Learn about the advantages of wire and bank transfers
Is there a difference between a wire transfer and a bank transfer? In short, yes: in a wire transfer, the sender’s bank acts as an intermediary, sending information about the transfer to the receiver’s bank before the money is moved, whereas a bank transfer simply involves sending money directly from one bank account to another.
Whether you need a quick transfer or would prefer a cost-effective option, each has its benefits and preferred applications. Let’s get into the specifics so that the next time you need to send money to friends or family, you’ll know which one to use for your needs.
In this article
- What is a wire transfer?
- What is a bank transfer?
- What are the differences between the transfers?
- FAQs and guides
What is a wire transfer?
A wire transfer is an electronic transfer of money from one account to another using a secure network. Many banks and financial institutions use the SWIFT network, particularly for international wire transfers. This reliable and quick method of moving money locally and internationally is fully documented by the financial institutions involved and can be used for small and large sums of money.
Wire transfers are a preferred method of moving money, especially in larger sums on an international scale. Your bank or financial institution verifies that the funds are available to be sent before sending the information via the SWIFT system to credit your receiver’s bank, which then credits their individual account. The network that enables the sending of wire transfers is used by banks and financial institutions around the world. This makes it a trusted and viable choice for many people as it has a legacy of legitimacy.
There are two types of wire transfers:
Domestic wire transfers
a) Domestic: Domestic wire transfers are sent locally between accounts within the same country.
International wire transfers
b) International: International wire transfers are sent to a bank account based in another country, which is still a part of the SWIFT network. International wire transfers are also sometimes referred to as remittance transfers.
What is a bank transfer?
A bank transfer is the electronic transfer of money from one bank account to another, using the communication system between the two banks. It’s not a physical transfer of money but a transfer of information that tells each bank where the money comes from and where it’s going to. There is no need for human intervention with a bank transfer; it is done electronically and automatically.
Bank transfers are a secure method of transferring money locally or nationally that is both quick and reliable. They have the added convenience in that a transfer can be sent from a credit card, debit card, ATM, or from a standard bank account. Depending on the banks involved, the process can take a few hours to a few days to finalise.
Bank transfers are used daily to move money for many reasons, including salary payments, rent and mortgage payments, payment of accounts, and even simply transferring money to loved ones when they need a cash boost.
What are the differences between the transfers?
Both wire transfers and bank transfers have their time and place. They each have advantages that suit different purposes, and they each have a part to play as your best option for sending money to loved ones from or within the UK. The common differences between wire transfers and bank transfers include:
Speed
Transferring money electronically usually comes with a need for speed. Both wire transfers and bank transfers can get money sent to your receiver quickly, but wire transfers generally have the advantage on that front. Wire transfers can be completed immediately, within hours, or at the latest, the next day. Bank transfers can also be completed immediately (depending on the banks used) but typically take up to 24 hours. Some bank transfers can take up to a few days to complete.
Cost
The costs for transferring money via wire transfer or bank transfer vary according to a handful of factors, including the amount being sent and the destination. Bank transfers are the most affordable way of transferring money. The speed it takes to send money via wire transfer increases the cost slightly, making it the more expensive option. Where wire transfers are concerned, both the sender and receiver can pay a fee. If any fees are payable with bank transfers, they are for the sender’s account only.
Ability to send internationally
Bank and wire transfers can be sent nationally, but only wire transfers can be made internationally. You can set up a bank transfer to send internationally, but it will require tapping into the SWIFT network that wire transfers rely on for the transaction to be completed.
Risk
Wire transfers run the biggest risk as once the money has been sent, it’s difficult to recall. Where bank transfers are concerned, the transaction can be reversed if a payment was made incorrectly. Both wire transfers and bank transfers are secure and reliable forms of transferring money from one account to another.
