About International Wire Transfers

International wire transfer is a method of transferring money from one country to another. The money can be sent from one financial institution to another for credit to the recipient's account, or to an office of a company such as American Express where the recipient can get cash.

Effects

An international wire transfer is by far the simplest way of transferring money overseas. A consortium of seven overseas banks founded the secure SWIFT system in 1974; SWIFT is a global network of international banks that transfer financial messages, including money, from one to another. SWIFT's facilitation of money transfer among countries greatly aided international commerce.

Significance

Basically, there are two reasons the international wire transfer system is important. First, it is a convenient way to pay for goods and services provided by overseas vendors. It is also important because it is a convenient way to make cash available to someone traveling overseas, whether or not that person has a local checking account. You can simply send funds to the local Western Union or American Express office, and after the recipient identifies himself, the cash will be made available.

Function

A person wishing to send money overseas simply has to give her bank the details of the transaction: the amount to be sent and where it should go. If the amount is to be sent to a specific account at a bank, the customer must provide the IBAN code for the account; the bank should be able to provide the code of the recipient bank. The bank then sends the message via SWIFT along with instructions. Often, the message is received almost instantaneously, but that is not always the case. In some instances, several days are needed to complete a transaction.

Warning

The costs of an international bank-to-bank wire transfer are set by the countries in which the banks are located. So, depending on the location of the bank to which you wish to send funds, the costs can be substantial. In addition, your bank charges a fee for this service. Make sure the transaction is worthwhile by asking your bank about those charges before you proceed.

Potential

With the globalization of commerce, the future of international wire transfers is secure. As companies begin to broaden their reach to buyers all over the world, there is no easier way for one firm to purchase goods and services from another than by wire transfer.