Most consumers are familiar with using cash, checks, and credit cards to make purchases. But not everyone really knows about wire transfers, even though it’s a method of payment often mentioned in movies and TV shows. So what is a wire transfer? In essence, it’s a way to transfer money electronically. It’s just called a wire transfer because years ago transferring money over long distances used to be done through the telegraph.
While in the movies wire transfers are often portrayed as ways for nefarious criminals to pay for various illegal goods, in the real world the use of wire transfers is much more mundane. The most common reasons to use wire transfer include sending money abroad for emergency purposes, such as when a relative doesn’t have enough money overseas. Migrant workers use wire transfers to send their remittances to their relatives back home. It’s also becoming increasingly popular to use wire transfers to pay for utility bills as well.
Generally, there are two ways of transferring money electronically. Money can be sent from one bank (or credit union) to another, if both the recipient and the sender hold an account at their respective banks. Or you can use a money transfer service that has outlets in both your area and the recipient’s location.
Bank to Bank
You can contact your bank through the phone, online, or in person if your bank offers wire transfer services. First you’ll need to verify your identity, and then you also need to check whether you have enough funds in your account to cover the amount you wish to send plus the transfer fees.
Once these are done, you then have to submit the name of the recipient, the name of their bank, and that bank’s American Banking Association code. The ABA code should be displayed on that bank’s website. For banks in the European Union, you’ll need the International Bank Account Number, and for other banks abroad you’ll need the Bank Identifier Code.
When you fill out the form for transferring the money, you need to submit the name on the sending account, the account number, the address of the bank, and the ABA of your bank. Then you also have to put in the recipient’s name, address, and bank account number, as well as the receiving bank’s name, address, and ABA.
Money Transfer Services
You can also use money transfer services, which can be convenient if your bank is closed on the day you wish to transfer money or if the recipient doesn’t have a bank account. The process is similar. You go online or to a retail outlet, and then you enter your info as well as the info of the recipient. Then you pay by cash, credit card, or bank transfer to cover the amount you wish to send plus the fees for the transfer. On the other end, the recipient can then get the money from either the bank or from the retail outlet of the money transfer company in that area.