What is a wire transfer? The cost, speed, and different ways to wire money

Key takeaways:

• A wire transfer is a way of sending money electronically from one bank account to another.
• Wire transfers are commonly facilitated by banks, although certain apps and online platforms may also offer this service.
• A wire transfer has six steps, including initiation, verification, processing, routing, crediting, and settlement.

If you’ve wondered what a wire transfer is and how to make one, this guide is for you. Wire transfers are an electronic way to move money from one account to another. They can be domestic or international and can occur between both individuals and businesses.

You can accomplish this type of money transfer without using cash or a check, making it more convenient than other ways of moving funds. Plus, wire transfers can be faster than physical exchanges, allowing funds to transfer within a few hours to a few days.

Learn more about sending money via wire transfers, the different types of wire transfers, and the potential pros and cons below.

Table of contents

• How do wire transfers work?
• Types of wire transfers
• When people use wire transfers
• How do you wire money?
• Wire transfers vs. bank transfers vs. peer-to-peer transfers
• Potential pros and cons of wiring money
• Send money electronically with PayPal
• Frequently asked questions

How do wire transfers work?

Wire transfers involve sending secure payments and account details to a recipient’s bank. The receiving bank then deposits the funds into the correct account.

First, the sender initiates the transfer with a financial institution or app, providing the recipient’s name and account and routing number. The sending institution or application then verifies the sender’s account information and their available funds. Next, payment networks process the transfer.

The second half of the wire transfer process starts with routing, if applicable. For some transfers, like international transfers, intermediary institutions route payments across banking systems.

The receiving institution or application then receives the request and transfers the funds to the correct recipient, and central banks or clearing houses settle the funds.

Types of wire transfers

There are generally two main types of wire transfers: domestic wire transfers and international wire transfers. Below, we cover the differences between these types of transfers.

International wire transfers

International wire transfers refer to transfers between accounts in different countries. These types of wire transfers:

• May require additional steps, like intermediary routing
• Need SWIFT codes to successfully process funds
• Typically require exchanges between different banking systems and currencies
• May have varied fees and processing times depending on the institution, transfer amount, and sending and receiving countries

To send money internationally using a wire transfer, you’ll need to follow regulations for both the sending and receiving countries.

Domestic wire transfers

Domestic wires are money transfers between accounts within the same country. These types of wire transfers:

• Typically processed within 24 hours
• Can be initiated using various services, including the Fedwire Funds Service
• May require additional fees, depending on the institution or application used

Domestic wire transfers and ACH transfers are similar because they are generally cheaper and faster than international wires. On the other hand, domestic wires are more suitable than ACH transfers for making large transactions within the same country.

When people use wire transfers

People commonly use wire transfers for domestic and international transactions. If you’re wondering when to use a wire transfer, we outline the common dos and don’ts in the table below:

How do you wire money?

Whether you’re using a bank, online platform, or app to transfer money, the process typically involves the following steps:

1. Choose a platform: Choose the transfer platform that meets your needs and input the necessary personal and payment information.
2. Add recipient information: Collect and enter the recipient's full name, bank account number, bank name, and routing number.
3. Choose the transfer amount and currency: Specify the amount to wire and the desired currency.
4. Review transfer details: Carefully review the transfer amount, wiring fees, exchange rate (if applicable), and additional instructions or notes.
5. Authorize the transfer: Provide payment verification and initiate the transfer using a digital signature, a verification code, or biometric authentication.
6. Submit the request: Once authorization is given and the necessary funds are available, submit the transfer request.
7. Confirm and track: After the transfer is processed, wait for confirmation of the completed transaction. Some services may allow you to monitor and track the transfer in real time.

Wire transfers vs. bank transfers vs. peer-to-peer transfers

When moving money electronically, it’s common for people to compare wire transfers, international bank transfers, and peer-to-peer (P2P) payments.

Each method comes with different features and uses, like:

• Wire and bank transfers are often used for international transfers or larger and more formal transactions.
• P2P transfers are popular for everyday, casual exchanges.

Understanding how international bank and wire transfers differ from P2P options can help determine the best fit for your needs.

Potential pros and cons of wiring money

Before wiring money to a person or party, consider the possible advantages and challenges associated with wire transfers: