One of the easiest ways to complete a transaction is to send money directly to a bank account. However, thanks to emerging technologies, there are numerous ways to make money transfers. With different payment infrastructures put in place to achieve the sole purpose of money transfer, people usually need help deciding between several payment options.
Therefore, this article highlights the difference between wire transfers and bank transfers to establish the best option for your intended money transfer.
What Is A Wire Transfer?
A wire transfer is a real-time electronic movement of funds across a secure network from one account to another. Banks and other financial organizations widely use the SWIFT network, especially for international wire transfers. Both small and considerable sums of money can be moved quickly and reliably using this procedure, which is fully documented by the financial institutions involved.
Wire transfer is considered the preferred means of transferring money, especially when dealing with significant sums on an international scale. Before transmitting the information via the SWIFT system to credit your receiver’s bank, which subsequently credits their account, your bank or financial institution checks that the funds are available to be delivered.
Banks and financial organizations worldwide use the network that allows wire transfers to be sent. As such, its credibility of operation makes it a trusted option for many people.
Types Of Wire Transfer
There are two types of wire transfers, namely, domestic and international wire transfers.
1. Domestic Wire Transfer
This type of wire transfer you can send from one account to the other within a given country. For instance, if you reside in the United States, you can make a wire transfer from your account to another account in the United States.
2. International Wire Transfer
International wire transfers are made to a SWIFT-affiliated bank account in another country. Remittance transfers are another name for international wire transfers.
What Is A Bank Transfer?
A bank transfer is an electronic money transfer between two bank accounts that leverages communication infrastructure enabled within the financial system. Here, you don’t transfer money physically, but rather a transfer of data that informs each bank about the origin and destination of the money. A bank transfer is carried out electronically and automatically without human participation.
Bank transfers are a fast, dependable, and secure way to send money locally or beyond borders. They also benefit from the extra convenience of sending transfers using a credit card, debit card, ATM, or regular bank account. The duration of the fund transfer process can range from a few hours to a few days, depending on the banks involved.
Money is moved daily via bank transfers for various purposes, such as wage payments, rent and mortgage payments, account payments, and even sending money to loved ones when they need a financial boost.
To this end, it can be established that wire transfers and bank transfers are effective in their respective ways with spatiotemporal attributes, but what are the differences that separate these two means of transfers?
Differences Between Wire Transfer And Bank Transfer
1. Cost
Several variables, including the amount being transferred and the recipient, affect the fees for sending money via wire transfer or bank transfer. The most economical method of sending money is through bank transfers.
The speed of wire transfers is a significant determinant of its cost, as it is expensive compared to bank transfers. This is due to the fact that both the sender and the receiver of the money via wire transfer have a fee, which does not apply to bank transfers. In bank transfers, the transfer fee is only associated with the sender.
2. Speed
There is always a need for speed when transferring money electronically. Bank transfers and wire transfers make it possible to send money quickly to a recipient, although wire transfers typically have the upper hand. Wire transfers can be completed immediately, within a few hours, or the following day at the latest. But depending on the bank, bank transfers can be completed instantly, but they usually take up to 24 hours or even some days before the recipient gets the money.
3. Security
Both transfers come with security features that a paper check doesn’t include. Banking information is encrypted during wire and bank transfer transactions, which adds a layer of security provided by financial institutions. However, errors and fraud do occur.
Wire and bank transfers require procedures to authenticate identity or financial information before the transaction can be executed. While bank transfers are reversible, wire transfers operate far faster and are irrevocable once the funds are received; reversing a wire transfer is typically a race against time.
4. International Money Transfer
Only wire transfers can be sent globally, whereas bank transfers and wire transfers can be sent domestically. You can set up a bank transfer to send money worldwide, but for the transaction to be successful, you’ll need to connect to the SWIFT network, which wire transfers rely on.
What Is Information Required For Wire And Bank Transfers?
Correct information of the receiver must be entered to avoid errors, rejections, and additional processing costs. The information that must be provided before sending funds is often shown transparently on the user interface of the online banking portal.
The name of the recipient, account number, IBAN, sort code, SWIFT code, bank name, and bank address are the details you must supply. A submission may contain errors if you omit to complete a necessary field. You now have a chance to fix the error.
Conclusion
When choosing between a wire transfer and a bank transfer, consider the processing time and costs. Bank transfers are often cheap but take a little longer to process. They are also perfect if you want an easy way to make electronic bill payments. But a wire transfer is ideal if you need to receive the money the same day or make a cross-border payment, although they are expensive.
