What Is a Wire Transfer, and How Does It Work?


They don’t advertise like they used to, but you may remember commercials from your younger days from Western Union. The stranded youth calling home for some cash, while outside it’s pouring down rain upon a curbed Toyota.

wire transfer

The young person gets the cash from his parents to pay a mechanic through a wire transfer provided by Western Union. But Western Union began long before those old commercials. In fact, they were wiring money thirty years before the twentieth century. As far back as the 1870s, banks were already transferring $2.5 million per year using wire transfers.

What is a wire transfer?

These days, we still use the same terminology. However, a wire transfer simply refers to the moving of funds from one person to another without the need of a third-party processing system.

The funds can be transferred electronically from one bank account to another, or the recipient can receive cash at designated locations. So, 145 years later, wire transfers are as prevalent as they were in the days of cowboys and budding railways. They are no more antiquated than they were in the 19th century.

People and companies frequently wire money every day when time is of the essence. If you’re considering wiring money but are unaware of the details involved, then read on to learn more.

How long does a wire transfer take?

If your money is staying in the country, but just switching hands, the process is pretty fast. Because you’ll only be processing one wire, and the money won’t have to be converted, you should expect to get your money in just a few hours.

However, for international transfers, it can take as long as a few days. This is because your money will have to go through another country’s system, as well as the U.S. system.

When a Wire Transfer Makes Sense

There are many examples of when you may need to wire money from one location to another. Basically, wire transfers are best used when time is limited. They’re for when you really need to transfer money and the clock is ticking. Common examples include:

  • Sending money to family (either abroad or far away)
  • If you need to send a large amount of money for payment purposes (like closing on a house)
  • Anytime large amounts of funds must be verified

Unlike checks, which can bounce, funds for a wire are verified to exist before they are sent. You can’t wire money you don’t have. Anyone can write a check (because as they say, paper doesn’t refuse ink), but only people who actually have money can wire it. For this reason, large transfers of cash are usually done via wire transfer.

How to Do a Wire Transfer

Once you’ve decided to complete a wire transfer, there are just a few easy steps to take. First, get in touch with the recipient of the wire transfer to get a few pieces of vital information. At a minimum, you’ll need their:

  • Name and address (make sure you use the name of the actual account holder)
  • Bank or credit union name, address, and ABA number
  • Recipient’s bank account number
  • Routing number for international wire transfers

Remember that all of this information should be about your recipient, not you! Once you’ve gathered all of this, you need to go in person to your bank branch. If you have multiple bank accounts, pick the one with the account you intend to use.

From there, you can initiate the wire transfer with a teller. You’ll need to have the funds to cover the cost of the transfer, which you can either bring with you or, in most cases, pay from your bank account.

Wire Transfer Fees

Fees vary depending on the bank. It also depends on whether it’s an incoming or outgoing wire, and whether it’s a domestic or international wire. The rates vary depending on which banks are involved. Where many banks won’t charge anything, others may charge as much as $50, so definitely find out what fees are involved before you agree to transfer funds.

The following ranges were obtained from reviewing the top 25 U.S. banks:

  • Incoming domestic wire transfer: $0- $20
  • Outgoing domestic wire transfer: $14- $40
  • Incoming international wire transfer: $0-$30
  • Outgoing international wire transfer: $20-$65

Domestic vs. International Wire Transfer Fees

There are two main types of wire transfers, each with different fees: domestic and international.

You probably noticed that domestic wire transfers are a lot cheaper than international wire transfers. Wiring domestically is faster because fewer parties are involved. The fees for international wire transfers are higher because they deal with more banks and use two different wire processing systems.

Furthermore, keep in mind that all currencies aren’t created equally. Your U.S. dollar may be worth more or less than the currency you’re exchanging with. Plus, if you’re sending internationally, a foreign bank may have a marked-up rate.

Wiring Online vs. Brick & Mortar or Phone

There are two more things to consider. How you transfer money can also affect what fees you may incur. Wiring online will typically be a lot cheaper than going the brick-and-mortar route or calling on the phone. There’s really no hard reason for this, and it can only be assumed that you’re paying for customer service.

Additionally, when sending money to the same person or entity multiple times, some banks will charge less. However, if this is the case, wiring money may not be the best option for you because of all the fees involved.

Please note, wiring money is utilized when you need to move money fast. If you know beforehand that money will be coming or going, an ACH transfer may be best. As you’ve learned, there are numerous fees involved with wiring money.

Can you reverse a bank wire transfer?

Typically, no. Once the wire has been sent, the transaction is final. If, for whatever reason, the wire has not been sent, then it is possible to rescind the payment or transfer. Know that this is unlikely to happen in today’s age, especially if we’re talking about domestic transfers in which only one processing system is used.

The odds are higher if you need to stop a transfer between two countries, but even then, it’s unlikely. If you’re going to wire money, you need to be positive about whom the recipient is, and the reason you’re sending it. If the situation is murky in any way, then a wire transfer may not be the best bet. Once you’ve sent the money, it’s gone.

Are wire transfers safe?

There aren’t really any risks in sending a wire transfer itself, but there are scams associated with them. If you’ve looked at your spam email folder lately, you may have gotten an email from someone claiming you’ve won a prize. They tell you to wire just a few bucks to them, and they’ll send you a new iPhone.

Wire Transfer Scams

You probably have 5–10 messages with something very similar to the above hoax in your inbox right now. Often these scams come from swindlers living in other countries who hit up thousands of people in the hopes that three or four people will fall for it.

If you fall for the scam and wire the money, there’s nothing you can really do because, if you remember, all wires are final. Another way they do it is by asking for your banking information so they can wire money to you. Hopefully, you don’t need to be told that all sorts of mischief can be had with a person’s bank information. Don’t fall for that one either.

Wire Fraud

Is there any risk of your wire being intercepted or delivered to the wrong person? It’s possible, but very rate. If you’re doing a bank-to-bank transfer, you’ll need the recipient’s bank information (ABA and bank account number), plus their full name.

If you’re transferring physical cash, then the recipient will need to provide a physical ID along with a verification code to receive the money. Though not impossible, these requirements are difficult to maneuver around if you’re a cyber-criminal. All in all, wiring money is safe, just look out for email scams.

Daily, Weekly, Monthly Limits on Wire Transfers

Some banks have limits, while others don’t. It’s safe to say that if you’re a member of a larger national bank, then you’re safe to wire and receive as much money as you want. However, if you’re frequently wiring out or receiving large amounts of money via a wire, your bank account may come under review, but even then, the chances are low.

Once in a while, funds may be frozen to ensure illegal money is not flowing in or out of the country. But as long as you’re not a part of anything shady, there’s nothing to worry about. This only happens in extreme cases where hundreds of thousands of dollars are frequently wired on a daily basis. If you’re reading this article and learning about wire transfers for the first time, then you’re probably safe.

Wire vs. ACH Transfers: Breaking Down the Differences

ACH stands for Automated Clearing House. Generally speaking, whenever an electronic transfer of funds takes place, it’s an ACH transfer. If you have automatic deposit or pay your bills online, you’re using ACH.

ACH transfers differ from wire transfers because they’re not direct bank-to-bank transfers. When you schedule a payment, the information is sent, instead, to a clearinghouse. Your transaction is put into a batch, along with thousands of others, and the batch is then sent to the appropriate bank.

Why do they do this? Think of it this way. Imagine a friend sent you twenty pictures over the weekend of him at a concert. You want to look at them full screen, but you have to download them each individually first before you do. It would be much easier to download them all at the same time as a zip file instead. This, in essence, is what banks do with “batches.”

Batches save banks a lot of time because all the transactions are dealt with at once. As you wouldn’t want to download each picture individually, banks don’t want to deal with one transaction at a time.

ACH Pros and Cons

Because of the ease of ACH transfers, they are either free or very low-cost (over wire transfers, where there can be costly fees on both sides of the transaction). Wire transfers are very fast, but ACH can take a day or more. Another drawback to using an ACH is that you typically can’t send money internationally through them.

If you have a family member abroad standing in the rain with no options before her or him, then a wire transfer is your better choice. Though ACHs take longer to deliver money, they’re basically free compared to wire transfers. As you can see, though, both types of money transfers have their uses in today’s world.

Lauren Ward
Meet the author

Lauren is a personal finance writer who strives to equip readers with the knowledge to achieve their financial objectives. She has over a decade of experience and a Bachelor's degree in Japanese from Georgetown University.