Business, Legal & Accounting Glossary
An electronic transfer of funds. Wire transfers typically transfer money from one bank account to another. U.S. domestic transfers are typically conducted using the Federal Reserve Wire Network, while international transfers are typically transacted via SWIFT. Western Union is the most common way to complete transactions between individuals, not financial institutions. Wire transfers are considered the safest way to transfer money internationally.
A wire transfer is simply an electronic transfer of funds.
A wire transfer allows people on opposite sides of the globe to quickly and easily exchange money. The term wire transfer originates from a time when telegrams were used as the means of communicating over long distances. During that era, a wire transfer was a message sent over a telegram line, or wire, directing an amount of money to be given to a particular person. A wire transfer is a relatively safe means of instantaneously transferring money. The identities of the bank account holders are confirmed and the funds are guaranteed, so the potential of fraud in a wire transfer transaction is limited. A wire transfer can also be called a bank transfer or EFT (electronic funds transfer). An ATM transaction would be an example of a wire transfer.
check
demand deposit
bank
A wire transfer involves moving money electronically.
The major advantage of a wire transfer is speed. The money arrives in hours and is immediately available. Contrast that with depositing a check in your bank. You will not usually be able to write checks against those funds for three days. If one were to mail the check, delays can be even longer. Who earns interest on the funds until they are credited to your account? What happens if the check is lost in the mail? (Someone stops payment on the first check–for a fee, and reissues a new check. But it’s delay, delay, delay.)
Wire transfers also work well for international transfers.
Your bank, broker, or mutual fund company will usually be able to arrange a wire transfer if you request it. Some charge a fee for this service. You will want to consider if the fee is worth it. For major transactions involving large sums such as the sale of real estate, wire transfer is highly recommended.
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This glossary post was last updated: 28th November, 2021 | 0 Views.