What is a Wire Transfer?

A wire transfer allows you to transfer money electronically through a network, such as the Fedwire Funds Service (Fedwire for short) or Society for Worldwide Interbank Financial Telecommunication (SWIFT). While it’s commonly thought of as sending funds between banks, you can also send and receive money through nonbank institutions. Wire transfers are one of the most secure ways to send money.

How does a wire transfer work?

These types of electronic payments allow two individuals or parties to transfer money to each other relatively quickly. The request is initiated from one financial institution to another. Details shared between the financial institutions will include the recipient's personal information, the amount being transferred, and the receiving bank's account number.

Wire transfers are typically used by individuals and companies who want to send large sums of money securely and quickly. Daily amount limits may be imposed by financial institutions, though these are still relatively high for most individual needs. For instance, if you need to transfer money to an escrow account to close on a home, most banks will allow large sums to be transferred.

Senders can initiate wire transfers in different ways, such as online or in person at their bank's local branch. In most cases, the method remains the same, with the sender initiating the transfer, the receiver receiving the funds, and an intermediary facilitating the transfer.

The sender will in most cases pay a wire transfer fee—the amount differs depending on the financial institution and the type of transfer—when initiating the transaction. In some cases, financial institutions may also charge the recipient for incoming wires. Information that the bank or financial institution will need includes:

• The recipient’s personal details, such as name, email address and phone number
• Information about the recipient's bank, such as the institution’s address, phone number, bank identification number (for example, a SWIFT code or routing number).
• The recipient’s banking information, including the account and branch number.
• The amount of money being transferred.

In some cases, the sender may need to indicate the reason for the wire transfer. Plus, some nonbank institutions may not need account numbers, though there are most likely requirements for the recipient’s personal information in order to be able to send funds.

Once the transfer is successfully initiated, the sender's financial institution will send a message to the recipient's with payment details and instructions though a secure network—SWIFT and Fedwire are common ones. Once the receiving bank has the necessary information from the sending bank, it will deposit their own reserve funds and settle final payment details.

How long it takes to successfully send money through a wire transfer will depend on several factors, including the destination of the funds and the financial institutions you are using. In many cases, domestic wire transfers can take anywhere from a few hours to one business day. Wires sent internationally may take several days because procedures and systems in different countries may work differently.

Keep in mind that financial institutions tend to have cutoff times for processing wire transfers sent on the same day. If you miss the deadline, it’ll be processed the next business day.

Types of wire transfers

The two types you’ll find are domestic and international wire transfers.

Domestic wire transfers

Domestic wire transfers are payments sent and received within the same country. For instance, if you live in Ohio and send a wire transfer to a recipient in Texas, it's considered a domestic wire. In most cases, domestic wire transfers are processed and completed the same business day, since financial institutions don't have to contend with differing networks or processing procedures.

International wire transfers

This type of wire transfer is initiated in one country and sent to a different one. For example, if you wire funds from your bank in the U.S. to Brazil, that counts as an international wire transfer. You will most likely need to provide details such as an international routing or SWIFT code. Unlike domestic wire transfers, these types of transfers typically take several days due to the need to clear different money-transfer networks.

Wire transfer pros and cons

Even the best money transfer apps and financial institutions have disadvantages when it comes to wire transfers. Here are the key benefits and downsides.

Benefits of wire transfers Convenience

One of the main benefits of wire transfers is convenience. You can send and receive money to someone who uses a different financial institution or bank, whether in the same country or abroad. Plus, you don’t have to worry about a check or money order will get to the recipient by mail. It’s also a reliable method of transferring money since you don’t have to worry about having a payment bounce due to insufficient funds.

Safety

A wire transfer is one of the safest ways to send and receive money, since it goes through vetted networks, whether internationally or domestically. You also don’t need to worry about misplacing payments in the mail, and financial institutions can usually trace payments if needed.

Processing times

In general, domestic wire transfers take a few hours to process, or up to a business day. International wire transfers can take up to several days. Even this is faster compared to other methods, such as sending a check or money order in the mail.

Disadvantages of wire transfers

Wire transfer fees

Most banks and financial institutions charge a fee for wire transfers, which can range upwards of $50 per transfer. Domestic wire transfers tend to cost less than international ones, but the fees can add up. Some banks may also charge the recipient an incoming wire transfer fee.

Money-laundering concerns

While wire transfers are usually safe and secure, users may encounter delays in processing the transaction. The sender or recipient may have to provide additional documentation to prove their identity and that the money being transferred is for legitimate purposes.

For instance, a U.S. Treasury agency called the Office of Foreign Assets Control monitors money being sent overseas. It aims to ensure that the money isn't used for illegal means, such as money laundering. Suspected transactions are flagged and the funds may be frozen until it’s proved that the money isn’t going to be used for illegal activities.

Alternatives to wire transfers

There are several alternatives to wire transfers, including the use of money transfer apps and the Automated Clearing House (ACH).

ACH transfer

ACH, or automated clearing house, is a system that financial institutions primarily use to transfer funds electronically. Funds sent through ACH are deposited into financial institutions or other third-party recipients. For example, you can use ACH to pay bills or send money to another individual. If you’re worried about fees, using ACH can help you avoid them. For example, if you use the neobank Lili, which provides checking accounts for freelancers and certain other business categories through banking partner Choice Financial Group, you can get free ACH transfers. In some cases, ACH transfer limits may be similar to those for wire transfers.

Money transfer apps

There are plenty of peer-to-peer money transfer tools that help you send money easily between recipients. Some of the apps don’t charge any fees (or just minimal fees). Cashapp, a popular money app, allows you to send and receive money from others for free, though there is a paid option to receive money instantly. If you’re looking to transfer money internationally, companies such as Paypal and moneygram offer this service — money tends to be sent and received pretty quickly.

Costs	Free to 1.75%	Starts at $0.49 plus 3.49% for most online payments	Varies by transaction amount, currency, and delivery method
Max transaction limit	Up to $1,000 per 30-day period for unverified accounts, may be higher for verified users	Up to $60,000 per transaction for verified accounts	Up to $10,000 per online transaction, up to $10,000 per 30-day period; higher limits may be available in store
Countries	2	200+	200+
	View Offer	View Offer

LEARN MORE: Best Money Transfer & Payment Apps

TIME Stamp: Wire transfers can be costly, but provide safety and convenience

Wire transfers are a convenient and safe way to transfer large amounts of money domestically and overseas. Despite the fees associated with this type of transaction, it’s usually worth it, knowing that the money can arrive safely and within a short span of time. Unless you are transferring money often, the occasional fee may not be that big a hindrance.

Frequently asked questions (FAQs)

How long does a wire transfer take?

Depending on when it’s sent and where it’s being sent to, a wire transfer may take anywhere from a few hours to several days.

Can I do a wire transfer over the phone?

In most cases, you are able to conduct a wire transfer request over the phone. However it depends on your financial institution, so check with them to make sure.

What are the key differences between wire transfers and ACH transactions?

Though wire transfers and ACH transactions are both electronic transfers, there are some differences between the two. Wire transfers are direct transfers between two financial institutions and usually happen immediately. ACH transfers are transactions that pass through the Automated Clearing House network and, for this reason, can take a bit longer to process.

The Lili Visa® Debit Cards is issued by Sunrise Banks N.A., Member FDIC, pursuant to a license from Visa U.S.A. Inc.

Lili is a financial technology company, not a bank. Banking services provided by Sunrise Banks N.A., Member FDIC.