There's a fine art to learning how to wire money.
Once perfected, wiring money can be a useful tool in expediting payments quickly, without having to resort to paper checks or adding to burdensome debt by turning to credit card payments.
Before going ahead with a money wire, make sure you know the rules, read the fine print (especially on overseas money wires) and watch out for potential money wire scammers who have multiple ways of stealing funds via money wires - money the sender won't get back, as money wire transactions are irrevocable.
Money Wires Defined
A money wire is a transfer of funds conducted electronically, with funds changing hands between the payer and payee and is often paid the same day the money wire is executed.
Processing times are dependent on the time of the day the money wire is conducted. An early morning money wire transfer greatly increased the odds that the wire will land in the payees account on the same day. A money wire executed in the afternoon may not show up in the payee's account until the next business day.
Banks and credit unions are the main facilitators of money wires, although private providers like Western Union and MoneyGram also handle money wire transfers. Financial institutions transmit money wires via several electronic delivery networks - mainly Fedwire Funds Service and Society for Worldwide Interbank Financial Telecommunication (SWIFT), which handles transactions for overseas banks.
There is a difference between money wire transfers and automated clearing house (ACH) transactions.
What is a Money Wire Transfer?
Wire transfers are bank-to-bank transactions with no third parties involved. Unlike ACH transfers, money wire transfers are handled on an individual basis, and a fee is charged for the service, usually up to $30 per wire transfer, depending on the financial institution.
Peer-to-Peer (P2P payment services like PayPal, Square and Venmo) also allow individuals to send money to friends, family, businesses, and organizations electronically. These services aren't technically defined as "wire transfers", and transferred funds take longer to complete, given the need for a third-party facilitator to handle the transaction. Increasingly, banks are also offering similar online money transfer services via online and mobile apps.
What is an ACH Transaction?
With ACH money transfers, senders can set up monthly bill payments, for things like mortgage or auto loan payments. A bank will accept the ACH request, bundle it with other similar requests in batches, and send the ACH instructions to a clearinghouse where the payment transfer is transmitted. Most ACH transactions are free of charge.
How to Execute a Money Wire Transfer
To properly execute a money wire transaction, contact your bank or credit union, and provide the necessary money wire instructions. Primarily, you'll need to include the following information:
- Date of money wire transfer.
- Amount of money wire transfer.
- The money wire sender's name, address, bank account number and bank routing number.
- The money wire recipient's name, bank address, bank account number and bank routing number.
- For international money wire transfers, a SWIFT or BIC CODE number should be included. (When sending money overseas, ask your bank about the relevant currency exchange rates, and check on any fees and taxes included in the wire transmission.)
Your bank will provide a money wire number to identify the transaction. Keep it on hand in the event you have any questions on the money wire transfer, or if the transfer fails to go through.
Also, make sure your information is accurate before sending or requesting a money wire. Even a misplaced digit can result in a money wire transfer being blocked, or worse, have the transaction sent to the wrong individual.
Historically, money wire transfer instructions were filled out at the bank or credit union, but increasingly, financial institutions allow money wire instructions to be filed electronically. (View a sample money wire instruction for here.)
How to Stay Safe With a Money Wire Transfer
Money wire transfers are irrevocable, so payers and payees need to be sure they provide the correct information, and that both the payer and payee know each other.
Unfortunately, wire transfer scams are all too real, so money wire transfers should never be sent to individuals the sender does not know. Be particularly wary of using money transfer services like Western Union or MoneyGram, which allow for anonymous transactions, which are especially favored by money wire fraudsters, who can disappear without a trace after a money transfer is completed.
The takeaway? Money wires are a highly useful mechanism for sending money quickly, safely, and effectively, as long as you follow the wire instructions to the letter, and both parties know each other before transacting a money wire.
Follow the rules listed above to ensure that your next money wire experience is safe and successful.