What is Wire Transfer / EFT?

Wire transfer is the method in which money is transferred from one bank account to another through a set of electronic instructions. The message (instruction) given by sender bank is acknowledged by recipient bank to complete the wire transfer process.

Wire Transfer is usually performed if you need an immediate funds transfer from overseas. This is done between two bank accounts and usually takes less than 48hrs. To make the wire transfer process secure, Society for Worldwide Interbank Financial Telecommunications has introduced a SWIFT code. This SWIFT code will contain all the information about the recipent bank and thus preventing any chance of error.

International Wire transfer is facillitated by use of the IBAN (International Bank Account Number) account numbers of sending bank and receiving bank. IBAN contains all details including the country, bank name, regional location and customer account number.

How to do a Wire Transfer?

The convenient way of transferring money from abroad is bank wire transfer. The procedure of bank wire transfer is as follows:

1. The sender or a person having authority for him should instruct the bank to transfer the money. The information he will need to give them is:

1. Amount to be transferred.
2. Sender’s name and bank account number.
3. Receiver’s name and bank account number.
4. IBAN and BIC codes.

2. Through the secure message system like Fedwire or SWIFT, the bank which is transferring the money sends a message to the receiving bank requesting to get done the payment as per the instructions.

3. The real transfer of money never happens immediately. Quite a few hours or days may need to shift the money from sender’s bank account to receiver’s bank account.

4. For the receiver’s benefit, the sender’s bank and receiver’s bank should have mutual account with each other.

Many times the names of the correspondent bank changes due to some reasons like mergers. So it is advisable to always reconfirm the codes like SWIFT and other details before instructing the bank about transfer.

Also it is advisable to send a copy of transfer receipt to the receiver because if the details are not obvious, the bank may holdup or postpone the crediting the mount to the receiver’s account.

What are Processing Fees for a Wire Transfer?

Processing fees or charges are applied to both, sender as well as receiver. The charges for sending money are collected separately from the sender. But the charges for receiving money are deducted from the transfer funds itself by the receiving bank and other middle banks which also helps in transfer. So the receiver receives the smaller amount than the amount transferred by sender.

Generally, Electronic Clearing House (ECH) has automatic transactions. But SWIFT transfers need some manual interference or involvement. So with SWIFT transfer the processing fees are quite large particularly for small amounts.

Also, according to the bank and account type the charges for receiving money may differ.

HDFC Bank

The receiver is not charged for receiving money through wire transfer by HDFC bank. But the intermediary or correspondent banks may charge the receiver, cutting it from transferred bank. Generally the foreign banks like Standard Chartered are the correspondent banks of HDFC bank. The charges they apply for the transfer can be large like Rs.500 per transfer.

In the transaction, HDFC receives the draft straight from the foreign bank branch. It is then credited to the receiver’s amount. HDFC bank is not capable of informing the exchange rate because the wire transfer is not directly collected by it. But the copy of the credit advice given by the foreign bank will be sent to you if requested for one. The credit advice from foreign bank clearly shows the bank fees which are around Rs.500.

ICICI Bank

Unlike HDFC Bank, ICICI Bank charges fees for current accounts for receiving money through wire transfer. Usually the fees are Rs.250 and service tax. For information regarding foreign currency exchange rates, one has to wait for at least one week. An additional charge is required for a foreign currency inward remittance certificate.

Bank wire transfers are safe, the transfer is fast and immediate and the system is reliable. These are the reasons why sending money by wire transfer is so popular.

For more information: Check out How Wire Transfer Works?