The bank wire transfer involves two or more banks and is somewhat complicated. When money is sent as a wire transfer, it goes as international bank transfer. So there has to be inter-communication between two or more banks when transferring money through bank wire transfer. Bank wire transfers are often the most expedient method for transferring funds between bank accounts.
The Bank Wire Transfer involves international bank transfer directions between banks using either SWIFT codes or BIC codes or IBAN. So, depending on the country which the bank operates, the methods used to communicate wire transfer data will differ. Banks collect payment for the service from the sender as well as from the recipient.
The sending bank typically collects a fee separate from the funds being transferred, while the receiving bank and intermediate banks through which the transfer travels deduct fees from the money being transferred so that the recipient receives less than what the sender sent.
In the case of Europe, bank wire transfer instructions commonly use the SWIFT code system with IBAN numbers. The SWIFT system was established by banks in 1974, offering a secured transfer platform. Many international banks have a minimum of one connection to the SWIFT system. Alternatively, some banks make use of other banks' SWIFT connections to facilitate Bank Wire transfer for them.
In the case of USA, the banks use proprietary bank wire transfer system named ACH transfers with routing numbers. When compared to USA, other countries normally use SWIFT code messaging system. This shows how complicated is the bank wire transfer directions which involves many banks operating in different regions. So one may wonder how bank wire transfer gets from completely separate systems to another. It is essential to know how banks (operating in different countries or regions) perform bank wire transfers.
Since, any international bank has to work between different coding systems, most of the banks' head offices have multiple systems which enable to communicate between multiple systems. Usually, they have the internal bank/branch system including SWIFT connections. Some banks have CHIPS and Fed Wire and many more. Also, in some cases, instead of having branches, banks have established central locations to coordinate all bank wire transfer directions using different systems.
The other important aspect is how to ensure the security of wire bank transfer. Hence, bank wire transfer should include correct information such as the Payee or beneficiary's name and any other relevant details. Many banks operating in Europe and USA are very strict on ensuring whether the wire bank transfer details are exactly match the recipient's. It is hard to send or get money anonymously, so itâ€™s harder to pull off a scam with a bank wire transfer. In essence, the transfer money reaches the genuine payee while maintaining that the bank wire transfer information is complete and accurate. This very reason, the bank wire transfers often get delayed or returned.
Another question that comes to anyone's mind, how funds are moved in a bank wire transfer. The money is an important part of the bank wire transfer while recognizing the communication process as secondary. In essence, the bank wire transfer system creates two messages- 1) One for the recipient's credit of bank wire transfer and 2) the other for the bank settlement of bank wire transfer. This means there are two separate systems for bank wire money settlement. Both systems should work hand in hand and any recipient will not receive a bank wire transfer prior to settlement is reconciled.
If you are doing business in a developing country such as India where foreign exchange regulations are there, your bank wire transfer (in US Dollar or Euro or Sterling Pounds)) has to be approved by Central Bank or Reserve Bank of India. In other words the foreign funds wire transferred should come from the foreign currency funds held on behalf of India. Since, the bank wire transfer involves transferring foreign currency from one country to another, it is mandatory that your bank getting approval to deal in foreign exchange amounts.
In conclusion, we have learnt that bank wire transfer involves many participants such as sending bank, recipient bank, intermediary bank the sending central bank and the recipient central bank. Also, it involves communication as well as the movement of money. No wonder, bank wire transfer is a complicated one.
We now know wire bank transfers involve sending bank, intermediary bank, beneficiary bank and sending central bank and destination central bank. On the one hand a wire bank transfer involves communication with many participants and on the other; it involves the movement of funds.
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