What is a Telegraphic Transfer (TT) and how do they work?

Key takeaways:

• Telegraphic transfers originate from when telegraphs were used to communicate fund transfers between banks. Although we no longer use telegraphs, the phrase has stuck, and ‘telegraphic transfers’ now refers to electronic funds that are transferred through the SWIFT network, typically internationally.

• Telegraphic transfers typically take one to five business days, depending on the origin and destination of the transaction, as well as any currency exchange requirements.

• Some finance platforms like Airwallex offer faster and cheaper alternatives to telegraphic transfers, providing access to local payment rails for international transfers to reduce fees.

What is a telegraphic transfer?

A telegraphic transfer is an electronic method of transferring funds between financial institutions. The phrase ‘telegraphic transfer’ originates from when telegraphs were used to communicate fund transfers between financial institutions. The sender would go to their bank, give the required details, and then the operator at the bank would send the information to the recipient’s bank using Morse code. The method of transferring funds moved on, but the name has stuck.

You might also see telegraphic transfers referred to as telex transfers, T/T, TT or TT payments. They’re used by both individuals and businesses to send money domestically and internationally, however, they’re more associated with cross-border payments. Telegraphic transfers typically take one to five business days, depending on the origin and destination of the transaction, as well as any currency exchange requirements.

The telegraphic transfer process usually involves the sender providing the recipient’s bank details, including the account number and SWIFT/BIC code. Funds are transferred through the SWIFT network.

Pros and cons of telegraphic transfers

Pros of telegraphic transfers

• Accessible To send a telegraphic transfer, you can use your existing bank account online or visit your local bank branch (although having to head to the bank can be a pain point itself!)

• Secure Telegraphic transfers are a secure method to send money, as there are international standards and regulations to control how the transfers take place.

• High limits Telegraphic transfers often have high transfer limits so can be a good option for making large payments.

Cons of telegraphic transfers

• Costly As telegraphic transfers travel through multiple financial institutions (banks and intermediaries), they can end up being subjected to several types of fees along the way, including:

  • a charge from the bank arranging the transfer

  • fees taken by intermediary or correspondent banks (up to three different banks may handle the payment on its journey through the SWIFT network, meaning they can get pricey fast)

  • a currency markup added onto the exchange rate

  • costs charged to the recipient by their bank

• Slow Telegraphic transfers can often take a few days to be processed by banks, and then one to five business days to reach their transaction. 

• Require a lot of documentation A lot of information is needed to successfully make a telegraphic transfer, including the recipient’s full name, bank account number, the name of their bank, their address, their IBAN (if transferring within Europe) and their SWIFT code if transferring globally. Your bank will also need to check your identity. Errors in these details can lead to significant bank transfer delays.

A simple, modern solution: With Airwallex, you can make fast, cost-effective and secure domestic and international transfers. Access market-leading international FX rates no matter the size of your transaction, and pay your global suppliers and employees without the expense and hassle of telegraphic transfers or the traditional banking system.

How to make a telegraphic transfer

The process of a telegraphic transfer is made up of three main stages; sending the transfer request, verifying the information, and then transferring the funds. Let’s take a look in more detail at how you can make a telegraphic transfer.

1. Make sure you have all the required information, including:

• recipient’s full name and address

• recipient’s bank name and address

• recipient’s bank account number or IBAN

• SWIFT/BIC code of the recipient’s bank

• purpose of the transfer (some banks require this)

2. Access your bank’s online platforms or visit your bank in-branch

3. Check the fees and charges Double-check the exchange rate your bank is offering, and also confirm other fees like sending fees, intermediary bank fees, and receiving bank fees.

4. Fill in the required digital or paper form This will include all the recipient’s details, as well as the details of the transfer, such as the amount being sent, the currency, and any reference or message you’d like to provide to the recipient.

6. Confirm and send the transfer request Review all the details carefully, and then confirm and authorise the payment using your bank’s authentication method (password, OTP, or another form of multi-factor authentication).

7. Save the payment confirmation Keep a copy of the transaction confirmation or receipt for tracking and proof.

8. Track the transfer Telegraphic transfers typically take between one to five business days. To track how your payment is travelling, you can contact your bank or use any tracking tools they might have available.

What is inward telegraphic transfer? 

Banks generally use the terms ‘inward’ and ‘outward’ wire transfer or remittance to describe the direction in which money is being sent.

An inward telegraphic transfer is when your bank account receives money from an external source. It’s an ‘incoming’ fund transfer from your bank’s perspective, and can mean a payment from an overseas bank account or a local transfer.

What is outward telegraphic transfer?

An outward telegraphic transfer is when you send money from your bank account to a local or overseas recipient. It is an ‘outgoing’ transfer from your bank’s perspective.

Outward and inward telegraphic transfers each have their own fee structure, which can include a sending bank fee, intermediary bank fees, currency exchange fees, and costs charged to their recipient by their bank. 

Telegraphic transfer fees

One of the reasons telegraphic transfers can be expensive for businesses is that they’re liable to incur several different fees on one transaction. The total amount will vary depending on the origin and destination of the payment, as well as the currency; but in general, you can expect to pay between $20–35 for a telegraphic transfer. Here’s a round-up of what you can expect.

• SWIFT transfer fee: a flat fee charged by your bank for processing the telegraphic transfer via SWIFT, to cover its administrative costs.

• Bank commission: a fee based on a percentage of the transfer amount. This can vary depending on the bank and the transfer amount.

• Intermediary bank charges: if intermediary banks are involved, they may have their own fees that get added to the overall cost for playing a role in transferring your funds. Telegraphic transfers can pass through multiple intermediary banks on their trip through the SWIFT network.

• Currency mark-ups: this happens when banks take the mid-market rate and then add their own margin on top as a markup. This can be as high as 3.5% above the interbank rate if you use a high-street bank. As a result, your transaction can end up costing you more than you anticipated.

• Costs charged by your recipient’s bank: depending on your recipient’s bank and their account type, they may be charged by their own bank to receive your funds.

Telegraphic vs wire vs bank transfers: what are the differences?

Telegraphic transfers, wire transfers and bank transfers these days all mean basically the same thing, minus a few small technical differences depending on the context.

Telegraphic transfers are mainly used to describe electronic funds transfers between banks, particularly internationally and mostly by businesses. They are made through the SWIFT network.

Wire transfer is a broader term referring to the electronic transfer of funds between banks and financial institutions. They may or may not be made using the SWIFT network, and can also be processed through bank networks or specialist money transfer services.

A bank transfer is an even broader term used to describe any movement of money between bank accounts. Bank transfers can include wire transfers, ACH transfers, telegraphic transfers or transfers between internal bank accounts.

Electronic Funds Transfer (EFT) is another term similar to a bank transfer; a broad umbrella term referring to the electronic transfer of funds. It encompasses various electronic payment methods, including wire transfers, telegraphic transfers, peer-to-peer payments, Automated Clearing House (ACH) transfers, QR code payments, direct deposits, and debit/credit card transactions.

Telegraphic transfers vs ACH transfers

ACH (Automated Clearing House) transfers are another type of fund transfer we can look at here. ACH is a generic term that describes an electronic network that processes financial transactions, usually within one country or region. Examples of ACHs include: BACS in the UK, BECS in Australia, and eGIRO in Singapore. ACHs don’t have a global function, unlike the SWIFT network.

Faster, more affordable international transfers

In the end, telegraphic transfers, and the SWIFT network as a whole, are a vital piece of financial infrastructure that makes it possible for people and businesses to exchange funds all over the world. While it’s accessible, secure, and comes with handy high payment limits, the biggest cons are the several rounds of fees that payments are subjected to, as well as the unpredictable speed of the transfer.

These are some of the reasons why choosing a more modern financial solution, like Airwallex, can help you save your business money when transferring funds internationally and ensure you’re keeping your vendors and suppliers overseas happy with quick payment arrivals.

Save on fees, and transfer more quickly with Airwallex

Airwallex offers you a faster, more cost-effective, and transparent alternative to legacy banking and telegraphic transfers. Our platform lets you transfer money internationally like a local, giving you access to our proprietary local payments network, and market-leading international FX rates, no matter the size of your transaction.

With Airwallex, you can seamlessly and securely transfer to 150+ countries and regions in 60+ currencies, with access to our global transfer method network to make sure you’re always using the most cost-effective and secure solution. Payments are received in as little as one business day, with the full amount on delivery guaranteed.

Other FAQs

1. Is a telegraphic transfer the same as a bank transfer?

Today, a telegraphic transfer means the same thing as a bank transfer or wire transfer. All three terms are interchangeable because they handle the movement of money electronically.

However, a telegraphic transfer referred specifically to sending money via a telegraph network until the 1940s, and is still commonly used to refer to cross-border payments using the SWIFT network.

2. Are there any limitations on the amount that can be transferred via telegraphic transfer?

There’s no law limiting the amount of money you can send via telegraphic transfer. After all, large cross-border payments are the de facto purpose of telegraphic transfers. However, some banks or service providers may have their own transfer limits you need to abide by.

3. How do exchange rates affect telegraphic transfers, and how can I get the best rate?

Exchange rates affect telegraphic transfers because your payee may receive less than the amount you’re required to pay them. With Airwallex, you’ll always have market-leading rates, no matter the size of your transaction.

4. What information is required from both the sender and receiver to complete a telegraphic transfer?

You need these five pieces of information for both the sender (i.e. you) and receiver (i.e. your recipient) to complete a telegraphic transfer:

1. Your full name and bank account details

2. Your recipient’s full name and bank account details, including their account’s IBAN or SWIFT code

3. Your recipient’s address and contact information

4. The amount and currency your transfer will be in

5. Your reason for making the transfer

5. What are the common mistakes to avoid when sending a telegraphic transfer?

To save yourself time and money when making a telegraphic transfer, avoid these four common errors:

1. Providing inaccurate information. These include spelling errors, wrong bank numbers, and an inaccurate SWIFT code. Even seasoned businesses can get this wrong, so make sure to check your remittance details before submitting it.

2. Not paying attention to the exchange rate. If the exchange rate for you and your payee’s currency is poor, they may receive less than what they should get. 

3. Forgetting about the fees you need to pay. TT payments usually come with several fees, including commission fees and FX conversion markups. 

6.  What is the history of the telegraphic transfer?

In 1871, Western Union pioneered this international money transfer method using a broad telegraph network. Since then, telegraphic transfer has undergone several significant milestones – from the advent of telex in the 1930s, to the introduction of SWIFT in 1973 to shorten the fund processing time with computers, and the emergence of real-time gross settlement (RTGS) systems in the 1980s which further expedited telegraphic transfers.

Today, financial transactions have predominantly moved to digital platforms. Aided by financial technology companies like Airwallex, international wire transfers are now faster and more cost-effective than ever.