You can transfer money to another banking account in multiple ways. Common methods of transfer include bank and wire transfers.
Despite the different names, both methods for transferring money have the same result and both require a sender and a recipient (beneficiary) with valid bank accounts. Still, the methods differ in their mechanisms and one may be more preferred against the other, and vice versa.
Knowing the difference between the wire transfer and the bank transfer process helps you select the best option that suits your requirements. Continue reading as we dissect wire and bank transfers to uncover the truth.
What is a Wire Transfer?
A wire transfer is a type of EFT (electronic funds transfer) that happens between one bank account to another.
Wire transfers are mostly undertaken for international money transfers. There is no physical transfer of money; it happens electronically via the financial system.
Under a wire transfer in India, you send money to a beneficiary via your bank. Your bank acts like a middle-person to send information through a secure system to the recipient's bank.
The recipient's bank receives information about the transfer of money before the actual fund gets transferred from the sender to the recipient.
This message sent from the sender's bank contains all important money transfer details, including sender and recipient particulars and the amount to be transferred to the recipient.
Depending on the sender and beneficiary locations, a wire transfer takes around 2-5 business days to complete the transfer process.
The two banks either communicate directly or use the SWIFT system to facilitate fund transfers. SWIFT stands for "Society for Worldwide Interbank Financial Telecommunications."
It works electronically and is a secure messaging network between banks, so it is important to have the SWIFT code for an international wire transfer.
There is no need for the two bank accounts to be linked, as the bank acts as an intermediary between the sender and beneficiary.
The bank authenticates that you have the funds in your account for the transfer. The SWIFT system is used to send information to the recipient’s bank about the transfer and ask them to credit the recipient’s accounts with the funds.
What is Bank Transfer?
A bank transfer is also an EFT payment where you can send money directly from your bank account to the recipient’s bank account. A bank transfer is normally associated with domestic money transfers.
Automated Clearing House (ACH) transfers are widely recognised and commonly used for domestic bank transfers.
ACH implies a network of banks and other financial institutions for transferring funds between them. Direct deposits and direct payments are the two types of ACH payments.
The transfers take place either online or through electronic payments. In India, banks make use of quick money transfer services like National Electronic Fund Transfer (NEFT), Real Time Gross Settlement (RTGS), Immediate Payment Service (IMPS), and Unified Payments Interface (UPI) for swift money transfers within India.
When you transfer funds from your local bank account to an international bank account, the transfer is a cross-border payment.
A bank transfer is a very safe mode of transferring your funds locally or abroad. The bank charges a certain fee for undertaking the transfer of funds internationally.
Difference between: Bank Transfer vs. Wire Transfer
Despite sounding fairly similar, a wire transfer and a bank transfer differ in certain aspects:
Wire transfers enable money transfers both locally and internationally. Bank transfers are mostly for domestic transactions.
Though both methods transfer money from sender to recipient, they work differently.
When it comes to speed, both wire and bank transfer models are fast in different scenarios.
Based on your need to transfer money, you can consider one of the two options for your money transfer.
1. What is a wire transfer?
A wire transfer is an EFT type wherein you can send money from your bank to the recipient’s bank account electronically via a secure messaging system like the SWIFT facility.
2. What is a bank transfer?
A bank transfer is a direct transfer of funds from the sender’s bank account to the recipient’s bank account. It is mainly done for domestic transactions.
3. Which is the fastest way to send money abroad?
Technology enabled online money transfer apps to undertake money transfers internationally with great speed. These apps are as good as other modes of remittance transfers. Jupiter is a 100% digital banking platform that offers online money transfer services internationally. It has the best speed among online international money transfer apps.
4. Which is the cheaper method between bank transfers and wire transfers?
The transfer of money depends on factors like the amount and the destination. Still, comparing the bank transfer vs. wire transfer modes of payment, bank transfers are the cheapest way to transfer money. It is because there is a direct transfer of funds from your bank account to a beneficiary bank account.
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