A wire transfer is a method of transferring funds from one entity to another. Wire transfers can be done by a simple bank account transfer, or by a transfer of cash at a cash office.

History

Although the genesis of the idea dates as far back as the giro, the modern wire transfer was a product of the telegraph companies, which made it possible to wire a money order from one office to another. Later, it became possible to wire money between banks, which is essentially the same process as the giro. what is it thomas? A giro, also called a direct deposit, is a banking term for a method of payment. ... what is it thomas? A giro, also called a direct deposit, is a banking term for a method of payment. ...

Overview of process

Bank wire transfers are often the most expedient method for transferring funds between bank accounts. A bank wire transfer is effected as follows: For other uses, see Bank (disambiguation). ...

• The sending bank transmits a secure message (via a secure system such as SWIFT, or Fedwire) to the receiving bank, requesting that they effect payment in accordance with the instructions given.
• The message also includes settlement instructions. The actual transfer is not instantaneous, but may take several hours to transfer from the senders account to the receivers account.
• The banks involved must either hold a reciprocal account with each other, or the payment must be sent to a bank with such an account, or a correspondent bank, for further benefit to the ultimate recipient. [1]

SWIFT logo For other uses, see swift (disambiguation). ... Fedwire, which is operated by the Federal Reserve, is a Real Time Gross Settlement system that enables financial institutions to electronically transfer funds amongst its more than 9,500 participants. ...

Regulation

Bank transfer is the most common payment method in Europe^{[citation needed]}, with several million transactions processed each day. Debit cards are used extensively to pay in stores, while monthly bills are usually paid with a direct transfer (by means of (cell)phone, Internet access or simply at the bank or an ATM). In 2002 the European Commission has regulated the fees that a bank may charge for payments in Euro between European Union member countries down to the domestic level (see the Regulation (EC) No 2560/2001 of the European Parliament and of the Council of 19 December 2001), resulting in either very low or no fees for transfers within the Eurozone, however international wire transfers outside this limited scope can be quite expensive. For other uses, see Europe (disambiguation). ... The Eurozone (also called Euro Area, Eurosystem or Euroland) refers to the European Union member states that have adopted the euro currency union. ...

In the United States, wire transfers within the country are governed by the following regulations:

• Federal Regulation J [2]
• Article 4A of the Uniform Commercial Code. [3]

Security features

Wire transfer, done bank-to-bank, is considered the safest international payment method. Both account holders must have a proven identity, and there is little possibility of a chargeback, although wires can be recalled. Additionally, information contained in wires is transmitted securely through encrypted communications methods. The price of bank wire transfers vary widely depending on the bank and its location, and in some countries the fee associated with the service can be costly.

Wire transfers done through cash offices, however, are more-or-less anonymous and designed for funds transfer between persons who trust each other. It is unsafe to send money by wire for an unknown person to be collected at a cash office. The receiver of the funds may, after collecting them, simply disappear. This method of scam has been often used especially in so-called Nigerian letters, also known as advance fee fraud or a "419 scam". A confidence trick, confidence game, or con for short, (also known as a scam) is an attempt to intentionally mislead a person or persons (known as the mark) usually with the goal of financial or other gain. ... An advance fee fraud is a confidence trick in which the target is persuaded to advance relatively small sums of money in the hope of realizing a much larger gain. ...

Transfers in the United States are subject to monitoring by the Office of Foreign Assets Control, or OFAC. OFAC monitors information provided in the text of the wire to determine if money is being transferred to terrorist organizations or countries or entities currently under sanction by the United States government. If a financial institution suspects that funds are being sent from or to one of these entities, they must block the transfer and freeze the funds. [4] The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, terrorists, unapproved international narcotics traffickers, and those engaged in activities related to the unapproved proliferation...

Methods of transfer

Western Union

One of the largest companies that offers wire transfer is Western Union (minimum of £25 in the UK, or $15 in the US). Western Union began in 1851 in Rochester, New York, and became the preeminent telegraph transfer service. It also introduced Telex, which was a predecessor of today's wire transfer services and is still used by some banks and business entities. Initially based in the United States, the company expanded operations internationally in 1989. [5]. Western Union (NYSE: WU) is a financial services and communications company based in the United States. ... Motto: (Out Of Many, One) (traditional) In God We Trust (1956 to date) Anthem: The Star-Spangled Banner Capital Washington D.C. Largest city New York City None at federal level (English de facto) Government Federal constitutional republic  - President George Walker Bush (R)  - Vice President Dick Cheney (R) Independence from... This article is about the city of Rochester in Monroe County. ... Year 1989 (MCMLXXXIX) was a common year starting on Sunday (link displays 1989 Gregorian calendar). ...

Western Union is a stand-alone entity and is not affiliated with a financial institution. Individuals who transfer or receive money with Western Union do not need to have an account with Western Union, or any financial institution. Instead, transfer instructions are sent into a central system, and the recipient can pick up the funds at a Western Union office in their area. Western Union transfers can also be initiated online. [6]

Concern and controversy about Western Union transfers has increased in recent years, due to the increased monitoring of money laundering transactions, as well as concern about terrorist groups using the service, particularly in the wake of 9/11. Although Western Union keeps information about senders and receivers, some transactions can essentially be done anonymously (ie, the receiver is not always obligated to show identification.) [7]

Country-to-country wire transfers

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Most international, country-to-country transfers are executed using the SWIFT system. The co-operative society, Society for Worldwide Interbank Financial Telecommunication, or SWIFT, was founded in 1974 by seven international banks. SWIFT operates a world wide network to facilitate the transfer of financial messages. Using these messages, banks can exchange data for transfer of funds between different financial institutions. The Society's headquarters are situated in La Hulpe, on the outskirts of Brussels. S.W.I.F.T. also acts as a United Nations sanctioned International Standards Body (ISO) for the creation and maintenance of financial messaging standards. Image File history File links Broom_icon. ... SWIFT logo For other uses, see swift (disambiguation). ...

Article 3 of S.W.I.F.T. states:

"The object of the Company is for the collective benefit of the Members of the Company, the study, creation, utilisation and operation of the means necessary for the telecommunication, transmission and routing of private, confidential and proprietary financial messages"

Each financial institution is provided an ISO 9362 code, also known as a Bank Identifier Code, BIC Code, or SWIFT Code. These codes are generally eight characters in length. [8]As an example, Deutsche Bank is an international bank; its head office is based in Frankfurt, Germany. Its SWIFT code for its primary office is DEUTDEFF: ISO 9362 (also known as BIC code or SWIFT code) is a standard format of Bank Identifier Codes approved by the International Organization for Standardization. ... Deutsche Bank AG (ISIN: DE0005140008, NYSE: DB) (English: ) is a bank operating worldwide and employing more than 75,000 people (June, 2007). ...

• DEUT identifies Deutsche Bank
• DE is the country code for Germany
• FF is the code for Frankfurt

Using an extended code of 11 digits (if the receiving bank has assigned branches or processing areas individual extended codes) allows the payment to be directed to a specific office. For example, DEUTDEFF500 would direct the payment to an office of Deutsche Bank in Bad Homburg.

European banks making transfers within the European Union also utilize the International Bank Account Number, or IBAN. [9] The International Bank Account Number (IBAN) is an international standard for identifying bank accounts across national borders. ...

Transfers within the United States

Banks within the United States utilize SWIFT to make payments to banks in countries outside of the United States. For bank-to-bank transfers that are conducted within the United States, the Fedwire system is used. This system utilizes the Federal Reserve System and its assignment of bank routing numbers (in a similar way to how Automated Clearing House, or ACH payments, use those numbers to effect the payment and collection of checks). Fedwire, which is operated by the Federal Reserve, is a Real Time Gross Settlement system that enables financial institutions to electronically transfer funds amongst its more than 9,500 participants. ... The Fed redirects here. ... The examples and perspective in this article or section may not represent a worldwide view. ... Automated Clearing House (ACH) is the name of an electronic network for financial transactions in the United States. ...

External links

• List of U.S. banks that offer free wire transfers to personal account holders
• SWIFT
• IBAN