A Guide to Bank Transfer Payments

The most common way to transfer money, particularly when doing so internationally is to engage in a bank transfer. This is when one bank sends money into the account of another branch or other bank. In many instances, the bank will charge you a fee for this transaction.

The following article takes a look at how much these fees can cost you and how you are required to pay them. It will also be exploring more affordable and faster ways for you to transfer money to other individuals.

Types of Bank Transfers

There are two main types of bank transfers that you can select from ACH transfers and wire transfers. ACH transfers are where deposits from banks and other financial institutions are sent to the Automated Clearing House at set times. Then, the Clearing House sends out the transactions the next day.

The reason that people continue to use ACH transfers is because the cost is relatively low. Nevertheless, there a couple of downsides with this method. For one thing, it is incredibly slow and can take several days to send your money to a particular bank.

The other inconvenience is that this method is best suited to domestic transfers. This is because most foreign banks and money transfer services don’t follow this procedure.

Now, there is a cost involved with sending money via wire transfers. This price goes up even higher when you are sending money internationally. However, the main benefit with these transfers is that they go through quickly. As such, the money can be transferred to another country in a matter of hours.

How Much Do Wire Transfers Cost?

There isn’t a standard cost for wire transfers. These can change from bank to another. This is because it is the bank that will determine just how much you will pay for a local or international transfer. Due to this, it can be difficult to know what the process is going to cost you.

If you are sending money locally, then you can expect to pay around $25 to send the money. However, the recipient of the money is also charged an amount – this is slightly lower, perhaps around $15. In case you are transferring money to an international account, it is possible that you will have to pay around $40 per transfer.

Why Are Wire Transfers So Expensive?

Needless to say, these prices are exorbitant. So, why does it cost so much? Let’s take a look at all the factors involved in the final cost:

To begin with, a bank will charge you a “minimum fee” – this is what the bank will charge you for setting the wire transfer in motion. This is often linked to how much money you are sending. Thus, the more money that you send, the higher the fee.

Then, there is the correspondent bank fees. Most banks don’t have a direct relationship with the bank that they are transferring the money to. Due to this, there is a “handling fee”. In the event that there is absolutely no link between two banks, then a third intermediary bank may be included in the process. There is a fee that is involved in this as well.

With international transfers, there is the currency conversion rate to consider as well. What many people don’t realize is that the fix their own rates each day and are typically focused on protecting the bank from volatility during this period. As such, they will charge huge margins to make up for any losses.

Depending on the country you are in, it is also possible to incur a cross border tax. This will be levied against if the money that you are sending has anything to do with income. In this case, you may face up to around 30 percent withholding tax.

As mentioned, the recipient of the money will also be required to pay a specific amount. While they are informed of this, many don’t realize just how much they will end up paying. In fact, most banks don’t disclose the full amounts of what their customers will have to pay in advance.

Charges Related to Transfer Issues

If something goes wrong during the transfer process, then you will be charged for this problem as well.

One such instance is if the transfer details are incorrect. If you have inputted the wrong BIC number, for example, you will be charged to fix this error. What’s most inconvenient about this tax is that it can be easily avoided with pre-confirmation of bank details.

However, many banks don’t inform their customers that this option is available to them. If the money goes missing during the transfer chain, then you will be charged a finder’s fee too.

There is always a chance that the payment may need to be returned to the original sender. Well, here too, there will be a charge. Just for processing the return of the transfer, you can be charged upwards of $30.

Paying for a Wire Transfer

When you are about to engage in a wire transfer, the bank will inform you how much you are expected to pay. If you are paying via cash, then you will have to give the bank the amount that you wish to send as well as the additional fee.

In case you are paying via debit card or your bank account, then the bank will deduct the total sum from your account. You will be given documentation of the transaction that took place.

If you would like to pay via credit card, you should be warned that this can be an expensive endeavor. This is because this type of payment is often seen as a cash advance. And, there are some credit card issuers that will charge you a fee for such an advance.

In addition to this fee, you would also be incurring charges for the actual transaction. There is a chance that you may be charged a higher APR as well.

Cheaper Alternatives to Wire Transfers

Here are the more cost common alternatives to wire transfers:

Internet Payment Systems

Internet payment systems are quite popular these days. Most people have a PayPal or Venmo account and they typically use it to make payments. However, these systems can also be used to send money from one person to another.

The main issue with these options is that sending money to someone else, particularly larger amounts can take some time. As a result, you may have to wait several days for the money to go through. And, if you want a faster option, then you will probably have to use these systems through specific banks or financial institutions.

Intrabank Transfers

There are some banks that will allow you to send money for free to family or friends if they have accounts with the same bank. Of course, this isn’t a service that is available with all banks. It should also be noted that this typically only works for local bank transfers.

Even if a bank offers lower prices for international transfers there are still limitations involved. For one thing, this offer only extends to international branches of the same bank. Thus, if it isn’t a well-known bank, you may have some trouble with international transfers.

Apps and Digital Wallets

There are plenty of apps and digital wallets that you can download onto your phone. As long as the other person has an account with that app, you should be able to send money. In some instances, you can send money via SMS as well.

These apps are typically useful for smaller amounts. If you want to send larger amounts, you will probably need something more mainstream. What’s more, it is unlikely that international transfers are possible through these avenues.

Online Money Transfer Services

An increasing number of people are relying on online money transfer services. This is because they often offer competitive rates, particularly when it comes to wire transfers. What’s more, these transfers are quick and efficient, ensuring that the money gets to the recipient more quickly.

There are different kinds of online money transfer services as well. Some are meant for the average Joe who wants to send smaller payments. These services may allow you to send up to several thousand dollars at a time. Then, there are the services that are typically focused on larger amounts. They can be used for amounts greater than $7000, for instance.

Now, there are several of these services available which means that you have to select the right one for you. Not all of them offer the same reach, advantages, and lower costs. This is why TransferWise tends to be the most common option among users.

Let’s take a look at why it may be the best option for you.

An In-Depth Review of TransferWise Operations

Here are the many factors that make TransferWise stand out as the best online money transfer service for you.

Lower Rates

With TransferWise, lower rates aren’t just a claim, they are a reality. The service actively works to provide you with some of the lowest charges around. You can actually determine how much you will be saving as the site gives you the opportunity to see how much other banks will charge you for the same service.

There are two ways that TransferWise manages to do this. First, it charges you the lowest possible amount in fees. Now, the total fee will depend on how much you are sending, the currency, and the country that you are sending the money to. However, you aren’t charged anything more than this.

The other tactic that TransferWise relies on is by staying true to the exchange rate. Now, as mentioned, banks will inflate this rate to ensure that they always stay ahead. This transfer service, however, always tracks the live rate. This means that you will not be charged anything over the current exchange rate.

As an added bonus, TransferWise gives you the opportunity to set up exchange rate alerts for yourself. You will be notified when a rate reaches your desired level, allowing you to send money at that point. In doing so, you will be saving yourself even more money.

No Hidden Charges

Banks are notorious for not being open and upfront about how much the entire transaction will be costing you. This isn’t the case with TranferWise – they assure you complete transparency. Best of all, they live up to this promise.

Once the specificities of your transaction have been considered, you will be informed of the exact amount that you will have to pay for the process. Better still, you will be notified of how much the recipient will be receiving, exactly.

Multi-Currency Accounts

Do you need to send money to various countries on a regular basis? If so, TransferWise makes this easy for you by allowing you to set up a multi-currency account for free. Here, you can keep money in more than 50 currencies. Then, it is simply a matter of converting between them at a real exchange rate when needed.

Transferring Large Amounts

The beauty of TransferWise is that you have the ability to send a great deal of money within a relatively short period of time. The process is also more or less the same. You can choose to send money from an independent account or as a business. Due to this, you can undertake a larger variety of transfers with TransferWise.

Worldwide Coverage

Unlike most local banks, TransferWise isn’t limited to just a few countries. It has services and accounts all over the world. In fact, you can send money to numerous countries in Africa, the Americas (North and South), Asia, Europe, and Oceania.

Best of all, recipients don’t need to have TransferWise accounts. All they need is a bank account and the money will be sent directly to them.

As an added benefit, TransferWise also ensures that there is global support for all its services. This means that if you have any queries or run into any issues, you will be able to discuss it directly with a customer service agent.

Simple Process

The process of sending the money is quite simple, ensuring that your transaction take to go through. You can create a new account for free within a matter of seconds. Then, you input certain details of your transaction and you are provided with a final fee.

TransferWise will require certain identifying details from both you and your recipient. This improves the legitimacy of the transaction.

If you don’t the bank details of a recipient, that’s not a problem at all. Instead, you just send TransferWise their email address. Then, the service contacts the recipient directly, allowing them to fill in these details by themselves.

What’s great about TransferWise is that they give you a full summary of your transfer. This gives you the opportunity to check that all the details are correct, reducing the risk of any errors or transaction mistakes. Then, it is a simple matter of making payment and kick-starting the transaction.

You will be able to keep a track of the transaction. As such, you will know exactly when it has reached its destination. The recipient can then be notified to pick it up immediately. There will be far fewer delays this way.

Reliable

When sending any amount of money, it is important to select a trustworthy service. It is the only way to ensure that your recipient will receive the exact sum that you have sent. Fortunately, TransferWise is monitored and heavily regulated throughout the world.

TransferWise stands out because it is independently regulated by authority agencies around the world. This means that it is monitored by the EEA in the UK and Europe, FinCEN in the US, ASIC in Australia, etc. It is also regulated in Canada, India, Singapore, Hong Kong, Japan, Malaysia, New Zealand, and the UAE.

Due to this, you can be absolutely certain that your money is being handled properly. Furthermore, you can be sure that TransferWise is engaged in only legal activities as they are under such heavy scrutiny.

Payment Options

You can pay for your transfer from an array of options. If you are in a pinch, then you can pay via credit card. Otherwise, you can pay via your debit card or bank account to keep costs as low as possible. Regardless of how you decide to pay, you can guarantee that the transfer will go through quickly and efficiently.

This is complete guide to bank transfer payments. As you can see, traditional wire transfers are incredibly expensive. Furthermore, they have various limitations that minimize the services that you can use, particularly when sending money overseas.

It is clear that when you do need to engage in an international transfer that you should use TransferWise. Doing so can save you a great deal of time, money, and effort. Not to mention, you get to send money to virtually any country that you wish to.

Now that you have a full understanding of bank transfers and the best options available to you, you can make better decisions in the future.