About Wire Transfers

Wire transfers are one of the most common and secure methods for sending money from one account to another. They can be conducted between any two people in the world, and are nearly instantaneous. These transfers are entirely electronic, with no physical money necessarily changing hands.

History

Wire transfers have been a feature of business since the invention of electronic communications. The telegraph, invented in the early 19th century, allowed for instantaneous electronic communications. In those days, a wire transfer involved bringing a sum of physical money to a telegraph operator who would then contact another institution and give them instructions to give funds to the intended recipient. The money would then be physically delivered to the institution in question.

Types

Nowadays, the technology has become far more developed and has been automated in most cases. The two primary forms of wire transfers are those between two banks and those using an anonymous transfer service. Transferring money between two banks requires that both parties provide relevant financial and personal identification information. Using a wire service does not necessarily require any form of identification and can be conducted anonymously.

Warning

One danger involved in anonymous wire transactions is that the receiving party can be free to take the money without providing any service. As such, many scams are involved in wire transfers. Anonymous wire transfers should only be conducted between people with already established strong relationships. If there is not sufficient trust, a bank wire transfer provides greater security and often less expensive service.

Features

Conducting a wire transfer requires a few pieces of information about the target account. For a domestic wire transfer, you need the ABA routing number and account number along with the address and phone contact information of their bank. In most cases, this can be accomplished over the Internet, but some institutions require phone or fax contact as well.

Benefits

Direct wire transfers have an advantage over other transaction methods such as checks. A wire transfer can't bounce, as it requires verification from the sender's account before being accepted for the transfer. It's also instantaneous, saving significantly on time. The only drawback is that most banks charge fees on transfers, particularly those that are either international or sent to a different institution.

Resources

• Transact Money: Wire Transfer Overview
• Bank of America: Wire Transfer FAQ