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Financial literacy
9 min

Everything you need to know about wire transfers

How do wire transfers work, explained! Learn how to send money fast and securely, ensure safety, explore international transfers, and discover alternative methods.

Adi Trudler
Published at
A small business owner sending a wire transfer online in her bike shop.

If you’re searching online for the term “wire transfers,” hoping to find a good explanation, we get it. While it’s one of the most used business payment methods, it’s also similar to other methods and can be a bit confusing.

Today, we’re here to give you all the info you need to know. Read on to learn what wire transfers are, why use them and how they differ from other forms of payment.

What is a wire transfer?

A wire transfer is a way to move funds between bank accounts. It doesn’t actually involve the physical exchange of cash, but is settled electronically and can be sent between banks or through financial services like Western Union. They are typically used for large, one-time transactions.

Domestic wire transfers vs. international wire transfers

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

  • Domestic wire transfers: Common for making large payments that require same-day processing—for real estate-related transactions, for example.
  • International wire transfers: A wire transfer is one of the safest ways to send money to other countries.

The essentials of wire transfers:

Time

One of the most repeated questions about this payment method is “how long does a wire transfer take?”—and the answer is essential for quality business operations.

Domestic wire transfers are usually processed within the same day. International wire transfers are typically processed within 1-2 business days. And the recipient can access the money the moment it hits their account.

Amount limit

Transaction limits depend on the provider, but are generally much higher than other types of transfers.

Citibank, for example, has different limitations on different types of transactions and accounts, up to hundreds of thousands of dollars for a single transaction.

Cost

The main disadvantage of wire transfers is their cost. Domestic transfers cost around $25-$30 per transaction, while international transfers cost up to $45-$50. Most banks also charge the transfer recipient.

Safety

Wire transfers are an incredibly safe way to transfer money. They are only initiated by authorized personnel at your bank or a non bank wire transfer service. However, once initiated, they can’t be canceled. Therefore, it’s important to be careful when using them to transfer funds. 

What information is needed for a wire transfer?

A wire transfer is initiated from one bank or financial institution to another. The sender pays for the transaction upfront. The sender must provide their bank with information that will be shared with the receiving institution. This includes the…

  • recipient’s name, address and contact number
  • recipient’s bank information—name, address, branch number, bank identifier (routing number or SWIFT code) and account number
  • amount transferred
  • reason for the transfer

The recipient’s bank receives the information from the initiating bank and deposits its own reserve funds into the correct account. And that’s it.

When to use a wire transfer

Let’s differentiate between domestic and international wire transfers.

Common use cases for domestic wire transfers

  • Large transactions. Wire transfers are expensive, but a $25-50 fee has a smaller relative impact in the context of a large transaction.
  • Urgent payments. When both parties are in the U.S., the money is transferred within the same day. 
  • Inheritance or gifts. The money is transferred quickly, the expensive transaction fee is less noticeable if you’re transferring large sums of money, and it’s very safe, so you know the money is going exactly to the account you list.

Common use cases for international wire transfers

  • No other options. No matter what payment services you use, wire transfers through your bank might be the only international payment method you’ve got. But that’s ok as it’s safe, efficient, and quick.
  • Business transactions. Sometimes it’s better to pay the more expensive fee to ensure a reliable, safe delivery that secures your reputation and business relationships.
  • Immigration purposes or education abroad. If you need a safe, documented way to transfer funds, wire transfers fit the bill.

Infographic outlining when to use a wire transfer, categorized by domestic and international needs.

What’s the difference between wire and ACH bank transfers?

You’re probably wondering, ok, but what’s the difference between wire transfers vs. ACH. There are a few differentiations and we’re gonna clarify it for you. 

The journey your money takes from one account to another

When you make an ACH payment to your vendor, the money is moved from your bank to an Automated Clearing House network first—instead of directly into your vendor’s account, like with wire transfers.

Cost of transaction

ACH bank transfers are relatively inexpensive. The charge per transaction is usually no more than a few dollars. Wire transfers, as mentioned above, can cost $25-50 per transaction.

Therefore…

  • ACH is better for everyday transactions because of the significantly lower fees. You can also set up recurring payments with ACH, which is great for bills like utilities and rent. 
  • Wire transfers are better for urgent payments, when you’re willing to pay extra to get the money transferred as soon as possible. That said, as the price is indeed very high, it’s best to use services like same-day ACH  for smaller transactions.

Domestic vs. international payments

Unlike wire transfers, ACH bank transfers are less common outside the U.S. That’s why the main reason for choosing a wire transfer is in the case of international payments.

Fees and costs associated with wire transfers

Some banks offer free domestic wire transfers with your account, with offerings different than what’s offered by online bill pay services. Here’s a common breakdown of banks’ international wire fees. 

  • Outgoing wire transfers: $25-35 for domestic transfers, up to $50 for international ones.
  • Incoming wire transfers: $15 whether it’s domestic or international.
  • Currency conversion fee, if you’re sending in one currency and the receiver gets it in another currency.

Different methods for initiating a wire transfer

There’s more than one way to initiate a wire transfer, which makes it more accessible to more people. Here are a few ways:

  • Online banking. Many institutions provide the option to do a wire transfer online with just a few clicks. You insert the information we covered above, and get instant confirmation.
  • Phone banking. Some institutions let you do a wire transfer by calling in and talking to a banker. You might need a special identification code to be able to do this. Check with your bank to verify.
  • In person. The option to walk into a bank and get a banker to help you in person still exists. Some banks require you to make an appointment in advance. Either way, verify you bring all the above mentioned information with you, so you don’t have to come in twice.

Illustration with the title "Ways to initiate a wire transfer" and three options below it: Online – Cartoon figure using a laptop. Caption: "Send a wire through your bank's website in just a few clicks." By phone – Cartoon figure speaking into a corded phone. Caption: "Call your bank and verify with a special code." In person – Two cartoon figures shaking hands. Caption: "Visit a branch (appointment may be required)."

International wire transfers: Navigating the additional complexities

It might feel a bit overwhelming at first because sending an international wire transfer requires additional information that isn’t always easy to find. This information belongs to your recipient, and they can likely ask the bank for help locating these details.

Here’s the additional information you need about the recipient besides everything listed above:

  • Your recipient’s IBAN. IBAN stands for international account bank number.
  • Your recipient’s BIC/SWIFT code. That’s a code that identifies your bank, branch, city and country. It’s 8-11 characters long.
  • Their type of bank account. Some institutions require knowing whether the funds are transferred to a personal or business account.

Security considerations for safe wire transfers

Wire transfers are one of the safest payment methods. They’re transferred from one bank account to another, while identifying both accounts with numerous assets, such as name, address, and SWIFT code.

The challenge is that once sent off, wire transfers can’t be returned. Therefore, the next steps are critical:

  • Double and triple check that you’ve provided the correct recipient information.
  • Only send wire transfers you’re sure you want to make, to people and organizations you trust. If you’re paying a deposit for something, for example, ensure you’re dealing with a credible vendor. 
  • If you’re unhappy with the purchase you made with a wire transfer, the only way to get the money back is via the vendor themselves, so again, verify it’s an entity you trust.

Pros and cons of wire transfers for businesses

Here’s the bottom line for businesses considering using wire transfers.

Pros of wire transfers for businesses

  • Availability. Wire transfers are internationally common, so they’ll likely be an option in most places you do business.
  • Simplicity. Wire transfers are easy to make and easy to allocate in your records (because each wire transfer is done separately). Plus, you can send payments fast.
  • Safety. You’re transferring money directly from one account to another, you’re the one listing the recipient’s information, and there’s nothing hidden.

Cons of wire transfers for businesses

  • Price. Wire transfers can be expensive, especially when compared to same-day ACH. In addition, often, both senders and receivers pay a fee for the wire transfer.
  • Irreversible. Once you make the transfer, there’s no going back, even if you made a typo when listing the recipient’s information, and the money ended up in an account you never intended it to reach.

How do I make wire transfers even easier and more secure?

As you can see, the main reason to use wire transfers is for international transfers—or when you’re really in a hurry, and the transaction is big enough that the fee is less significant to you.

It’s also a great choice for ensuring the funds’ safety as they cross borders. However, for a higher level of security, it’s best to use a secure third party like Melio. Sign up today to get an intuitive platform that makes payments easy, fast, and safe.

*This blog post is intended for informational purposes only and is not intended as financial advice.
**Melio does not provide legal, tax or accounting advice, and you should consult with a professional advisor before making any financial decisions.

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