However, some electronic payments can be reversed. Thieves like to take advantage of customer confusion by promising to send a wire transfer but actually sending money using a different (reversible) method.
Because the money moves quickly, the recipient should not have to wait for funds to clear before claiming or using the money. In other words, there is usually no hold placed on money received via wire transfer. For anybody selling merchandise or services, a wire transfer is safer than a check. Checks can bounce, and it can take several weeks (or more) to find out that a payment was bad.
Watch out for scams involving wire transfers: You send money, the thief withdraws cash (or wires it to a different account, possibly overseas), and you don’t realize you’ve been scammed until it’s too late to recover the funds. Thieves only need to take control of somebody’s bank account for a few days to get cash or send the money elsewhere. Because of this, don’t ever send money to anyone you don’t know.
The term “wire transfer” is often used for various types of electronic transfers that typically aren’t as instant or as safe as bank wire transfers, as described above. In fact, almost all payments are electronic (even checks get digitized).
If somebody asks you to wire funds, think carefully about who you’re sending to. Some transactions are especially risky. For example, if you wire money to an office that pays out the proceeds in cash (such as a retail “money transfer” shop in a strip mall, Western Union, or similar), it is harder to verify who got the money. Anybody with a fake ID can collect the cash.
Some money transfer services (like Western Union) operate independently—you can bring cash for an in-person transfer and the recipient will walk out with cash. The recipient is identified with a phone number or email address.
The main risk with wire transfers is when you send money.
With a wire transfer, money goes from one bank to another, and then to the recipient’s account. Inside of the United States, that means each party to a wire transfer needs a bank account. To open an account, federal regulations require that banks verify your identity (among other things) and ask for a physical address where you can be found.
Wires can be completed in one day, depending on how early you submit your request to send money. It may take several hours for the receiving bank to show the wire proceeds in the recipient’s account—even if the money is at that bank. A bank employee may just need to complete several tasks to make the funds available.
A wire transfer is an electronic transfer from one bank or credit union to another. Learn about the speed, security, and costs of wiring money.