Wire transfers – everything you need to know about sending money internationally
The term “wire transfer” is often used to refer to any electronic transfer of money from one person to another. The term “wire transfer” also has a more narrow technical meaning, referring to one certain method of transferring funds, which usually involves an electronic transfer of funds from one bank or credit union account to another.
Domestic Wire Transfers
- Inter-bank (Funds transferred within the country from one bank to another): Domestic inter-bank transfers can be done via RTGS or via a local or even a localized Financial Network or Switch. Essentially, banks are members of a network (secure, closed network) that that allows them to send payments to each other and exchange beneficiary details. Some less developed countries still do this manually by exchanging physical checks and then settling them. But, most countries have a network to collect and settle wire transfers. The United States, for example uses ACH for this purpose. In Europe there is SEPA, and in the UK there is BACS and FPS.
- Intra-bank (Funds transferred within the country from one bank branch to another): For Intra-Bank Transfers the procedure is very simple. Most banks will simply instruct their core banking software to do an Funds Transfer, which essentially means debit one account holder and credit the other account holder.
International Wire Transfers
- Inter-bank (Funds transferred from one bank in one country to another bank in another country): This is the most commonly used bank transfer scenario. In this case, banks in both the payer country and the recipient country have to follow laws in their respective countries for reporting to the financial services authority on the money in-flow/out-flow.
- Intra-Bank (Funds are transferred within the same bank, but in a different country): In this case, the banks typically use the network. SWIFT is the network which connects any two banks. Sometimes two banks may have a direct arrangement (for example, a transfer from Citibank NYC (US) to Deutsche Bank Karachi (PK) have a direct arrangement, and hence the transfer will be done via the SWIFT network, without the interaction or involvement of an intermediary bank, commonly referred to as a correspondent bank. In the event a direct relationship is not available, banks have arrangements with each other (via Nostro Accounts).
Ways To Send Wire Transfers
Well, what did you expect? First things first, let me explain a bit further. Payoneer offers local bank transfers, not wire transfers. There is a slight difference between the two: a wire transfer is an electronic money transfer transaction from one financial institution to another, either foreign or domestic. A local bank transfer (what Payoneer offers) is an electronic money transfer that is domestic only. That said, we offer local bank transfer services which help our international customers get paid from global clients. Here’s how:
- Global Payment Service: Payoneer users get access to local receiving accounts, which act like a local bank account in the US, UK or EU (more to come!). All you need to do is provide the details of your receiving account to your clients and then can send a local bank transfer just like they would send to a local employee. This means you receive payment quickly and they don’t have to deal with the headache of international laws, fees or currencies. The funds go straight to your Payoneer account, which you can then withdraw to your local bank in local currency or access via the Payoneer Prepaid Card (if you have one). Learn more about the Global Payment Service.
- Billing Service: Send your clients a bill directly from the Payoneer platform and we’ll send them an email with the details of your payment and several ways to pay you, including local bank transfer, credit card and eCheck.
- Make a Payment: Do you need to pay a team member, supplier, or contractor? Use our Make a Payment service to pay other Payoneer users. The best part is…it’s FREE!. You won’t pay a cent, even if you’re making an international payment. Hallelujah!
Check out what Mohamed Eldeeb has to say about using Payoneer services:
2. Your Bank
Your bank can assist with many types of funds transfers. If you’re simply transferring money from one account to another within the same financial institution, this is something you can easily do at your bank for free. A bank teller can help you set up many other transfer services, including wire transfers to another bank, state or country. If you’re looking to transfer funds to an account at a different financial institution, you’ll need the account number you’d like to send money to, and the bank’s routing number.
Overseas money transfers are possible through your bank as well, but they are often costly and complicated. Save your dollars for a better solution.
eWallets can be a economical method for transferring money from one account to another; however, you’ll need to find out first if the person you want to transfer money to (or receive from) has the same eWallet account. Additionally, you’ll need to determine whether you (or the recipient) can easily withdraw funds from your eWallet to you local bank account, and how much it will cost.
Do you have an eWallet but can’t seem to get access to your funds? Find out how you can withdraw funds from your eWallet with Payoneer.
4. Western Union or MoneyGram
As a U.S. local, you can use these services to easily transfer money to a different city, state or country. They charge a flat rate for the transfer that is based on the speed of the transfer, the location you’re sending money to and the amount of money you are sending. If you’re doing an overseas or international transfer; however, you’ll also be charged an exchange rate. These services don’t generally offer a very competitive exchange rate, which results in a hidden charge if you transfer money using this method.
5. Cash/ Personal Check
Many articles will tell you that this is a practical solution, but we think you’re better than that!!
Tips for Sending Money Safely
Financial institutions take safety seriously, and in general wire transfers and ACH transfers are very safe. But there are some precautions you should take to safeguard your personal information and ensure the money gets to the right person.
- Wire transfers are quick and convenient, which makes them very popular among scammers. For example, “phishing” scams, in which fraudsters seek to convince you you’re dealing with a legitimate business, often will demand immediate payment by wire transfer so that they can secure the payment before you have second thoughts. So before sending funds electronically, it’s important to make sure you really know who you’re sending money to.
- Do you need to receive a wire or ACH transfer? You’ll need to give the sender your bank routing number and account number, which opens you up to unauthorized transactions if these numbers fall in the wrong hands. If it’s not someone you absolutely trust, it’s a better choice to ask the sender to use a service like Payoneer, which regulates your account and ensures the safety of your money. You can even request a payment directly from inside your Payoneer account, and clients and customers can easily pay online in a few simple steps via credit card, eCheck or wire transfer.