# What Is a Wire Transfer? How It Works, Safety, and Fees

![Wire Transfer](https://www.investopedia.com/thmb/zPbWlGLB7lhUPPnnI_rSBoIGzGk=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/wiretransfer-FINAL-8fb2c62ec7e7410792ebb33a8c82ddb9.jpg)

*— Investopedia / Jiaqi Zhou*

## What Is a Wire Transfer?

Wire transfers enable rapid and secure movement of money across the globe by facilitating [electronic fund transfers](https://www.investopedia.com/terms/e/electronic-funds-transfer-act.asp) between banks and financial agencies. Without the need for physical [cash](https://www.investopedia.com/terms/c/cash.asp), these transactions require essential details, like the recipient's name and account number, from the sender. Managed through systems like Fedwire or SWIFT, wire transfers provide a reliable way to conduct both domestic and international monetary exchanges using bank networks or non-bank services like Western Union.

### Key Takeaways

*   A wire transfer is an electronic method for transferring funds across a network managed by banks and transfer agencies globally, enabling secure and swift transactions without the need for physical cash exchange.
*   Wire transfers come in two forms—domestic, which occur within the same country, and international, which involve transactions across borders requiring additional processes like SWIFT codes, typically settling within two business days.
*   Wire transfers often involve transaction fees ranging from $15 to $50 and carry certain risks, such as potential for fraud if the recipient's identity isn't verified, despite being generally secure.
*   Wire transfers are fast and reliable, offering immediate fund access with no risk of bounced payments, although newer payment methods might be cheaper and quicker for smaller amounts.
*   International wire transfers from the U.S. are monitored by the U.S. Treasury's Office of Foreign Assets Control, which ensures compliance with security and sanction regulations to prevent misuse like money laundering.  
    

  

## How Wire Transfers Work: A Comprehensive Overview

Wire transfers, or [wire payments](https://www.investopedia.com/what-is-an-external-transfer-5185528), let you send money quickly and securely without using cash, even to someone in a different location. They involve sharing the recipient’s information, their [bank](https://www.investopedia.com/terms/b/bank.asp) account number, and the transfer amount between the banks involved.

The sender pays for the transaction upfront at their bank. The sender must provide their bank with the following information:

*   The recipient's name, address, and contact number, along with any other personal information required to facilitate the transaction
*   The recipient's banking information, including their [account number](https://www.investopedia.com/terms/a/account-number.asp) and branch number
*   The receiving bank's information, which includes the institution's name, address, and bank identifier ([routing number](https://www.investopedia.com/terms/r/routing_transit_number.asp) or SWIFT code)
*   The reason for the transfer

Once the information is documented, the wire transfer can begin. The initiating firm sends a message to the recipient's institution with payment instructions through a secure system, such as [Fedwire](https://www.investopedia.com/terms/f/fedwire.asp) or [SWIFT](https://www.investopedia.com/articles/personal-finance/050515/how-swift-system-works.asp). The recipient's bank receives the information from the initiating bank and deposits its own reserve funds into the correct account. The two banking institutions then settle the payment on the back end after the money has been deposited.

Wire transfers are important tools for anyone who needs to [send money quickly](https://www.investopedia.com/how-to-wire-money-5088001) and securely—especially when they aren't in the same location. Wire transfers enable the transfer of large sums, though firms set high transfer limits. For instance, one company may use a wire transfer to pay for a large purchase from an international supplier.

> **Fast Fact**
>
> Non-bank wire transfers do not require bank account numbers. One popular non-bank wire transfer company is Western Union, whose international money transfer service is available in more than 200 countries.

## Exploring Domestic and International Wire Transfers

There are two types of wire transfers: domestic and international.

### Domestic Wire Transfers

A domestic wire transfer is any type of wire payment that takes place between two different banks or institutions within the same country. Senders may require a code or the recipient's branch number if they want to execute a transaction.

Domestic wire transfers are typically processed the same day and can be received within hours because they only need to pass through a domestic [automated clearing house (ACH)](https://www.investopedia.com/terms/a/ach.asp).  

### International Wire Transfers

International wire transfers are initiated in one country and settled in another. Senders must initiate international transfers even when they send money to someone in another country who has an account at the same bank. These payments require a routing or SWIFT code.

These wire transfers are normally delivered within two [business days](https://www.investopedia.com/terms/b/business-day.asp). This extra day is required because international wires must clear a domestic [ACH](https://www.investopedia.com/ach-transfers-what-are-they-and-how-do-they-work-4590120) and also its foreign equivalent.

> **Important**
>
> Domestic wire transfers can cost up to $35 per transaction or more. International wire transfers often cost much more. Some receiving institutions also charge a fee, which is deducted from the total amount received by their customer.

## Risks Associated With Wire Transfers

Wire transfers are generally safe and secure, provided you know the person who's receiving them. Legitimate wire transfer services require everyone involved to prove their identity, preventing anonymous [transactions](https://www.investopedia.com/terms/t/transaction.asp).

The Office of Foreign Assets Control monitors U.S.-originated international wire transfers to ensure funds aren't used for terrorism or [money laundering](https://www.investopedia.com/terms/m/moneylaundering.asp). In addition, they are also tasked with preventing money from going to countries that are the subject of sanctions by the U.S. government.

If the agency suspects that any of these scenarios are true, the sending bank has the authority to [freeze](https://www.investopedia.com/terms/a/account-freeze.asp) the funds and stop the wire transfer from going through.

Wire transfers may be flagged for several reasons, alerting officials to possible wrongdoing by either the recipient or the sender in the case of:

*   Transfers to safe-haven countries
*   Transfers to non-account holders
*   Regular transfers for no viable reason
*   Incoming and outgoing wires with the same dollar amount
*   Large amounts wired by cash businesses

## Pros and Cons of Using Wire Transfers

Wire transfers are a convenient way to send money and pay bills to recipients at different banks. Domestic transfers often settle the same day, while international ones can take a few days. Unlike mailed checks, they are unlikely to be misplaced or lost in the mail. Moreover, they are also reliable: While checks can bounce, a wire transfer can only be initiated if the sender has sufficient funds in their account.

However, there are some drawbacks. Banks often charge a flat fee for wire transfers, which can range between $15 and $50. This can eat up a large percentage of the transferred amount, especially for smaller transactions. In addition, some banks place a limit on the amount that can be wired in a single day.

Moreover, evolutions in [fintech](https://www.investopedia.com/terms/f/fintech.asp) have provided alternatives that may be even faster than wire transfers. Tools like [PayPal](https://www.investopedia.com/terms/p/paypal.asp) and [Venmo](https://www.investopedia.com/articles/personal-finance/010715/venmo-its-business-model-and-competition.asp) allow domestic transfers in extremely small amounts, even faster than a bank wire, and for lower (or no) fees.  

### Pros and Cons of Wire Transfers

Pros

*   Fast settlement, even across borders.
    
*   Cannot be bounced or held due to insufficient funds.
    

Cons

*   Bank fees make wires impractical for some amounts.
    
*   Banks may impose a limit on the maximum transfer.
    
*   Alternative payment methods can be even faster and cheaper than wires.
    

## Exploring Alternatives to Traditional Wire Transfers

Prior to the development of computer networks, the main alternative to wire transfers was to mail a physical check or money order. This had obvious disadvantages since mail could sometimes be lost or delayed in transit. While it is also possible to pay by credit and debit over the phone, this method was vulnerable to credit card theft.

If the money is not needed immediately, it is also possible to send payments through the [Automatic Clearinghouse](https://www.investopedia.com/terms/a/ach.asp), or ACH, an electronic network run by the National Automatic Clearinghouse Association. Because they are often batched together, ACH transfers are frequently used for bill payments, payroll, or tax refunds, but they can also be used for one-time transactions.

Following the widespread use of the Internet, innovations in financial technology created new ways to send money. Peer-to-peer financial services such as [Venmo](https://www.investopedia.com/articles/personal-finance/010715/venmo-its-business-model-and-competition.asp), [Zelle](https://www.investopedia.com/news/zelle-new-p2p-payment-app-pypl/), [Square](https://www.investopedia.com/articles/tech/021017/square.asp), and [PayPal](https://www.investopedia.com/terms/p/paypal.asp) provide a fast, convenient way to send money, with small or zero fees. Moreover, they do not require any banking information about the recipient in order to do so.  

## How Is a Wire Transfer Done?

A wire transfer is most often used to transfer funds [from one bank or financial institution to another](https://www.investopedia.com/terms/b/bankgirotransfer.asp). No physical money is transferred between banks or financial institutions when conducting a wire transfer. Instead, information is passed between banking institutions about the recipient, the bank receiving account number, and the amount transferred.

The sender first pays for the transaction upfront at their bank. The sending bank sends a message to the recipient's bank with payment instructions through a secure system, such as Fedwire or SWIFT. The recipient's bank receives all the necessary information from the initiating bank and deposits its own reserve funds into the correct account.

The two banking institutions then settle the payment on the back end (after the money has already been deposited).

## What Are the Advantages of Wire Transfers?

Wire transfers allow for the individualized transmission of funds from individuals or entities to others while still maintaining the efficiencies associated with the fast and secure movement of money. The sender can initiate a wire transfer quickly, and the recipient can access the funds immediately, as there are usually no bank holds on the money. Wire transfers also allow people in different locations to safely transfer money to locales and financial institutions around the globe.

## How Safe Are Wire Transfers?

A wire transfer is generally safe and secure, provided you know the recipient. A legitimate service will vet the identity of each entity involved in a transaction so that anonymous transfers are impossible.

International wire transfers that originate in the United States are monitored by the Office of Foreign Assets Control, an agency of the U.S. Treasury. This agency makes sure the money being sent overseas is not being used to fund terrorist activities or for money laundering purposes. They are also tasked with preventing money from going to countries that are the subject of sanctions by the U.S. government.

## How Long Does a Wire Transfer Take?

Domestic bank wires may take up to three days in the United States, but they are usually much faster, especially if the sender and recipient use the same banking institution. International wires can take up to five business days. However, human error and other factors can sometimes cause delays, in extreme cases of up to three weeks.

## The Bottom Line

Wire transfers allow money to be sent over an electronic network between different banks. Bank wires are a relatively painless way to send large transactions, whether domestic or international. However, there are fees involved, and wires may take some time to clear.  

> **Article Sources**
>
> 1.  Western Union. "[About Us](https://corporate.westernunion.com/)."
>     
> 2.  U.S. Department of the Treasury. "[OFAC Consolidated Frequently Asked Questions](https://home.treasury.gov/policy-issues/financial-sanctions/frequently-asked-questions/ofac-consolidated-frequently-asked-questions)."
>     
> 3.  Western Union. "[How Long Do Wire Transfers Take?](https://www.westernunion.com/blog/en/us/us-how-long-do-wire-transfers-take/#Howlongdoesadomesticwiretransfertake)"