what is a wire transfer 
a wire transfer is an electronic transfer of funds via a network that is administered by banks and transfer service agencies around the world wire transfers are sent by one institution and received by another they require information from the party initiating the transfer such as the recipient s name and account number wire transfers don t actually involve the physical exchange of cash but are settled electronically they can be sent between banks or through a non bank service such as western union understanding wire transferswire transfers which are also known as wire payments allow you to move money quickly and securely without the need to send cash they allow two parties to transfer funds even if they re in different geographic locations safely a transfer is usually initiated from one bank or financial institution to another rather than cash the participating institutions share information about the recipient the bank receiving account number and the amount transferred the sender pays for the transaction upfront at their bank the sender must provide their bank with the following information once the information is documented the wire transfer can begin the initiating firm sends a message to the recipient s institution with payment instructions through a secure system such as fedwire or swift the recipient s bank receives the information from the initiating bank and deposits its own reserve funds into the correct account the two banking institutions then settle the payment on the back end after the money has been deposited wire transfers are important tools for anyone who needs to send money quickly and securely especially when they aren t in the same location they also allow entities to transfer a large amount of money firms do limit the amount that can be transferred but these caps tend to be fairly high for instance one company may use a wire transfer to pay for a large purchase from an international supplier non bank wire transfers do not require bank account numbers one popular non bank wire transfer company is western union whose international money transfer service is available in more than 200 countries 2types of wire transfersthere are two types of wire transfers domestic and international a domestic wire transfer is any type of wire payment that takes place between two different banks or institutions within the same country senders may require a code or the recipient s branch number if they want to execute a transaction these transactions are generally processed on the same day they are initiated and can be received within a few hours that s because a domestic wire transfer only has to go through a domestic automated clearing house ach and can be delivered within a day international wire transfers are initiated in one country and settled in another senders must initiate international transfers even when they send money to someone in another country who has an account at the same bank these payments require a routing or swift code these wire transfers are normally delivered within two business days this extra day is required because international wires must clear a domestic ach and also its foreign equivalent domestic wire transfers can cost up to 35 per transaction or more international wire transfers often cost much more some receiving institutions also charge a fee which is deducted from the total amount received by their customer risks associated with wire transferswire transfers are generally safe and secure provided you know the person who s receiving them if you use a legitimate wire transfer service each person involved in a wire transfer transaction should be required to prove their identity so that anonymous transfers are impossible international wire transfers that originate in the united states are monitored by the office of foreign assets control an agency of the u s treasury the agency makes sure the money sent overseas is not being used to fund terrorist activities or for money laundering purposes in addition they are also tasked with preventing money from going to countries that are the subject of sanctions by the u s government if the agency suspects that any of these scenarios are true the sending bank has the authority to freeze the funds and stop the wire transfer from going through 1wire transfers may be flagged for several reasons alerting officials to possible wrongdoing by either the recipient or the sender in the case of advantages and disadvantages of wire transferswire transfers offer a convenient way to send money and pay bills to a recipient who uses a different bank international wire transfers now take only a few days to settle and domestic wire transfers often settle on the same day unlike mailed checks they are unlikely to be misplaced or lost in the mail moreover they are also reliable while checks can bounce a wire transfer can only be initiated if the sender has sufficient funds in their account however there are some drawbacks banks often charge a flat fee for wire transfers which can range between 15 and 50 this can eat up a large percentage of the transferred amount especially for smaller transactions in addition some banks place a limit on the amount that can be wired in a single day moreover evolutions in fintech have provided alternatives that may be even faster than wire transfers tools like paypal and venmo allow domestic transfers in extremely small amounts even faster than a bank wire and for lower or no fees fast settlement even across borders cannot be bounced or held due to insufficient funds bank fees make wires impractical for some amounts banks may impose a limit on the maximum transfer alternative payment methods can be even faster and cheaper than wires alternatives to wire transfers