As the global economy continues to expand, sending money to businesses and individuals abroad is more common than ever. That’s why it’s important to understand the basics of international wire transfers. A quick, secure and reliable method of moving money electronically between banks, wire transfers make it easy to do business across borders. According to World Bank data, roughly $719 billion was wired between countries around the world in 2019—and that figure is growing by leaps and bounds. Here’s what businesses need to know about international wire transfers.
International wire transfers are also known as remittance transfers. These transactions are often handled by banks, but can also be facilitated by credit unions and other financial service companies. Banks, credit unions and other traditional financial institutions are usually the best options for infrequent transfers across borders.
Executing an international wire transfer is simple enough, and works like most other forms of digital funds transfer—simply log in, input recipient information and process the transaction. That said, to execute a wire transfer takes no small amount of information, including the recipient’s complete banking information. Moreover, most banks require wiring privileges when it comes to executing international wires.
International wires get processed through a payment rail like the Society for Worldwide Interbank Financial Telecommunication (SWIFT) or Fedwire. The transaction is processed instantly; however, it can take anywhere from 24 to 36 hours for the funds to land, depending on the bank and destination.
Sending money through wire transfer has some real advantages—especially when it comes to businesses transacting internationally. Here are a few pros of making cross-border electronically using a wire:
There are some potential negatives businesses need to keep in mind when considering an international wire transfer. here are a few of the drawbacks that come with sending money through a wire:
Some financial transactions are ideally suited for wire transfers. Sending a one-time large sum transfer is a prime example. For business owners, wire transfers are common when it comes to paying monthly or quarterly invoices. This mode of payment is also applicable for one-off payments—especially if they require expedited delivery or you’re moving a large sum. The best instances for using an international wire transfer include:
All that said, remember that wire transfers require the recipient’s complete banking information. International wire transfers are a great way to send large sums of money overseas on an occasional basis. When it comes to smaller sums or more regular transfers, other forms of digital payment are often more applicable.
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