Wire transfer , bank transfer or credit transfer is an electronic funds transfer method from one person or entity to another. Wire transfers can be made from one bank account to another bank account or by cash transfer at the cash office.
Different wire transfer systems and operators provide various options relative to closeness and finalization of settlement and transaction costs, values, and volumes. The central bank's bank transfer system, such as the FedWire Federal Reserve system in the United States, is more likely to be a real-time gross settlement (RTGS) system. The RTGS system provides the fastest availability of funds as it provides "real time" and final "irrevocable" settlements by posting dirty entries (complete) against electronic accounts of wire transfer system operators. Other systems such as the Inter Bank Clearing Payment System (CHIPS) provide regular net settlement. Faster settlement systems tend to process higher monetary value-time transactions, have higher transaction costs, and have smaller payment volumes. A faster settlement process allows less time for currency fluctuations when money is on the way.
Video Wire transfer
Histori
The first widely used service for wire transfers was launched by Western Union in 1872 on existing telegraph networks. Using a password and a code book, telegraph operators in one office can "transfer" the money already paid to the office by sending money to another telegraph office to be paid to the receiving customer. In 1877 the service was used to transfer nearly $ 2.5 million each year. Because the earliest wire transfers use telegraph networks, they are called telegraphic transfers and they are still used in some countries, although more sophisticated electronic transfer networks are used.
Maps Wire transfer
Process
Bank transfer transfers are done as follows:
- An entity wishing to transfer approaches the bank and gives the bank an order to transfer a certain amount of money. IBAN and BIC codes are also provided so the bank knows where the money should be sent.
- The sending bank transmits the message, through a secure system (such as SWIFT or Fedwire), to the recipient bank, requesting payment to take effect in accordance with the instructions given.
- The message also includes the completion instructions. Transfer is not an instant: funds may take several hours or even days to move from sender account to recipient account.
- Either the banks involved must have mutual accounts with each other, or payments must be sent to the bank with such account, the correspondent bank, for further benefits to the final beneficiary.
The Bank collects payments for services from the sender as well as from the recipient. The sending bank usually collects fees that are separate from the transferred funds, while the receiving bank and the intermediary bank where the travel transfers cut the cost of the transferred money so that the recipient receives less than what the sender sends.
Rules and prices
Since 2009, EU Regulation No. 924/2009 controls cross border payments in the European Union. In the new regulations Article 1 (q.v., Ref.4) states that the transfer of IBAN/BIC in Single Euro Payments Area (SEPA) should not be more expensive than national transfers, no matter what currency is used. The receiving bank may charge a fee for exchange to the local currency.
Prior to this, in 2002 the EU lowered the regulatory fees that may be imposed by banks for in-euro payments between EU member states to the domestic level, resulting in very low or no cost for electronic transfers within the Euro Zone. In 2005, Iceland, Liechtenstein, and Norway joined the EU rules on electronic transfers. However, this rule was replaced by the Single Euro Payments Area (SEPA), which consists of 32 European countries.
In the United States, domestic wire transfers are governed by Federal J Regulations and by Section 4A of the Uniform Commercial Code. US wire transfers can be expensive. By 2016, among the top 15 retail banks, the average cost for outgoing domestic connections is $ 25. The cost of a domestic connection will be split equally between $ 0 (free) and $ 15.
Security
By bank transfer to bank, every account holder must have a proven identity. Chargebacks are not possible, although cables can be pulled back. The information contained in cables is delivered securely through encrypted communication methods. Bank wire transfer rates vary widely, depending on the bank and its location; in some countries, fees associated with services can be expensive.
Wire transfers made through cash offices are essentially anonymous and are designed for transfers between people who believe in each other. It is not safe to send money via cable to unknown people to be collected at the cash office; the recipient of the money may, after collecting it, not provide any goods or services they promise in return for payment, but instead simply disappears. This fraud has often been used, especially in so-called 419 scams that often nominate Western Union to be taken.
International transfers involving the United States are subject to monitoring by the Office of Foreign Assets Control (OFAC), which monitors the information provided in the wire text and then decides whether, under US federal government regulations and political position, money is being transferred to terrorist groups, or countries or entity under sanction by the United States government. If a financial institution suspects that funds are being sent from or to one of these entities, it must block the transfer and freeze the funds.
SWIFT or IBAN wire transfer is not entirely free from vulnerability. Any intermediary bank handling wire transactions can take direct costs from wire payload (transferred assets) without the knowledge or consent of the account holder. In many places, there is no law or technical means to protect customers from this practice. If bank S is a sending bank (or a broker), and R bank is a receiving bank (or broker), and banks I1, I2 and I3 are intermediary banks, clients may only have contracts with S and/or R, but bank I1, I2 and I3 can (and often) take money from wire without direct arrangement with clients. Clients are sometimes surprised when less money arrives at bank R. Compare this with a check, where the transferred amount is fully guaranteed, and the cost (if applicable) can be charged only at the bank endpoint.
The EU offers some partial protection from this practice by banning European intermediary banks from taking the amount transferred, even for transatlantic transfers. However, it is still common practice for European brokerage firms to declare that they do not charge a transfer fee, and then contract their bank to take unpublished fees from the transferred amount as a means to compensate their bank with their client assets - for example, CMC Markets implements this policy is in partnership with Natwest.
Method
Retail money transfer
One of the largest companies offering wire transfers is Western Union, which allows individuals to transfer or receive money without a Western Union account or any financial institution. Concerns and controversy about Western Union transfers have increased in recent years, due to increased monitoring of money laundering transactions, as well as concerns about terrorist groups using the service, especially after the September 11, 2001 attacks. Although Western Union stores information about senders and recipients, some transactions can be done anonymously, because the recipient does not necessarily have to show identification.
There are other companies in this market, such as ACE Money Transfer, RIA Financial Services, MoneyGram and VFX Financial PLC and LCC Money Transfer (both based in Europe) as well as Azimo, Dwolla, TransferGo, and TransferWise.
Another option for consumers and businesses to transfer money internationally is to use a special brokerage house for their international money transfer needs. Many of these special brokers can transfer money at a better exchange rate than banks, saving up to 4%. This provider may offer various currency exchange products such as Spot Contract, Forward Contract, and Limit Order. However, not all providers are governed by the appropriate government agency. For example, in the UK, even though the company is governed by the Financial Behavior Authority, not all of them are included in the research (FCA). Regulators include the Australian Securities and Investments Commission (ASIC), the Canadian Financial Transaction Reports (FINTRAC) Analysis Center in Canada, the Hong Kong Customs and Excise Department and the FCA in the UK.
International
Most international transfers are carried out through SWIFT, a cooperative established in 1974 by seven international banks, operating a global network to facilitate the transfer of financial messages. Using these messages, banks can exchange data for funds transfers between financial institutions. The SWIFT headquarters are in La Hulpe, on the outskirts of Brussels, Belgium. The community also acts as the UN-backed international standard body for the creation and maintenance of financial standards-messages. See SWIFT Standard.
Each financial institution is codenamed ISO 9362, also called Bank Identification Code ( BIC ) or SWIFT Code . These codes usually consist of eight characters. For example: Deutsche Bank is an international bank with its headquarters in Frankfurt, Germany, the SWIFT Code for which is DEUTDEFF :
- DEUT identify Deutsche Bank.
- DE is the country code for Germany.
- FF is the code for Frankfurt.
Using an additional code of 11 digits (if the receiving bank has assigned additional code to the branch or to the processing area) allows payment to be directed to a particular office. For example: DEUTDEFF500 will direct payment to Deutsche Bank office in Bad Homburg. SWIFT deviates slightly from the standard though by using the nine position for Logical Terminal ID, making the code length extended 12 digits.
European banks make transfers within the EU and in Switzerland also use the International Bank Account Number, or IBAN.
International prepaid card
International prepaid cards are an alternative way to transfer funds. Companies can provide debit cards for employee payments around the world. The recipient does not need to have a bank account and can use cards in places where debit cards are accepted at point of sale or online and can withdraw funds in local currency at ATM.
United States
Banks in the United States use SWIFT to send messages to notify banks in other countries that payment has been made. Banks use CHIPS or Fedwire systems to actually affect payments.
Bank-to-bank domestic transfers are made through the Fedwire system, which uses the Federal Reserve System and its assignment to the ABA transit routing number, which uniquely identifies each bank.
Other electronic transfers
Other forms of electronic transfers include, for example, electronic funds transfer systems (EFTS). This is a system used when someone provides bank account numbers and routing information to someone who owes money and that party is transferring money from someone's account. It is also a system used in several payments made through the bank's online bill payment service. EFTS transfers differ from wire transfers by important legal means. EFTS payments are essentially personal electronic checks, whereas wire transfers are more like electronic checks.
In the United States, such EFTS transfers are often called "ACH transfers," as they progress through the Automated Clearing House.
One important way of ACH transfer is different from wire transfer is the receiver can start it. Of course there are restrictions, but this is the way people often set up automatic bill payments with utility companies, for example.
See also
References
Source of the article : Wikipedia
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