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).
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.
It is difficult to bank anonymously within the U.S., which limits thieves’ ability to pull off a scam with a bank wire transfer. You can keep your identity from individuals and businesses to some degree, but law enforcement generally has the ability to find you. Even Swiss banks cooperate with U.S. law enforcement efforts.
Automated clearing house (ACH) transfers are also different. The money moves from bank to bank, but the transfer takes several days, and the payee won’t know for sure if the funds will arrive. ACH payments can be reversed, but only in limited circumstances.
A wire transfer is an electronic transfer of money. A traditional wire transfer goes from one bank or credit union to another using a network such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT) or Fedwire.
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.
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.
When you need to send or receive money quickly, a bank transfer or a wire transfer might be the right tool for the job. Wire transfers are immediate, reliable, and safe (as long as you’re not sending money to a thief).
For significant transactions—like buying a home—wire transfers or cashier’s checks might be your only options. Why? The short answer is that the funds are available to the recipient more or less immediately.
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.