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Wire Transfers: How Do They Work, and How Long Do They Take?

26 September 2023
Grof Writer
6 Minutes Read
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Wire transfers are like sending money through a secret tunnel from one bank to another. They are commonly employed in all types of businesses for efficient and secure transactions.


Every business in Singapore adheres to a regular process of global money transfer. If you are also a business owner in Singapore, wire transfers stand out as one of the paramount and most secure methods for moving your funds. They provide a swift solution for sending money to distant international destinations, a necessity for cross-border business transactions. Businesses can securely and expeditiously transfer money, even across distinct locations. 


Let’s learn more about wire transfers and how it suits your business needs. Therefore, it is now necessary for every business to know about efficient ways of transferring money and how beneficial it is for every person running a business. 


What Are Wire Transfers? 

Wire transfer involves electronically transferring funds between individuals or businesses. This process includes a sender and a recipient, with one or more banks or non-bank money transfer service providers facilitating the transaction. The sender needs to provide the upfront payment, either from their bank account or in cash. It's important to note that a wire transfer doesn't involve a physical exchange of cash. Instead, the involved financial institutions exchange information, including the amount to be transferred and the recipient’s bank account details. 


A wire transfer, also known as an over-the-wire transfer, can serve as both a bank-to-bank transaction and a non-bank transfer. For instance, an overseas bank transfer is a common example of a wire transfer. Wire transfers can be categorised as domestic, occurring within the same country, or international, where the transfer originates in one country and reaches another.  


What is the SWIFT network? 

The SWIFT network, known as the Society for Worldwide Interbank Financial Telecommunication, facilitates secure and reliable communication and exchange of financial transactions and information among financial institutions globally.


Established in 1973, it has become an essential component of the international banking and financial system. Financial institutions worldwide use SWIFT to send standardised and secure messages concerning transactions, including payment instructions, trade confirmations, securities settlement instructions, and more. SWIFT operates as a closed messaging system, connecting thousands of banks, financial institutions, and corporations around the world. 


One of SWIFT's prominent applications is in international money transfers. Sending banks utilize the SWIFT network to securely transmit payment instructions to receiving banks, which then process the instructions to ensure proper fund allocation. Each member institution is assigned a unique identification code, often referred to as a SWIFT/BIC code or SWIFT code. This code ensures accurate routing and delivery of messages. 


It's important to recognize that although SWIFT provides a standardised communication platform, it doesn't manage fund movement itself. Fund settlement is typically handled through various interbank clearing and settlement systems.  


What Details Are Required for a Wire Transfer? 

To make a wire transfer, you need to provide some information, including: 


  • Name and address of recipient's bank 
  • Recipient's IBAN (International Bank Account Number) 
  • BIC/SWIFT code of the recipient's bank 
  • The main reason for the transfer 
  • The amount that needs to be transferred and currency. 
  • Who will pay the money: The recipient, you, or the third person between you and the recipient? 


Therefore, the financial institution may ask to give some additional information if required. 


How Long Does a Wire Transfer Take?

While wire transfers offer a swift method of moving funds, their processing time can vary. Hence, understanding transmission duration is vital, especially for urgent transfers. 


Domestic Wire Transfers 

Transfers within FAST institutions are near-instantaneous. However, typically, domestic transfers take about 24 hours. They're processed on the submission day, with funds reaching recipients within 24 hours. 


International Wire Transfers 

Crossing borders extends processing time. Although approval might occur on the same day, it can take up to 5 business days for funds to reach recipients. Transfers between accounts within the same financial institution are quicker, potentially even completing within 24 hours.  


Let’s See How Wire Transfers Work 

1. Initiation: The process begins when the sender provides their bank with specific details about the recipient, such as their name, account number, and the recipient's bank information. This information is crucial to ensure the money reaches the correct destination. 

2. Sender's Bank Verification: The sender's bank verifies the provided information and guarantees that the sender has sufficient funds to conceal the transfer charge, plus any associated fees. Once everything checks out, the sender's bank begins the transfer. 

3. Message to Intermediary Banks: In international wire transfers, the sender's bank might use a secure messaging network like SWIFT to communicate with intermediary banks. These banks help route the transfer across borders and currencies, ensuring the money arrives at the recipient's bank. 

4. Recipient's Bank Processing: The recipient's bank receives and processes the transfer message. They credit the recipient's account with the transferred amount minus any fees associated with the incoming transfer. 

5. Notification: Depending on the recipient's bank's guidelines, they may notify the recipient about the incoming funds. 

6. Accessibility: Once the funds are credited to the recipient's account, they can access funds through their bank account. 

However, they might involve fees, especially for international transfers, and the exact timeline for the transfer can vary depending on factors like the sender and recipient banks, currency conversion, and any intermediary banks involved. Ensure you have the right recipient information before initiating a wire transfer to avoid complications or delays. 


Telegraphic Transfer Vs. Wire Transfer 

Due to the two names' similar history and usage, this question frequently comes up. Banks used telex, a network of electronic equipment that communicated through text-based messages, to send money across international borders in the 1990s. A telegraphic transfer, often known as a telex transfer, TT transfer, or just TT, is one such transaction.


The old system was replaced by the new system as a result of technological advancements. Nevertheless, a wire transfer is still referred to as a telegraphic transfer or TT transfer today. 


Impacts on Wire Transfer Speed 

A person needs to pay attention to these points while sending money globally to ensure a quick wire transfer: 


Bank Cut-off Times: Banks have specific cut-off times for processing wire transfers each business day. If you initiate a transfer after the cut-off time, it may not begin processing until the next business day, usually delaying the transfer. 

Weekends and Holidays: Banks typically don't process transfers on weekends and public holidays. If you initiate a transfer on a Friday, for example, it may not start processing until the following Monday, possibly extending the transfer time. 

Time Zones: The time difference can impact the money transfer time if you send funds to a recipient in a different time zone. 

Additional Documentation: In some cases, other documentation or verification may be needed for security reasons and can delay the processing time. 

Errors: Before filling out the form, it is necessary to avoid any errors, or they may impact the wire transfer speed. The request gets delayed or denied due to a wrong SWIFT code or even a misspelt name. 


Can a Wire Transfer Be Cancelled? 

As you now know the procedure to send the money globally is not as straightforward as getting "cancelled." A bank transfer, whether domestic or international, is a one-way transaction. 


Therefore, once the process is initiated, the trade will have been finalised, and the recipient's bank has already given them the funds; nothing will be done after that. However, early on, the procedure can be stopped (and sometimes declined if you don't have enough money to cover the charges), but once a transaction has been 'pushed through,' it can't be cancelled. The recipient would have to send you the money via their foreign bank transfer to get it back. 


What Are The Alternatives To Wire Transfer? 

Cheques: 

Paper pledges to pay a specific sum are what cheques are like. When sending money to someone, you write a check with the recipient's name and the desired amount. After that, they can exchange the check for cash at their bank. Due to the physical processing and transportation required for reviews, they are slower than wire transfers. Additionally, the funds can take some time to show up in the recipient's account. However, cheques can be useful in some circumstances, such as when you're not in a rush, or the recipient needs a bank account to handle electronic transfers. 


Interbank GIRO Transfers: 

One way to electronically transfer money inside the same nation is through GIRO transfers. GIRO transfers move money online instead of physically moving money like with checks. The procedure may become quicker and more effective. When you give your bank the recipient's account information, money is transferred immediately. For recurring payments like bills or salary, it's an intelligent choice. However, it is essential to remember that the transfer may require some time, typically a day or two. This may vary depending on your bank and the nation you're in. 


How to Save Your Wire Transfer Cost? 

Wire transfers are the best for businesses to send money. They work with special messages and trusted banks to ensure that money reaches the right place securely as fast as possible.


If you do business in Singapore and often use wire transfers to send money globally, you may not be able to avoid the cost of wire transfers before, but now, however, there many ways to get around them. You need to have some inquiries to waive the fees of wire transfer. 


Therefore, you need a Multi-currency business account to handle different currencies in one account. At Grof, we've partnered with trusted payment service providers to ensure you save money on each overseas transaction.


Conclusion

You must have learned much about wire transfers and how they are effective for quick and easy ways to access prompter payments to meet customer demand. Whether you live in Singapore or are a foreign entrepreneur looking to develop your businesses in Singapore, we have all here for you to help, just switch to Grof for fast, safe, and easy access to money transfer globally. You will have transparent and low-cost fx international payment or get organised & digitalise your costs. 


Whether you want to manage your finances, transfers, and accounting, we can cover all your needs to bring your business to the top globally. You can contact us and let us handle all your corporate needs!

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Explore crucial dos and don'ts, along with essential tips for a successful company registration when establishing your foothold in Singapore!
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