What is a telegraphic transfer (TT) and how it works

Shermaine Tan8 min
GuidesBusiness tips
What is a telegraphic transfer (TT) and how it works
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Telegraphic transfers can be used to send funds to almost any country in the world. They are available in all major banks in Singapore and can be used to transfer large sums of money across borders, making them a versatile cross-border payment option for many businesses, especially those who make regular payments to international contractors or suppliers.

If your business works with overseas suppliers, it is important to be able to pay them on time using international money transfer methods that process funds quickly. Choosing the right payment processing method can not only help your business make timely payments and maintain good supplier relations, but it can also save your business money over time by avoiding unfavourable transfer fees and exchange rates.

Read on to learn how telegraphic transfers work, the costs and time frame associated with telegraphic transfers, and how you can use them to settle business payments with overseas vendors and suppliers.

Understanding telegraphic transfers

Telegraphic transfer, also known as TT payment or TT transfer, is a method of transferring funds electronically from one bank account to another, typically across international borders. It involves a direct transfer of funds from the sender's bank to the recipient's bank through secure banking channels. 

TTs are often used for international money transfers and can be initiated online or through a bank branch. They are known for their speed, security, and global reach, making them a popular choice for businesses making overseas transactions.

Meanwhile, Electronic Funds Transfer (EFT) is a broader umbrella term that refers 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 (e.g. PayNow and PayLah!), direct deposits, and debit/credit card transactions.

Among the different types of EFTs, businesses typically use TT or ACH transfers in their day-to-day to send money and make payments. Here are the key differences between the two:

EFT Type Telegraphic Transfer ACH Transfer
Usage Generally used by businesses for international payments (e.g. paying vendors or suppliers) Generally used by individuals, businesses and the government as a domestic funds transfer between bank accounts (e.g. bill payments, receiving paychecks)
Who Offers It? Banks and selected financial services providers Banks and selected credit unions
Speed 1-5 business days, could be longer for international transfers 1-3 business days
Cost Less affordable More affordable, but fewer institutions use the ACH network

Depending on the currency used and the country of the receiving account, Airwallex supports both TT and ACH transfers to help businesses make domestic or international payments easily. With partnerships with local payment rails around the world, Airwallex can support cross-border ACH transfers without incurring any SWIFT fees. Read on to learn more about SWIFT as a messaging system for international money transfers.

How telegraphic transfers work and how they’re processed

The current process of making a telegraphic transfer is entirely digital, leveraging a secure network of banks and a messaging system called SWIFT. Here’s a breakdown of the key players involved in an international telegraphic transfer and how they make your cross-border payment work:

Sending bank

Your bank initiates the TT transfer. It verifies your information, deducts the transfer amount from your account, and transmits the transfer instructions.

Receiving bank

Your recipient’s bank plays a crucial role in verifying the transfer details and crediting the cross-border payment to your recipient's account.

Intermediary banks

In some cases, additional banks might be involved, particularly if the sending and receiving banks lack a direct relationship. These intermediary banks act as relays, passing on the transfer instructions and funds like a baton in a relay race.

Step-by-step guide to how a telegraphic transfer is processed

1. Gather the necessary information

Before performing the TT payment via your bank’s online platform, ensure you have all the necessary details to avoid any delays in the transfer process.

These details include your full name and bank account information, as well as the recipient’s full name and bank account number. Additionally, you’ll need their bank name and the bank's unique identifier for international transactions, also known as the SWIFT code.

2. Verification and fees

Your bank will verify the information you’ve provided, ensuring your funds go to the intended recipient, and that the transfer amount matches your instructions.

It will also inform you of any applicable fees associated with the TT transfer, including the:

  • SWIFT transfer fee: A flat fee charged by your bank for processing the transfer via SWIFT in order to cover its administrative costs.

  • 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.

3. Transferring the money

Once you've reviewed and approved the foreign telegraphic transfer, your bank will deduct the full amount from your account. Ensure you have sufficient funds in your account to cover the entire amount.

4. Your money gets sent over by SWIFT

Your bank then utilises the secure SWIFT network to transmit an electronic message containing all the necessary bank wire details. This message acts like a digital envelope carrying important instructions, including:

  1. Your recipient's name and bank information

  2. The transfer amount and currency

  3. Any special instructions you may have included, such as the purpose of the telegraphic transfer

Your bank may send the message directly to your recipient’s bank if they have a direct relationship. Otherwise, it will be routed through intermediary banks until it reaches your recipient.

5. Recipient receives money

International telegraphic transfers typically take 1-5 business days to complete, as mentioned above. This depends on several factors, such as the countries involved, intermediary banks (if any), currency exchange processes, the weekends, and bank holidays.

Now that you know how a telegraphic transfer works and is processed, make sure you factor in the various bank transfer fees and currency exchange rate in the total transfer sum submitted to your bank next time you perform a TT payment. When all these fees are combined, you may end up having to pay way more than what was originally listed on your recipient’s invoice to you.

What is the difference between a telegraphic transfer (TT) and wire transfer?

Telegraphic transfers and wire transfers are now essentially synonymous, meaning that they are terms which can be used interchangeably these days. For the most part, it’s only a minor technical difference which separates the two terms

A wire transfer is an EFT method which can be used by businesses for domestic or international transfers. A wire transfer may or may not use the SWIFT network and it can be processed through different networks, including bank networks or specialist money transfer services. Conversely, a TT transfer is solely used by organisations for international transfers.

To that point, here are the pros and cons of TT payments for your business when it comes to transferring funds overseas:

Pros

  • Security. Telegraphic transfers are safe. After all, their purpose is for large cross-border payments.

  • Accountability. Your payments can be easily tracked, especially as banks and financial service providers keep their IT infrastructure updated.

  • Convenience. TT transfers can be made anytime. As long as you have an internet connection, you can initiate a funds transfer.

  • Flexibility. TT payments have higher transaction limits. Even a personal bank account can set a telegraphic transfer limit that’s up to six figures large.

Cons

  • Speed. Telegraphic transfers are relatively slow, usually taking one to five business days to complete an international transaction.

  • Fees. An international telegraphic transfer usually sports higher fees. These include bank commissions and SWIFT fees, among other potential charges.

  • Involvement of intermediary banks. When intermediary banks get involved, not only are extra fees levied, your transfer tends to get slowed down.

With all that said, Airwallex may just be the remedy your business needs, especially if you’re aiming to expand overseas aggressively. Airwallex’s all-in-one business account lets you accept payments from your customers in their preferred currency. You can then hold these currencies to pay your vendors and other clients directly. No currency conversions needed and more importantly, no extra fees which you’ll have to pay. Your international money transfer can also arrive in your vendor’s account as quickly as within the same day to ensure timely payments.

Outward remittance fees and charges: How much does it cost?

As mentioned earlier, a telegraphic transfer can be bundled with multiple fees. Let’s take a look at what traditional banks charge for an international money transfer versus Airwallex.

Institution DBS UOB OCBC Airwallex
Commission 1/8% (S$10 - 120) 1/8% (S$10 - 100) (In-Person)
1/16% (S$10 - 100) (Online)
1/8% (S$10 - 100/120) (In-Person)
S$30 (Online)
0%
SWIFT/TT fees S$35 (In-Person)
S$20 - S$30 (Online)
1/8% (S$10 - 100) (In-Person)
1/16% (S$10 - 100) (Online)
+ cable and/or agent charges, if any
S$35 (In-Person)
S$0 (Online)
S$20 (SHA)
S$35 (OUR)
Other fees Intermediary bank fees, inward transfer fees, over-the-counter transaction fees account fee, service change, etc. Intermediary bank fees, inward transfer fees, etc. Intermediary bank fees, inward transfer fees, account fee etc. FX conversion markups

Based on publicly available information from Airwallex, DBS, UOB, and OCBC as of 2 March 2024

The telegraphic transfer fees via Airwallex are clearly more cost-effective than even Singapore’s top banks. It also highlights that a telegraphic transfer isn’t the only way to transact with your overseas clients.

Airwallex lets you transfer funds like a local because you can access bank-beating FX rates at any time. What’s more, you can simplify your payments to multiple vendors and suppliers by using the “batch transfers” feature to send them all at one go, with a specified amount for each transfer too.

How long does a TT transfer take: Timeframe and urgency

As stated earlier on, a TT transfer can take one to five business days. This means your transfer can take as long as one full week if you factor in the weekend. Unfortunately, there’s potential for your international money transfer to be further delayed by more factors, including:

1. Bank holidays and cut-off times

If you submit a telegraphic transfer request after the bank closes for the day or during public holidays, expect it to be processed only on the next day. Keep the bank holidays for your recipient’s nation in mind as well.

2. Incorrect details or missing information

This is a common way for your transfer to be delayed. The payment will get sent back to you or delayed when the bank seeks clarification. It’s crucial to always double check your transfer before authorising it.

3. Time zone differences

If you’re making a secure money transfer to someone in a time zone that differs greatly from yours, expect the processing time to increase. That’s because of when your payment will be sent over and when your recipient’s bank can process it.

With Airwallex, expediting international money transfers is a breeze. Airwallex's partnership with local payment rails support faster transfers and payout to 110+ countries. Therefore, your international bank wire gets transformed into a speedy domestic money transfer, allowing you to bypass SWIFT entirely.

Security measures and compliance: How safe is your transfer?

Because telegraphic transfers are facilitated by financial institutions using the SWIFT network, they’re backed by its robust security infrastructure and protocols.

Perhaps the two most important safety measures SWIFT has in place are:

  1. An annual security audit by an external company. The firm ensures that SWIFT complies with the ISAE 3000 international standard, and that it’s up to par in the areas of Governance, Confidentiality, Integrity, Availability, and Change Management.

  2. SWIFT ensures that the data in messages can only be controlled by the sending and receiving financial institutions. Additionally, both institutions are able to check if the message has been tampered with in the meantime.

Airwallex has equally robust compliance and security practices in place, ensuring we meet the standards of every country we operate in. Additionally, we work only with trusted firms in the world of financial services, like Visa and Mastercard.

And in the Lion City, Airwallex is one of the financial institutions recently registered as a Major Payment Institution regulated by the Monetary Authority of Singapore. Therefore, you can rest easy knowing that every transaction you make with Airwallex is safe and secure.

Why choose Airwallex for international money transfers?

Now that you know how telegraphic transfers function, along with their benefits and downsides, here’s why Airwallex may just have the edge for international money transfers.

Quicker and more affordable transfers

Remember, you can transact like a local enterprise with your all-in-one Airwallex business account. There’s no need to convert currencies multiple times just to pay your vendors and suppliers.

With both the Airwallex Global Account and multi-currency payment gateway, you can simply collect or deposit the currency you need before holding and making payments with it as is.

This is all thanks to Airwallex’s partnership with local payment rails across more than 110 countries worldwide. What’s more, you’re never subject to any account opening fees or other hidden charges.

Built-in expense management with borderless cards

When you run a business, your employees will be regularly making financial transactions with the company’s card. Whether it’s a bill for an overseas-based advertising service or flight tickets for business travel, your Airwallex account boasts built-in expense management on one handy dashboard.

With the Airwallex Borderless Card, your employees can make purchases across multiple currencies without international transaction fees, helping bolster your company’s bottom line even more.

Enjoy full peace of mind while transacting

Airwallex is fully compliant with global standards. These include the PCI-DSS for payment cards, General Data Protection Regulation for information privacy, and much more. As an Airwallex client, you’ll never have to worry about your company’s funds and information being at risk.

If you’re wondering where you can send money to while you’re using Airwallex in Singapore, check out this handy table:

Country
🇦🇺 Send money to Australia
🇨🇳 Send money to China
🇪🇺 Send money to Europe
🇯🇵 Send money to Japan
🇲🇾 Send money to Malaysia
🇳🇿 Send money to New Zealand
🇺🇸 Send money to US
🇭🇰 Send money to Hong Kong

Australia, China, and the other countries showcased above are just the tip of the iceberg! Airwallex supports transfers to 150+ countries and regions. View the full list of countries you can send money to with Airwallex by signing up for an account at no cost today.

The global impact and practical applications of Airwallex

If you’re a fashionista in Singapore, you would’ve heard of Saturday Club and its curated mix of versatile staples and wardrobe essentials. As the company grew, its owners Justin Ying and Ying Tze Her realised it had to expand globally to remain competitive and thrive in the fashion industry.

However, one issue it faced as it did so was the high foreign transaction fees and exchange rates traditional banks charged for making overseas transfers.

This was a problem as Saturday Club made frequent international telegraphic transfers to pay its foreign suppliers. Furthermore, it also received payments from customers based in nations all around the world.

With an Airwallex Global Account, the company could both make remittances and receive international payments without incurring steep and multi-layered fees. All in all, the company enjoyed 99% savings on transaction fees after switching over from a traditional bank account to Airwallex. 

Airwallex helps streamline telegraphic transfers not only for eCommerce businesses like Saturday Club, but also for organisations across all industries regardless of their business purpose for the transfer.

That’s because of how crucial wire transfers are to companies in their day-to-day operations. From wholesalers collecting payments from businesses and paying suppliers worldwide to payroll firms sourcing and settling contractor invoices from multiple countries, the telegraphic transfer isn’t going away anytime soon.

Conclusion

With its high transaction limits and secure transaction systems, telegraphic transfer remains a trusted way to make large overseas payments. This is crucial for businesses that frequently handle payment processing for four to seven-digit sums. 

Although a telegraphic transfer has its merits, its downsides are hard to ignore, especially when it comes to speed and cost. With modern solutions from companies like Airwallex, there’s no need to get bogged down by slow fund transfers and high fees. You can also say goodbye to hefty commissions and other fees when you make an international money transfer through Airwallex.

Using Airwallex, you can enjoy market-leading FX rates across over 60 currencies in 150+ countries, but that’s not all. Approximately 70% of funds we facilitate transfers for arrive within several hours or even the same day.

Frequently asked questions

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 the telex service until as recently as the 1990s.

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. As a result, Airwallex does not impose a limit on the amount of money you can deposit or collect. This is because businesses transact in relatively large amounts every day too.

However, other banks or service providers may have their own transfer limits you need to abide by. Do check their fee schedule for more information.

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. This is made worse if your business already has to convert currencies once when collecting payments. A second conversion is now needed to make the foreign telegraphic transfer and pay your vendor or supplier.

With Airwallex, you’ll always have market-leading telegraphic transfer rates, no matter how large your payment is. What’s more, Airwallex does not levy any hidden fees to grant you market-leading FX rates.

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. Be aware because it’s easy to forget this while you’re making your foreign telegraphic transfer.

  3. Forgetting about the fees you need to pay. TT payments usually come with several fees, including commission fees and FX conversion markups. You need to factor them in when calculating the final amount to pay your client.

  4. Not double checking your transfer details. Before you authorise your TT transfer, ensure every single detail is accurate. For example, your recipient’s bank account information and the transfer amount.

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 1980s which further expedited telegraphic transfers.

Today, as we march ahead in the digital era, 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 before due to proprietary platforms and payment gateways.

***Note: This publication does not constitute legal, tax, or professional advice from Airwallex nor substitute seeking such advice, and makes no express or implied representations/warranties/guarantees regarding content accuracy, completeness, or currency.

Useful sources:

https://www.swift.com/about-us/discover-swift/information-security

https://www.acra.gov.sg/training-and-resources/facts-and-figures/statistical-highlights-2023

https://www.acra.gov.sg/training-and-resources/facts-and-figures/business-registry-statistics

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Shermaine Tan
Manager, Growth Marketing

Shermaine leads the development and execution of content for businesses in Singapore and the SEA region.

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