What is a telegraphic transfer?
Sending and receiving money overseas is a crucial part of any modern business. It’s worth understanding the pros and cons of different methods to ensure you’re not throwing money away.
If you’re already handling money in multiple currencies, sending it across borders or even making a domestic payment, it’s likely you’ve already used a telegraphic transfer without ever hearing its old-fashioned name.
Also known as a telex transfer, a TT or a TT bank payment, this electronic transfer method is used to wire money both domestically and abroad. Because they are so ubiquitous, and often used to send money across borders, TTs are often referred to generically as wire transfers, overseas transfers or electronic fund transfers.
Although they are still used in digital form today, the idea behind telegraphic transfers has a long history. Telegrams and telex messages were the original text messages, sent electronically and then passed to the reader in physical form. In previous centuries, banks would use these systems to communicate and arrange a bank transfer.
Although the telegraph itself is now obsolete, this was the foundation for the system we have today. Now, funds are transferred electronically via secure cloud-based apps or cables connecting banks, but the name remains.
How do telegraphic transfers work?
When you send a telegraphic transfer, the payment passes through several networked banks to reach its destination.
In the UK, one type of telegraphic transfer uses a network called the Clearing House Automated Payment System (CHAPS). CHAPS payments are typically carried out on the same day, for high-value or time-critical transactions.
The other common type of UK money transfer system, BACS (Bankers Automated Clearing Services) payments, are not types of telegraphic transfer. It is a common misconception that they come under this umbrella.
Internationally, money can be transferred by telegraphic transfer via the Society for Worldwide Interbank Financial Telecommunication (SWIFT). For this reason, the terms telegraphic transfer and SWIFT transfer are sometimes used synonymously.
SWIFT was launched in 1973 to make it easier to send money overseas, standardising the system to make it quicker and less error-prone.
How do you send money via telegraphic transfer?
To dispatch money via telegraphic transfer, the sender needs the account numbers and routing numbers of the recipient, as well as their financial institution.
If you’re sending money internationally, you may also need the recipient’s IBAN number or SWIFT code. These help ensure that the funds arrive in the correct bank account.
Personally identifiable information is also required for security purposes and to confirm the identity of the sender.
Most financial institutions will allow users to send telegraphic transfers by logging into their online banking account and doing it directly. If you are sending money abroad, search for the sections marked with words such as “international payment,” or “wire transfer”.
What are the fees associated with telegraphic transfer?
The cost of a telegraphic transfer varies depending on the financial institutions involved and the amount of money being transferred. Each bank that the funds pass through has its own fees and processing times.
In total, you can expect to pay between £15 - £25 for a telegraphic transfer. That’s on top of exchange rates, which can be as high as 3.5% above the interbank rate if you use a high street bank to make the transfer.
Telegraphic transfer fees are often so opaque that senders aren’t aware of the full costs until the transfer is complete. Compared to other electronic payment methods, telegraphic transfers are fairly expensive, but the tradeoff is that they happen relatively fast. Usually the payments are received within one or two days.
Airwallex offers a cheaper, faster type of international payment
TT payments may no longer require sending telegrams, but they are still based on a centuries-old system.
Luckily, traditional financial institutions are no longer the only option when it comes to sending money overseas. The digital revolution is here, and Airwallex is at its centre.
Airwallex uses a network of local banks and payment routes to make sending money around the world faster and cheaper for businesses. Receive, hold and send multiple currencies—including USD, Euros, GBP and HKD—from your foreign currency account, without transfer fees.
Airwallex offers market-beating exchange rates of 0.5 - 1% above the interbank rate, much cheaper than the high street banks. And because we sidestep the SWIFT network where possible, your money will be received in one business day or less in most cases.
Related article: Why your bank transfer is delayed
Tilly manages the content strategy for Airwallex. She specialises in content that supports businesses in their growth trajectory.
Profit margins: 5 things every startup founder needs to know
How to sell online internationally with Shopify