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A wire transfer refers to an electronic fund transfer that moves money directly from your bank to another person or company’s bank account. With wire transfers, you can make local and international payments faster than traditional payment methods. Common uses for wire transfers include cross-border payments and urgent or high-value payments.
Wire transfers move money from one account to another through a network. For wire transfers in the US, the Clearing House Interbank Payment System (CHIPS) and Fedwire are the two largest networks. Meanwhile, international transfers usually use the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network to transfer funds.
Wire transfers require senders to provide their banks with information about the recipient. These requirements include the following:
In SWIFT transfers, for instance, a bank identifying number is the SWIFT code.
Depending on the regulatory requirements of the country, the sender may be required to provide additional information, such as the reason for the transfer or tax identification numbers for payments subject to withholding.
Wire transfer continues to be a popular way to move money for personal or business purposes. Here are the top three reasons why this payment method continues to be popular today.
Transfers can happen in real time, but they typically take a few minutes or hours for funds to arrive in the recipient’s bank account. In B2B transactions, wire transfers are a common way to make urgent payments.
Like other EFT transactions, wire transfers utilize security measures like encrypted communication channels and authentication protocols to reduce unauthorized access and fraud. Compared to checks and cash transactions, wire transfers are more secure — making them the preferred way for making large payments from one company to another.
For wire transfers, you don’t have to hold physical money in the form of currency or present a check to transfer funds. Money moves directly from one bank account to another once the sender’s bank approves the transaction.
Wire transfers can be integrated into an automated payment system that links directly to a company’s AP workflow and ERP system. Companies can schedule, track, and review all payment transactions, including wire transfers through a payment portal in an automated payment system.
Companies usually use wire transfers for various transactions such as:
While wire transfers allow you to move money quickly, securely, and conveniently, manually tracking and making transfers can still take up significant time and effort. Automating wire transfers is the key to optimizing the payment process and making wire transfers part of your AP workflow. With automated payment systems like SoftCoPay, you can schedule recurring payments, speed up reconciliation, ensure timely payments for obligations, and enhance financial management.