Understanding the Difference between WIRE bank transfers VS TELEGRAPHIC transfers VS Electronic Funds Transfer

Get an offer for Electronic Business Bank Account in Europe

 
 

The terms “wire transfer”, “money transfer”, “telegraphic transfer”, “electronic transfer” and “IBAN money transfer” are often used interchangeably and incorrectly. There are subtle distinctions between these terms, mainly in the speed, cost and method used to make these transactions. The commonality between these terms is that they are transacted electronically.

What is an Electronic Money Transfer?

An electronic Funds Transfer (EFT) is when money is transferred electronically from one bank account to another bank account. This term applies when both the sending and receiving accounts are within the same financial institution and when the transfer is made between accounts held in multiple institutions. An electronic money transfer is done via computer systems without the need for human intervention.

The term Electronic Money Transfer refers to any transfer of funds initiated electronically via credit card; computer; point-of-sale (POS) or ATM. The transfer could be for any purpose including debit transfers, mortgage payments, payroll payments, credit transfers and more. Electronic Money Transfers are known by different names in different systems including Electronic Funds Transfer (EFT); giro transfer or Direct Deposit (used to deposit salaries directly in employees’ bank accounts). It is often used as an umbrella term for all money transfers made electronically.



What is an Electronic Money Transfer?

How is it made: Through any electronic terminal – credit card, debit card, ATM, online, POS etc.

Cost: Cheaper than wire transfers; domestic is cheaper than international money transfers. Cost can be free or minimal.

Speed: Completed instantly or within 24hrs-3 days.

What is a Wire Bank Transfer?

How it is made: Electronically from bank-to-bank or through a wire transfer service.

Cost: More expensive option although domestic bank wire transfers are cheaper than international. With bank-to-bank wire transfers the sender pays a fee; recipient pays a fee (deducted from the amount sent) and intermediary banks charge a fee. With wire transfer services the sender usually pays the fees and receiving the money is free.

Speed: Same day for domestic or up to 5 days for international bank-to-bank wire transfers. Wire transfer services offer various options – money in minutes, direct to receiver’s bank account within 2-5 days or direct transfer to receiver’s digital wallet.

What is a Wire Bank Transfer?

What is a Wire Bank Transfer?

A wire bank transfer is used to transfer funds electronically from one individual or business to another. There are a range of wire transfer options depending on the urgency and finality of the settlement; volume of transactions; amount being sent and cost of the wire transfer. A wire bank transfer is initiated when the sender contacts his bank and supplies the information for the required transfer – amount of money to be transferred; IBAN/SWIFT of the receiving bank; name of receiver and their bank account details. The sending bank transmits a transfer request via a secure electronic system like SWIFT to the receiving bank. Within a few hours or days the funds are moved from the sender’s account to the receiver’s account. The banks must have reciprocal accounts with each other or the transfer must be sent via a bank with such an account.

Fees and charges are made at every stage of the wire bank transfer process. Both the sender and the receiver of a wire transfers will need to pay for the service. The sending bank charges a fee separate from the transferred amount; the receiving bank deducts a fee from the transferred amount and any intermediary banks will also take a percentage of the amount being transferred. This means that the recipient receives the transferred amount minus the fee deductions and the sender pays more than the amount sent; as he pays bank fees for the wire transfer service.

Alternatively you can use a cash office or money wire transfer service like Western Union where you can provide the money from a bank account (credit card) or hand over cash. The recipient can pick up the funds from the cash office or have it deposited in their bank account. The exact process, speed and cost differ depending on whether you make the wire transfer through a bank or a wire transfer service.

How is it made: A telegraphic transfer is done by the sender giving an instruction to his bank to send funds or by internet banking.

Cost: Fees are paid to the sending, intermediary and receiving banks.

Speed: Fast! Bank-to-bank telegraphic transfers 1-4 days.

What is a Telegraphic transfer?

A telegraphic transfer (TT or telex transfer) moves funds electronically but it is mostly used for international transactions. The term originates from when money used to be moved using telex messages but these days it is done electronically. In the UK the term telegraphic transfer usually refers to a domestic CHAPS (Clearing House Automated Payment System) transfer or an international SWIFT (Society for Worldwide Interbanking Financial Telecommunication) transfer. In the USA domestic telegraphic transfers go through the Federal Reserve System and international telegraphic transfers use SWIFT. In Europe SEPA is used for telegraphic transfers. Use of these internationally recognized systems insures a high standard of security and strict regulations which control the manner in which the transfer is conducted.

Telegraphic transfers are distinct in being fast (1-4 business days) and expensive. The cost of a TT transfer is subject to a number of variables (currency, amount being transferred, country or origin and destination, institution used to make the transaction etc.). Charges and fees for telegraphic transfers are not standardized and can vary depending on the financial institution or bank.

What is an IBAN transfer?

An IBAN (International Bank Account Number) is associated with an individual or business’s bank account, bank and country. This way when money is sent internationally the recipient’s bank account can be easily located using the IBAN that indicates not only the bank account number but also the bank and country. To transfer money internationally you will most likely be asked for the IBAN of the recipient’s bank account. The IBAN’s unique combination of letters and numbers for each individual bank account makes processing transfers easier, faster and more secure. The IBAN system is so reliable that when doing a SEPA transfer through a European bank the recipient’s IBAN can be the only reference you need.

Looking for a bank account? We can assist you

Please leave your contact details and we will get back to you.