What Is a Bank Wire Transfer?

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Bank wire transfers are a quick way to get funds from one bank account to another. Wire transfers are used for large-value business and personal money transfers. Each bank has different requirements for wire transfers and may charge fees depending on the banking relationship and the amount being sent. Requirements for business and international transactions also have special procedures and requirements.

Definition

A bank wire transfer, otherwise known simply as a "wire transfer" is a money transfer system that utilizes electronic payments instead of paper checks or cash deposits. Wire transfers are regulated by the "Fed Wire" system which is part of the Federal Reserve network. This is a settlement system that provides real-time money transfer settlements which is why transfers are liquid so quickly after the transaction.

Requirements

Wire transfers require specific information to complete. The sender must provide a valid ID and have a valid account number at the institution the funds are being sent from. Cash wires are not allowed. The sender must also provide complete beneficiary information (the person receiving the money). This includes the name, account number and routing number of the bank. If the transaction is over $3000, the address of the beneficiary is also required.

Business Requirements

If the sender is a business, documentation must be provided that demonstrates the person signing the wire transfer paperwork is authorized to conduct such a transaction. Those who are principals to the company or signers on the account usually qualify unless the account is restricted. An example might be a nonprofit company that would require minutes from a meeting approving the transfer in addition to signer information.

International Wires

Wires that will not be received domestically will need either a SWIFT Code or BIC code. This is in lieu of a bank routing number for international institutions. SWIFT is an acronym for the Society of Worldwide Interbank Financial Telecommunication. It is a member-owned cooperative in the financial services industry with more than 8300 banks, brokerages and corporations included. SWIFT's purpose is to standardize transactions, lower costs and eliminate risk and inefficiencies. A BIC code is a Bank Identifier Code assigned by SWIFT to member organizations.

Fees

Financial institutions vary with rates for wire transfers. As part of preferred or business banking account benefits, customers may have free or discounted wire transfers. Normal charges range from $40-$80 depending on the institution. Usually there is a scale depending on the amount being transferred. For example, at one institution, wire transfers under $5000 cost $45. Transfers over $5000 cost $65.

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