There are plenty of reasons to send money if you’re living or traveling abroad. You might want to make a deposit on a holiday home, transfer your pension regularly due to relocation, or wire a one-off payment to a loved one in some other country.
To transfer money the conventional way from one country to another, you would most likely consider an International Wire Transfer. By using an International Wire Transfer, you can send and receive money from abroad and convert it to your own native currency.
But you might wonder, what is a Wire Transfer exactly? Why’s it called that? And how do we use it? Is it the best method for transferring money or are there any better alternatives?
Well, don’t worry, after reading this post you will rest assured you have a better understanding of bank transfers involving various situations, what are its benefits and drawbacks, and how you can make your future decisions on this topic more effectively.
What is a Wire Transfer?
Wire transfer, sometimes called a bank transfer, is a medium of electronic funds transfers from one entity to another – a person or a company. It is essentially an interbank payment method, meaning one bank transfers money to another bank. Unless you’ve been living under a rock, you know that it’s a secure mode of transfer with several advantages.
For instance, say you stay in the United Kingdom, and your parents stay in India. You can send money from your bank account to your parent’s bank account easily by issuing a wire transfer.
How does it work?
Previously we used telegraphic wires to transfer money. Thus it was named “wire transfer”.
Wire transfers allow you to send a substantial amount of money to almost any bank account in the world. Here’s how it works :
1. First, you set up a wire transfer online by choosing the sender’s account.
2. Then, you Enter the bank account details of yourself or the company you want to send the money to.
3. Check whether you have the right credentials and details, including sending amount and the currency.
4. That’s it. Your account will be debited for the currency value by the bank and wire the money overseas in foreign currency.
But wait. There’s one catch. International wire transfers are really, really expensive and often come with poor exchange rates and high fixed fees.
Luckily, by the time you’re done reading this, you’ll know the best and cheapest alternatives to wire money internationally.
Differences between Domestic and International Wire Transfers
Banks make an international wire transfer when sending funds to financial institutions in an overseas country or zone. On the other hand, while sending money/funds to financial institutions within the same country or zone, banks issue a domestic wire transfer.
These two types of wire transfers, often due to their differences, affect the duration and fees the banks charge in order to complete the transfer.
Usually, most international wire transfers are executed using SWIFT and other such services. It has a wide network of banks and financial institutions across 200 countries with over 10,000 banks.
Domestic wire transfers generally take a day or two, whereas, International transfers may take up to 5 days or more.
Wire Transfers Fees
Often with individual banks involved, an additional fee is taken from the amount. Additionally, with international transfers, the funds/money is converted to the specified currency at a rate unknown to the sender.
Thus, these denominators imply that the amount of money is unknown to the recipient, which can create big issues for international invoices or purchases. International wire transfers are therefore very expensive for banks, too, as the money needs to be tied up in accounts globally.
How long do International Wire Transfers take?
The speed of an International Wire Transfer depends upon country to country in terms of time, countries involved, and other factors. Typically it takes 2 to 4 business days for the internationally wired money to arrive at the destination bank. However, there might be some reasons for a delay during transference.
Current Problems regarding Wire Transfers
Although a wire transfer is an obvious choice in sending money internationally, it does have a lot of problems within its procedure and structure.
Some of them would be:
- Lack of Customer Support
Customer service is one of the primary factors which decides whether a customer will stay at the platform or not. Recent studies have shown that 89% of customers switch their service providers after a bad experience.
Banks still face several difficulties in serving their customers on a daily basis.
- Delay in transactions
Wire Transfers tend to take time especially when you enter account details incorrectly for which the money gets wired to some other bank. During this problem, the transfer may be difficult to trace and a resolution may be difficult if the wire transfer gets truncated, lost, or not provided at all.
That’s why an ideal transaction experience should be secure, convenient, and fast that is familiar to the user. You should use a payment platform that takes security seriously like Salt.
- Security Issues
It is often hard to control and manage wire information after it is released. Bank websites and invoices sometimes increase security risk by showing sensitive wire information or methods.
Therefore, you should always choose a payment method that takes Security with utmost priority and executes the necessary precautions for a safe and sound payment experience for you.
- Cost Concerns
Furthermore, Wire transfers can prove exceptionally costly. Banks charge payers with sizeable fees and discourage them from making a payment. Additionally, Institutions may also receive less amount from the payment due to these bank charges.
Hence, a cost-effective method of payment is a necessity during a transaction. You should always research and choose the best and also the most pocket-friendly medium of transferring money.
Rise of Fintech
Fintech is a rising goliath in the field of digital transaction methods that utilizes automation and improves the delivery of financial services. It focuses primarily on making the customer experience seamless with the help of personalization, accessibility, functionality, and convenience.
Fintech has large market penetration thanks to its use of technological advancements and trends like smartphones and laptops. It also has fewer barriers to trends that in turn encourages innovation and the latest technological adoption.
Source: Statista
Fintech Adoption rates between 2015 and 2019 clearly show a massive rise in the use of fintech companies and services. By the year 2019, 75% of consumers worldwide started adopting a money transfer or payment method in one way or the other.
This shows how people globally demand faster and easier modes of payment which traditional banks are incapable of doing. It’s often glitchy and slow rather than being frictionless, whereas modern tech mediums like Salt offer lightning-fast payment which is secure and convenient, and tailored explicitly for the customers.
Possible Solutions and Alternatives
There are many problems with this transfer service, but it also has its merits. Namely, its reliability and security, when sending large amounts of money internationally. But what can save on – are costs and time. It’s why we recommend you explore some of the widely used services that cater to your specific needs and offer a more attractive alternative.
Like Salt – which delivers a one-stop solution to manage your currency accounts, payments, and expenses worldwide.
Salt offers businesses unique features to manage multiple accounts to save their time and resources. Get early access today to join their list of early adopters.
The Final Verdict
So, this has been an awesome journey! Congrats! You now have the necessary knowledge and wisdom to go forward and wire money effectively anywhere you want.
Before you go, let’s wrap things together with some final suggestions.
Overseas Wire Transfers with your Bank
If you decide to use your bank, make sure to check exactly its fees and exchange rates. They are not as they advertise to be, as they’ll charge you hefty prices.
From a more cost-effective standpoint, try sending large amounts of money so that the fixed fee doesn’t become a big concern for you.
As an alternative, try using online money transfer services as they are fast, easy, and less costly than the banks, and they’re great for smaller amounts. If you want to know more about how bank transactions work, check out this article.
