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How Does International Wire Transfer Work

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Wire transfer refers to the electronic transfer of funds through a secure network administered by banks and non-bank financial institutions like transfer services. One institution sends the money on behalf of its customers, and another receives it. The prerequisite is information from the party initiating the transfer, such as the recipient’s name and account number.

How Does it Work?

Like any other method, the sender should initiate the transfer, even if the recipient has an account with the same bank in a different country. International payments mandate a routing or SWIFT code.

Here’s a breakdown of the international wire transfer process:

  1. Initiation: The sender initiates the transfer by providing the bank with the recipient’s details, including their name, bank account number, bank address, and the transfer amount. Sometimes, a sender may also need to specify the purpose.
  1. Transfer via the SWIFT Network:  SWIFT stands for Society for Worldwide Interbank Financial Telecommunications. It is a secure messaging system connecting banks worldwide, and banks leverage this network to send transfer instructions to the recipient’s bank. 
  1. Intermediary Banks:  If there is no direct connection between the sender and recipient banks, intermediary banks come into the transfer process. Then, these banks, also called correspondent banks, facilitate the transfer of information and funds between the sending and receiving banks. 
  1. Currency Exchange:  If the sending and receiving banks have different currencies, the transferred amount will be converted based on the current exchange rates. The associated fees must be checked with the service provider beforehand. 
  1. Settlement and Delivery: Once all parties verify the transfer details, the transfer is approved. Soon, the funds are deducted from the sender’s account and credited to the recipient’s account, and the recipient receives the money within two business days.

Also read: Everything You Need To Know About International Wire Transfer

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What should you consider when making an international wire transfer?

  • Fees: International wire transfers are riddled with diverse kinds of service charges. The sending and recipient banks levy their respective transfer fees. If any intermediary bank is involved, its costs can also add up. Make sure to inquire about all applicable charges before initiating the transfer.
  • Transfer Time: Depending on currency exchange, intermediary banks, and regulatory checks, sometimes international wire transfers can take 1-5 business days.
  • Exchange Rates: Currency exchange rates fluctuate and impact the amount the recipient in the other country receives. So, it is necessary to compare your bank’s prevailing rates with other service providers for better clarity.
  • Accuracy: It is essential to cross-check all the recipient information before initiating the transfer to avoid any kinds of delays or errors. 

Can an international wire transfer be reversed?

International bank transfers are not reversible in a simple manner. Instead, they follow an intricate and unidirectional series of steps. After initiating a transfer order for funds to be sent overseas, the details are pushed through strict protocols, ensuring the transaction progresses securely.

What is the limit for international wire transfers?

As per the via the Liberalised Remittance Scheme proposed by the Reserve Bank of India (RBI) permits Indian nationals to send up to USD 250,000 abroad each fiscal year.

Options Beyond Wire Transfers

Though wire transfers are dependable for international money transfers, they may not be the most economical choice for smaller sums. Other choices are: 

International Cheques: This mode is generally not recommended due to their slow processing times, higher risk of loss or theft, and potential for additional bank fees.

Online Money Transfer Service Providers: With the rapid growth of FinTech and API interfaces, we now have plenty of online money transfer services that offer competitive exchange rates and swift transaction speeds for cross-border payments.

moneyHOP is a cross-border payment platform that enables individuals to send money conveniently and economically worldwide. The unified interface allows users to seamlessly transfer money between multiple accounts at a near-zero Forex Markup.

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International wire transfer is just one option among many. The best mode for your money transfer is narrowed down by a comparison of multiple factors like speed, associated costs, exchange rates, convenience, and the recipient’s location. Remember, careful planning and meticulous research can guarantee you a smooth and cost-effective cross-border transfer experience.

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