Wire transfer is a common, secure, fast, and reliable means for sending money to individuals and originations both home and abroad. People leverage this transfer method to send money to family, friends and loved ones as it has an edge over other transfer methods. However, does that mean sellers like you can leverage wire transfers? Is it safe for you?
Wire transfer remains one of the safest means to send money locally and internationally. As a seller, you can accept payment with this method as it boasts of features that can protect you from fraudulent or dishonest customers.
Care to know more about wire transfer, how it works, how to initiate it, types, and if it is ideal for your business? Below, I have highlighted all the important things you need to know about wire transfers. Read on to find out more.
Is Wire Transfer Safe for Seller?
Before we look at if wire transfer is safe for sellers not, let’s take a brief look at what wire transfer is
A wire transfer involves the transfer of money electronically and not manually. Most commonly, the term “wire transfer” refers to bank wires, which transfer money between banks via networks like the Fedwire Funds Service (Fedwire for short) or Society for Worldwide Interbank Financial Telecommunication (SWIFT).
The term “wire transfer” goes back to when long-distance communication was conducted over telegraph wires. To transfer money over long distances, customers would visit a telegraph office and initiate payment. The telegraph office would then send an encrypted message to the telegraph office near the recipient. That encrypted message authorized the release of funds to the individual on the other side.
Types of Wire Transfers:
There are two main types of wire transfers; domestic and international. Each type of wire transfer is used for different purposes and scenarios. Let’s take a closer look at each type of wire transfer.
- Domestic wire transfers
Domestic wire transfers are sent and gotten in the same country of origin. For instance, a wire sent from a bank in Texas to one in Florida would be considered a domestic wire transfer.
- International wire transfers
International wire transfers are those made to banks outside the country. For instance, if you initiate a wire transfer from a bank in the United States to a bank in France, it is safe to say that you’ve made an international wire transfer.
How Do You Make a Wire Transfer?
Thanks to technology, a wire transfer can happen in several ways, even beyond the telegraph wire of many years back. Regardless of the type of wire, there is always a sending and receiving party and a middle man who facilitates the transfer. When you make a wire transfer via your bank, you are required to provide the following information:
- Recipient’s routing number
- Recipient’s name
- Recipient’s bank account number
- Amount of money to be sent
If you make a wire transfer via a nonbank provider such as Western Union or MoneyGram, you’ll typically need the recipient’s name, phone number, and address. Whether you are using a bank or third-party wire transfer provider, you’ll need guaranteed funds to make your transfer. You need to pay the money you are sending in advance, funded by your bank account or cash.
Initiating a Wire Transfer Online
How do you initiate a wire transfer online?
To initiate a wire transfer online, you generally need to log into your bank account and go to the section for transfers. From there, you’ll input the information mentioned above and transfer funds online without stepping a foot in a branch.
How Much Money Can You Send Through a Wire Transfer?
Banks and credit unions set their max daily limits for wire transfers. But, you should know that wire transfers, be it domestic or international, are often scrutinized by banks before approval.
Banks are required to report all wire transfers over $10,000 using a Currency Transaction Report (CTR) and submit it to the Financial Crimes Enforcement Network (FinCEN). Banks are also liable for reporting any strange activity, like a customer trying to send several bank wires below $10,000 so that the transaction wouldn’t be reported.
Dubious bank wire activities are reported using a Suspicious Activity Report (SAR) and filed with FinCEN. If a bank doesn’t file the necessary CREs and SARs, it could be subject to fines for breaching banking rules.
How Much Are Wire Transfer Fees?
Wire transfers have processing fees. These fees differ per provider. Because international wires are sent abroad, you expect them to cost more than domestic wires sent within a country. Based on a survey, the median incoming domestic wire transfer cost was $5 in 2021, while the median outgoing domestic transfer fee was $25. Outgoing international wire transfers may cost $45 to $50 or even more.
Many United States banks have gotten into the practice of ignoring fees for incoming wires and only charging account holders when initiating a wire transfer. Contact your financial institution to see if their accounts generally or your particular account tier offers wire transfer fee waivers or reduced fees. You could also find that your bank charges a reduced wire transfer fee if you make the transfer via your online banking portal rather than visiting a branch and making the wire yourself.
Fees generally depend on the wire amount and many other factors when sending a wire transfer via a nonbank provider. Nonbank providers have many extra fees that can affect the cost of a wire transfer.
These fees are:
Loyalty programs: Patrons can earn points when sending money and redeem points for reduced fees.
How you fund your wire. There are different fees for using credit cards and debit cards, including funding directly via your bank account.
It’s good to check all the fees before making a transfer.
Wire Transfer for Sellers: Is It Safe?
Should you consider wire transfer as a seller searching for an ideal way to collect payment for your products? Is it safe?
Whether you are a seller or an individual trying to send money to an individual, you can always bank on the safety of wire transfer. Compared to other payment options, wire transfers are considered an extremely safe way to take payment for your products. They are secure transactions made by authorized personnel at your bank or nonbank wire transfer service.
The best thing about wire transfers for you as a seller is that once made, they cannot be canceled except it’s an international wire transfer (such transfers can be canceled within 30 minutes of initiation).