International Wire Transfer
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Read moreWhat Is an International Wire Transfer?
An international wire transfer (also known as an "international bank wire") is a type of bank transfer that delivers funds from a bank account in one country to a recipient bank account in another country via SWIFT.
A standard foreign exchange service offered by most banks, international wire transfers are a secure method of funds transfer that typically involves currency exchange due to their international nature. As a result, all of this makes international wire transfers one of the most well-used methods of sending money internationally, but also one of the most expensive due to the number of steps and third parties involved, as well as the fact that currency conversion takes place.
Understanding International Wire Transfers
When wiring money internationally, a number of steps and parties are involved. On the one hand, there's the sender of the money and their bank, and on the other, there's the beneficiary and the beneficiary bank.
When the sender instructs a wire transfer with their bank, the sending bank then sends their funds via SWIFT, a global network that allows banks around the globe that often don't have the networks, resources, or operational expertise to conduct financial transactions with one another directly. After an international wire is sent, the recipient bank account is identified by their SWIFT number, which functions as an international version of country-specific bank identifiers such as routing numbers in the US, sort codes in the UK, and transit numbers in Canada, for example.
Funds transferred via SWIFT often require the assistance of correspondent banks or intermediary banks to arrive at their destination. These specialised financial institutions act as "middlemen" in the process of transferring money from one bank to another over SWIFT and are permitted to detract a fee of practically any amount directly from funds being transferred, all without the knowledge of the sender and their bank.
How To Do an International Wire Transfer
In general, making an international wire transfer tends to be a simple, fast, and secure process.
To instruct an international wire transfer, you'll need to visit your bank's website to verify what information you'll need from your beneficiary in order to process a bank wire. These generally include most or all of the following pieces of information:
- The beneficiaryâs full name;
- The beneficiary's postal address;
- The beneficiary's account number;
- The beneficiary bank's branch number and full address;
- A SWIFT, BIC, or IBAN.
With these details at the ready, you'll be able to log in to your online banking portal and instruct an international wire transfer directly from there. Alternatively, you can also visit your bank branch to send a bank wire too, although this service tends to come at a steeper price.
International Wire Transfers: The Costs
As touched on above, one of the major drawbacks of international wire transfers for many people is the costs involved. These costs involve two parts: transaction fees (including correspondent and intermediary bank fees) and exchange rates.
International Wire Transfers: Fees
Because transfer fees are imposed by the sending bank, the cost of wiring money internationally varies significantly, not only from bank to bank but also from country to country:
US banks, for example, tend to charge a single, fixed fee for international bank wires that usually falls in the range of US$25.00 to US$40.00 per transfer. In the UK, high-street banks often advertise themselves as being "fee-free" for international wire transfers, although it's not unusual for them to charge a fee of up to ÂŁ20.00 for transfers to certain countries.
In Canada, transfer fees vary dramatically (usually falling between C$3.00 and C$30.00 or higher per transfer) and tend to be steeper the more one wires. In Australia, these fees range between A$6.00 and A$30.00, while major New Zealand banks tend to charge fixed fees between NZ$10.00 and NZ$20.00 per transaction.
In South Africa, international bank transfers involve a commission of around 0.50% of the transfer value (with minimum and maximum caps) in addition to a fixed fee that's usually in the ballpark of R100.00 to R200.00 per transaction. Similarly, most Singaporean banks also charge a commission for telegraphic transfers (usually in the region of 0.125% of the transfer value) in addition to a fixed fee of S$20.00 to S$30.00 per transfer.
Avoid 'OUR' Payments
International wire transfers open the door to correspondent bank fees, which can be as high as US$100.00 per transfer (or currency equivalent.) As such, if you're asked to choose between 'SHA,' 'BEN,' and 'OUR,' we recommend you avoid choosing 'OUR' payments wherever possible. These instructions can open the door to third-party banks levying further fees from you long after the transfer has been sent.
International Wire Transfers: Exchange Rates
The second cost of sending an international wire transfer is the exchange rate margin, the difference between the mid-market exchange rate and the exchange rate offered to consumers.
Exchange rate margins fluctuate continually in relation to broader dynamics in the foreign exchange market, meaning they can be hard to pin down. However, for most banks generally, exchange rate margins tend to range from as low as 1.50% of the transfer value to as high as 15.00% or more at the extremes. (It's worth noting that exchange rate margins tend to be lower for transfers to major world currencies and higher for transfers to more obscure or volatile ones.)
In contrast, PayPal levies exchange rate margins of between 2.50% and 4.50% of the transfer value for international payments. Currency exchange giants such as Western Union and MoneyGram usually levy margins between 0.50% and 1.50%, and digital transfer specialists offer margins that are lower still.
Exchange rates are often levied proportionally to transaction fees to account for the full cost of making an international wire transfer. For example, UK banks tend to charge most (often all) of their fees as exchange rate margins, and as a result, their margins are high (often around 8.00% to 10.00%) while their transfer fees are low or nonexistent. On the other hand, Singaporean banks tend to levy a bulk of their international transfer fees in fixed and commission fees, resulting in higher fees and lower exchange rate margins. US and Australian banks tend to be somewhere in the middle.
Savvy Alternatives to International Bank Transfers
While international bank wires are the preferred option of many people for sending funds abroad, the major drawback is without a doubt their cost, followed by their transfer speed (they take up to five days to arrive in a beneficiary's bank account.)
For these reasons, we generally recommend avoiding bank wires when sending money internationally. Instead, we recommend comparing money transfer specialist services to get the job done more quickly and cheaply. These services â which include Wise, Paysend, Remitly, TransferGo, and others â make use of a savvy network of global bank accounts to dodge SWIFT altogether, allowing them to offer faster payments and lower fees to their customers. Take a look at Monito's in-depth guide to learn more about the difference between money transfer specialists and banks for international payments.
To compare your options from among this competitive market of services, run a search Monito's real-time comparison engine to find the best deal for your next transfer abroad:
Compare The Cheapest Alternatives
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Frequently Asked Questions About International Wire Transfers
Are international wire transfers safe? đ
Yes, international wire transfers are indeed a safe and secure method to transfer money across the world. Not only do hundreds of banks transfer the equivalent of tens of millions of dollars across the world this way each day, but international wire transfers are allow made via SWIFT, a globally standardized funds transfer system that involves 11 thousand financial institutions across more than 200 countries and territories worldwide.
Are international wire transfers instant? đ
No, international wire transfers are not instant. The fastest an international wire transfer is delivered is typically around one working day (twenty-four hours), contingent on certain factors such as the operational relationship between the sending and beneficiary banks. In general, however, international wire transfers tend to take slightly longer still â usually around two to three working days â and can take as long as five to ten working days at the extremes.
Are international wire transfers reported to the IRS? đ
No, in a vast majority of cases, international wire transfers do not involve the IRS. However, US citizens are required by the Foreign Account Tax Compliance Act (FATCA) to comply with tax regulations on their foreign accounts. As a result, receiving an international wire transfer from outside of the US could potentially trigger an IRS audit. To learn more, take a look at Abajian Law's explainer post on the subject and consider hiring an international tax lawyer if you believe you're not compliant with FATCA rules.
How much are international wire transfer fees? đ§Ÿ
Transfer fees are imposed by the sending bank, and as a result, the cost of wiring money internationally varies not only from bank to bank but also from country to country. In the US, for example, banks tend to charge a single, fixed fee for international bank wires that usually falls in the range of US$25.00 to US$40.00 per transfer.
Can international wire transfer be reversed? âź
Yes, it is possible to reverse an international wire transfer. To get the job done, you'll need to contact your bank directly and request an amendment to the transfer. Bear in mind that these services almost always come with a fee and that reversing an international wire transfer is once possible if the money has not yet arrived in the beneficiary's bank account.
Can international wire transfer be cancelled? â
Yes, an international wire transfer can generally be cancelled. To amend a funds transfer that's already been instructed, you'll need to contact your bank directly. Bear in mind that these services almost always come with a fee and that cancelling an international wire transfer is only possible if the money has not yet arrived in the beneficiary's bank account.
Can international wire transfers be done online? đ»
Yes, with most banks around the world, international wire transfer can be done online through one's online banking portal. As a rule of thumb, the option to instruct an international wire transfer can usually be found in the same place as a domestic transfer, although the particularities will differ from bank to bank.
Do international wire transfers work on weekends? đŽ
Yes and no. International money transfers can generally be instructed on the weekend without any trouble, but they will not be processed until the next working day.
Can I do an international wire transfer online with Wells Fargo? đ
Yes, it's certainly possible to do an international wire transfer with Wells Fargo. However, while an all-around excellent bank for everyday financial services, international bank wires with Wells Fargo can be very pricey due to the high fees and exchange rates involved. Find out more about how to minimize their hidden fees and find the best alternatives in our in-depth Wells Fargo money transfer guide.
How long does an international wire transfer take? â±
In general, the fastest an international wire transfer is delivered is typically around one working day (twenty-four hours), contingent on certain factors such as the operational relationship between the sending and beneficiary banks. However, international wire transfers usually take slightly longer still â usually around two to three working days â and they can take as long as five to ten working days at the extremes.
Is an international wire transfer the same as SWIFT? đ
Not quite, but they are very similar. An international wire transfer is a type of funds transfer that takes place via SWIFT, while SWIFT itself is a global funds transfer system that sends payment orders and facilitates their settlement â a process that allows international wire transfers to occur in the first place.
Who pays international wire transfer fees? đ”
Many (although not all) banks will allow the sender of an international wire transfer to choose who will shoulder the transaction fees. The options, known as SWIFT instructions, are generally categorised as 'SHA,' 'OUR,' and 'BEN,' which denote that the fees will shared between the sender and the beneficiary, paid in full by the sender, or paid in full by the beneficiary respectively. However, because international wire transfers open the door to correspondent bank fees (which can be as high as US$100.00 per transfer), we recommend you avoid choosing 'OUR' payments wherever possible, as these instructions can open the door to third-party banks levying further fees from you long after the transfer has been sent.
What's needed for international wire transfer? đ
In general, you will need to provide your bank will the following pieces of information about the beneficiary of your transfer in order to successfully instruct an international wire:
- The beneficiaryâs full name;
- The beneficiary's postal address;
- The beneficiary's account number;
- The beneficiary bank's branch number and full address;
- A SWIFT, BIC, or IBAN.
However, be aware the the precise information needed can differ from bank to bank, and we advise you visit your bank's website to be sure of the information you'll be needing in advance.
Why do international wire transfers take long? âł
International wire transfers can take a long time to arrive (as many as five to ten working days) due to several factors. Because international wire transfers are made via SWIFT, the funds need to follow a number of steps and be processed by third-party financial institutions before they can arrive at their destination. In general, this means that if either the sending or beneficiary bank are small and do not maintain large operational relationships with other banks globally, it is far more likely that your international wire transfer will take longer to arrive.
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