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How does a wire transfer work?

Wire transfers are a secure way to send money, but they can come with high fees.

Yahoo Personal Finance· Getty Images
Updated 5 min read

Sometimes, you may need to send money electronically, especially when sending cash or a check is inconvenient. In these cases, wire transfers provide a safe and secure way to send money domestically or abroad.

While wire transfers have advantages, there are usually fees for sending money this way. Additionally, alternatives available today can be cheaper and faster. Learn more about how wire transfers work and how to send one — plus, other options you can consider.

A wire transfer is an electronic method for safely and securely sending funds between bank accounts. Vast amounts of money are sent via wire every day: Over $93 trillion was sent via Fedwire, the U.S. wire transfer service, in March 2024 alone.

While a wire transfer is similar to a regular bank transfer, it can be much faster. For instance, domestic wire transfers can sometimes be completed on the same day. International wire transfers take longer but can still be completed within a few days. Compare this to standard transfers, which can have people waiting multiple days to receive their money.

In addition, wire transfers use secure networks to move money between bank accounts, making them a safe and reliable way to send funds.

Although wire transfers are often completed more quickly than bank transfers, several steps are involved in the process. Here’s how it generally works:

  1. The wire transfer is initiated with a bank or wire transfer service.

  2. The sender provides the recipient’s details, such as their name and bank account information.

  3. Money is deducted from the sender’s account after the transfer is initiated.

  4. The transfer moves through a secure network.

  5. The recipient’s bank receives the wire and transfers the money into the account.

Whether sending or receiving a wire transfer, you must have the necessary account numbers in advance to ensure no delays.

The two main types of wire transfers are domestic and international. Here’s how they differ:

  • Domestic: Uses a domestic wire transfer service, such as Fedwire in the U.S. Often completed the same day with lower fees than international wires.

  • International: Uses the SWIFT network, which facilitates international wire transfers. Takes one to three business days and usually has higher fees than domestic wire transfers.

If you need to wire money internationally, you need the recipient’s BIC or SWIFT code. These terms are used interchangeably because they provide the same service.

Wire transfer fees vary, as no federal laws dictate them in the U.S. However, international transfers usually have higher fees than domestic transfers. The typical range is $15-$30 for domestic wires and $35-$50 for international wires.

Some banks charge fees for outgoing transfers and income transfers, but outgoing fees are usually higher. Certain banks, including Bank of America and some online banks like Ally, may let you receive income wires without fees.

Wire transfers are a safe and convenient way to send money, especially for international transfers. However, before sending or receiving money this way, there are pros and cons to consider.

  • Speed: Wire transfers can be completed the same day for domestic transfers or within a few days for international transfers.

  • Security: Wire transfers use secure networks to send money, so you can be confident your money will arrive as expected.

  • Reliability: For a wire transfer to be initiated, the sender must have enough money in their account to cover the transfer. This isn’t the case when writing a check, for example.

  • Traceable: Wire transfers leave an audit trail, making it easier to track any issues that might occur during the transfer.

  • Fees: There are often fees when wiring money, sometimes for the sender and recipient. International transfer fees are usually higher.

  • Irreversible: It is typically difficult to reverse a wire transfer, especially if the recipient’s information is correct. This can make wire transfers popular with scammers.

Performing a wire transfer is generally straightforward if you have the required information. First, choose a bank to send your money, paying attention to fees and transfer speed.

Next, get the required information, including the recipient’s full name, bank account information (account number and routing number for domestic transfers), and sometimes IBAN for international bank transfers. Remember that you’ll need the BIC or SWIFT code for international wires.

Figure out the exact amount you need to send, considering any potential fees. In some cases, you might need to provide a government-issued ID to perform the transfer.

Once you have all the required information, initiate the transfer through online banking or the wire transfer service. Carefully review all information before sending, then proceed with the wire transfer. If all goes well, you can expect the wire transfer to go through as soon as the same day for domestic wires or in one to three days for international wires.

Although wire transfers are safe and secure, you might want to consider alternatives. These can sometimes have lower fees and be completed even faster.

Some of the best alternatives include:

  • Peer-to-peer payment services: Payment apps like Zelle, Venmo, and PayPal allow you to send money to friends and family. These apps sometimes let you send money instantly in the U.S. without fees.

  • Online money transfer services: Wise and Xoom specialize in international wire transfers and offer competitive exchange rates.

  • International ACH transfers: Some banks have international ACH transfers. They can be slower than wire transfers but may have lower fees.

Wire transfers are a safe and secure way to send money electronically, domestically or between countries. They are also one of the fastest ways to send money, especially internationally. However, wire transfer fees can be significant, so it may be best to first consider alternative methods.

When sending money domestically, peer-to-peer payment services are often free and sometimes instantaneous. Still, wire transfers can be a good alternative when these aren't options.