What is a wire transfer? How it works, fees, how-to guide

In today’s fast-paced world, businesses need secure and efficient methods to transfer funds across borders. One such way is wire transfer, which is a method of electronic funds transfer from one banking account to another. 

Wire transfer is often used to send large sums of money across domestic and international borders, especially for businesses that have to make payments to overseas suppliers regularly. The transfer process utilises networks like SWIFT, involving specific details from both the sender and receiver, such as account numbers and bank identification. This is to ensure the money reaches the correct destination safely.

In this article, we will cover how you can send a wire transfer and compare various international money transfer services offered by banks and financial providers. We will also share some tips for sending money overseas, so you can make sure your funds arrive on time and safely.

Why use wire transfers for international and domestic transactions? 

Wire transfers offer several benefits for both international and domestic transactions. Here are some key advantages:

1. Security: Wire transfers employ encryption technologies and authentication protocols to help safeguard transactions from unauthorised access, ensuring the safe transfer of funds.

2. Traceability: Each wire transfer is assigned a unique identification number, allowing both the sender and recipient to monitor its progress and verify transactions.

3. Global reach: Wire transfers support various currencies, enabling individuals and businesses to send and receive funds across borders.

Telegraphic transfer (TT) vs wire transfer vs bank transfer: What is the difference? 

Telegraphic transfer, a term that originated in the times when payment instructions were sent via telegraph, is now a broader term that encompasses various forms of electronic fund transfers, including wire transfers. A wire transfer is an electronic movement of money between two entities over a secure network. Widely used for international money transfers, wire transfers often involve the SWIFT network for conducting transactions in various currencies. Wire transfers typically involve transfer fees ranging from 3-5% of the total amount transferred.

A bank transfer, on the other hand, refers to an electronic transfer of money between two banks, essentially from one bank account to another. In comparison to international wire transfers, bank transfers are usually faster, cheaper, and usually reserved for local payments through routes such as FAST in Singapore, ACH in the US, and SEPA in Europe.

In summary, while both TT and bank transfer facilitate the electronic transfer of money, the difference lies in the cost, speed, and usage of these transactions.

Also Read: 3 Major Drawbacks of Using Telegraphic Transfers

How to wire money online? A basic guide 

Sending money online through a wire transfer is a straightforward process:

1. Gather recipient information: Collect the recipient's full name, bank account number, and the bank's SWIFT code.

2. Initiate the wire transfer: Navigate to the wire transfer section and enter the recipient's details, transfer amount and any additional instructions.

3. Pay for the transfer: Ensure you have sufficient funds in your account to cover the transfer amount and any associated fees, such as bank charges and FX fees. Fees may be deducted upfront or added to the transfer amount.

4. Track the transfer: Use the provided confirmation or reference number to track the progress of the transfer. Most providers offer online tracking tools or customer support.

The duration of a wire transfer can vary depending on several factors. For domestic transfers within the same country, funds are typically credited to the recipient's account within the same business day or a few hours. International wire transfers take longer, usually ranging from 1-5 business days, due to additional processing and compliance requirements.

Other factors affecting the speed of bank transfers include cut-off times, weekends and holidays and time zone differences. If you have any concerns or require urgent transfers, it's advisable to contact your bank or service provider for specific information on their processing times.

Businesses can use Airwallex to make online wire transfers with ease. Airwallex facilitates payouts to over 150 countries, with more than 90% of their transactions running through local rails rather than SWIFT. Around 70% of funds arrive within hours or on the same day, while half of these transactions are instant. Their comprehensive dashboard allows businesses to check all transfer costs at a glance for added convenience and transparency.

Also Read: How Wholesalers Are Making Cross-Border Payments

Which Bank Offers the Best International Money Transfer Services?

When considering international money transfer services, you have the option to use traditional banks or alternative money transfer providers, such as fintech providers like Airwallex.

Traditional banks, relying on the SWIFT network, often involve higher transfer costs and longer processing times, largely due to the necessity of navigating through multiple intermediary banks. On the other hand, fintech platforms, like Airwallex, leverage partnerships with local rails in addition to utilising the SWIFT network to offer more cost-effective and faster alternatives.

Let’s take a look at how specific Singapore banks and fintech companies compare in terms of wire fees, exchange rates and payout coverage:

Sources: DBS, UOB, Airwallex, and WorldFirst as of 15 March 2024

DBS

DBS offers two different ways for businesses to make international money transfers.

DBS Remit allows businesses to send money to 50+ countries in 19 currencies through local payment rails. While there is no transfer fee, an exchange rate markup will be applied and businesses can enjoy preferential FX rates when they send 50,000 SGD or more. This service is quick, with transfers arriving on the same business day if the cut-off timing is met, and it can conveniently be done online or through the “DBS digibank” app. However, there is a transfer limit of 200,000 SGD.

DBS also offers the standard telegraphic transfer that reaches 200+ countries, making it a more globally accessible service. Based on the destination and payment value, the service operates with variable fees including cable charges, handling commission, and agent bank charges. Businesses can conduct TT online or at a DBS branch and the transfer usually takes 2-4 business days to be processed.

If your business is looking to make same-day transfers above 200,000 SGD to a destination outside of the DBS Remit’s list, you can consider using Airwallex instead. Airwallex’s transfer services cover 110+ countries (over two times more than what is available through DBS Remit). At the same time, you won’t have to worry about slow transfer times, which can be the case for telegraphic transfers, as 70% of Airwallex transfers arrive within the same day.

UOB

Like most traditional banks, UOB offers overseas money transfer services via the SWIFT network. The transaction typically takes 1-5 business days to complete and incurs various transfer fees including bank commission, cable charges, and agent charges, which can add up to a considerable sum on top of your transfer amount.

For a quicker and more cost-effective way of sending money overseas, consider choosing fintech service providers like Airwallex. By leveraging local payment networks in over 110 countries, Airwallex helps businesses achieve same-day transfer for 70% of transactions. Moreover, Airwallex does not charge any account opening fees, so you don’t have to worry about having a minimum initial deposit or keeping a required minimum monthly balance.

Airwallex

Airwallex offers businesses a global financial platform to manage multi-currency transfers and financial operations efficiently. With the Airwallex Global Account, businesses can make international money transfers to 150+ countries in over 60 currencies. These payments are able to arrive as swiftly as within the same day, thanks to Airwallex’s extensive partnerships with local payment rails. Their platform also integrates seamlessly with third-party bookkeeping systems, enabling companies to automate and manage their transactions more effectively.

Also Read: How to pay Chinese suppliers from Singapore?

Wire transfer fees: How much do banks charge and how much can you send?

Wire transfer fees vary depending on the financial institution or money transfer service you use. Here are some common fees associated with wire transfers:

1. Outgoing transfer fees: Banks and money transfer services typically charge a fee for sending money through a wire transfer. This fee can vary based on the transfer amount, destination country and the provider's pricing structure.

2. Incoming transfer fees: The recipient's bank may also impose fees for receiving wire transfers. These fees are usually deducted from the transferred amount or charged separately.

3. Intermediary bank fees: In international transfers, intermediary banks involved in routing the funds may charge fees. These fees are often deducted from the transferred amount and can vary depending on the banks involved.

4. Currency exchange fees: Additional fees may apply if the transfer involves currency conversion. Banks and money transfer services typically offer their own exchange rates, which may include a markup compared to the mid-market rate.

5. Additional fees: On top of the fees linked directly to the transfer, banks may charge additional fees that you may have missed initially, including account opening and initial deposit fees, below balance fee (when your account falls below the minimum required balance), monthly service fee, commission, and agent charges.

In Singapore, the transfer limit for wire transfers can vary depending on the bank or financial institution conducting the transfer. Most banks impose daily transfer limits that can range from a few thousand to several hundred thousand dollars.

Managing these various fees and transfer limits can be frustrating. However, businesses can minimise the costs typically associated with wire transfer using Airwallex, which charges low to no transfer fees and gives businesses access to market-leading currency exchange rates. With the Airwallex Global Account, businesses may even avoid FX fees altogether by holding foreign currencies. Lastly, Airwallex provides transparent information on all transfer costs, ensuring you have peace of mind without any concerns about additional hidden fees. 

How safe and secure are wire transfers?

Wire transfers employ safety and security measures to protect funds and personal information. Safeguards include encryption, multi-factor authentication, compliance with regulations and fraud detection/prevention. 

However, taking personal precautions is important. Tips to avoid wire transfer scams include being cautious of phishing scams, exercising caution with unknown buyers/sellers. Verify recipient identities, conduct research, use secure channels, and seek advice if needed. 

Can you do an international wire transfer without a SWIFT code?

A SWIFT code is a unique identification code used to identify a specific bank or financial institution in international wire transfers. It consists of a combination of letters and numbers that represent the bank's name, country and location.

When initiating an international wire transfer, the sender includes the recipient's SWIFT code to ensure the funds are directed to the correct bank. The SWIFT system acts as a network that facilitates secure and standardised communication between banks, ensuring accurate and efficient transfer of funds across borders.

Although international wire transfers traditionally rely on the SWIFT network, it is possible to transfer money overseas without a SWIFT code. For instance, by using Airwallex, businesses can send money directly to a recipient's international bank account in their local currency without the need for a SWIFT code. Thanks to Airwallex's use of local rails, which bypasses intermediary banks, the expensive fees and long transfer times typically associated with SWIFT transfers can be minimised.

Tips on sending money internationally

To ensure a smooth and secure international money transfer, consider the following tips:

1. Choose the right transfer method: Research options based on the recipient's country requirements and desired speed. 

2. Understand fees and exchange rates: Be aware of the costs and exchange rates associated with the transfer method and pay attention to any hidden costs that may not be listed upfront. 

3. Set up the transfer accurately: Provide all required information accurately and complete the necessary paperwork or online forms. Follow the instructions for a seamless transfer.

4. Mind cut-off times: Be aware of specific cut-off times for processing international wire transfers. Initiate the transfer well in advance to allow sufficient processing time.

Frequently asked questions

1. Can I remit money through money changers in Singapore?

​​Yes. Some money changers in Singapore offer remittance services, allowing individuals to send money to other countries. However, these money changers mainly target their services towards individuals instead of businesses. This means that you’d have to pay a visit to a money changer in-person to complete a wire transfer. On the other hand, you can simply send funds online using Airwallex.

2. Is wire transfer the same as SWIFT?

While wire transfer and SWIFT transfer are used interchangeably these days, they are not strictly the same. SWIFT transfers refer specifically to a type of international wire transfer that is carried out using the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network. This network facilitates the secure and standardised communication necessary for international funds transfers between banks. In essence, all SWIFT transfers are wire transfers, but not all wire transfers are SWIFT transfers. Wire transfers can be conducted through various networks and technologies, including but not limited to the SWIFT network.

3. Is PayNow a wire transfer?

PayNow is not considered a wire transfer. It is a real-time electronic fund transfer service in Singapore. Users can send and receive funds instantly using their mobile or internet banking apps. PayNow operates within the domestic banking system and utilises the FAST network for interbank transfers. Unlike wire transfers, which involve cross-border or interbank transactions, PayNow is limited to domestic transfers in Singapore.

4. Can you track a wire transfer and how do you do it?

Yes, it is possible to track a wire transfer, but the process and available tracking methods may vary depending on the financial institutions involved. To track a wire transfer, you typically need to contact your bank and provide them with relevant information such as the transfer amount, date and recipient details. They can then provide you with updates on the transfer's status and any associated tracking numbers or reference codes. Using Airwallex, you can check the real-time status of your transfer simply by visiting your account dashboard.

5. What are the common reasons a wire transfer might be delayed?

Common reasons for wire transfer delays include incomplete or incorrect recipient information, compliance and security checks, time zone differences, bank holidays and weekends, correspondent bank intermediaries and technical issues.

6. What should businesses know about wire transfer regulations in Singapore?

Businesses in Singapore should be aware of wire transfer regulations, including Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) requirements. Compliance with customer due diligence, transaction monitoring and reporting suspicious activities is essential.

Before making a wire transfer, you should make sure that the service provider you’re using is licensed as a major payment institution in Singapore and is regulated by the Monetary Authority of Singapore (MAS).

In addition, Know Your Customer (KYC) requirements are critical for banks and financial institutions to authenticate client identities and activities, ensuring the prevention of fraudulent transactions. During wire transfers, businesses may be required to provide documentation verifying their identity and confirming the transaction's legitimacy.

***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.