Wire Transfer: Definition, How It Works, Benefits, and Costs

Wire transfers and bank transfers might be considered two different things in the banking world.

For now, the discussion will not focus on the differences between the two but will specifically explore wire transfers from their definition to the costs involved.

In the business world, conducting wire transfers is very common. A wire transfer is a method of sending money between banks and is a way to transfer funds from one country to another through financial institutions.

It is a common way to send money abroad or receive money from abroad. Let's find out all about wire transfers in this article.

What is a Wire Transfer?

A wire transfer is a form of electronic payment that sends money directly from one bank account to another.

In the banking world in Indonesia, wire transfers are commonly known through remittance services. remittance.

The Financial Services Authority (OJK) itself explains that wire transfers are activities that are always supervised by them, and this is very reasonable because transferring money abroad for business purposes is unavoidable.

Using wire transfers is actually very beneficial in terms of security and efficiency.

Whether the wire transfer is between individuals, companies, or institutions, transferring money abroad or from abroad to Indonesia becomes easier.

Where Can We Perform Wire Transfers?

Although it is considered safe, you must understand that for even greater security, you should choose a wire transfer service from an institution that has a license from Bank Indonesia.

Referring to Bank Indonesia Regulation Number 14/23/PBI/2012 concerning Fund Transfers, fund transfer service providers are banks and non-bank legal entities in Indonesia that have obtained approval or a license from Bank Indonesia as:

1. Participants in the BI-RTGS System (Bank Indonesia Real Time Gross Settlement)
2. Participants in the SKNBI (Bank Indonesia National Clearing System)
3. Providers of APMK (Payment Instruments Using Cards) that offer fund transfer services

From the explanation above, some institutions that are safe and trustworthy for conducting wire transfers are post offices, banks, and several money transfer service providers.

How Wire Transfers Work

To understand more about wire transfers, in a wire transfer, banks act as payment intermediaries.

The sender sends funds to their bank, which then sends the funds to the receiving bank, which eventually disburses the funds to the final recipient.

Since banks act as intermediaries between the sender and the recipient, no direct connection is required between the two bank accounts.

Instead, the bank will verify the funds available in the sender's account to ensure that the transfer can be carried out.

Next, they will use the SWIFT system to send all relevant information about the transfer to the recipient's bank, requesting that the recipient's account be credited with the transferred funds.

电汇的类型

In the world of wire transfers, there are two types you need to know: domestic and international.

• A domestic wire transfer is any type of wire transfer conducted between two different banks or institutions within the same country.
• An international wire transfer starts in one country and settles in another. The sender must perform an international transfer even if they are sending money to someone in another country who has an account in the same bank. This payment requires a routing or SWIFT code.

Risks of Wire Transfers

You would agree that as long as wire transfers are conducted through secure institutions, the entire process up to receiving the funds is also safe.

However, you also need to understand the risks of wire transfers. As long as you know who the recipient is, it will be safe. This is because in the wire transfer process, the recipient of the money is required to provide clear identification.

So, if there is anything that makes the wire transfer suspicious, the party conducting the wire transfer has the right to freeze the fund transfer and halt the wire transfer process.

Benefits of Wire Transfers

Wire transfers work by the sender making a payment for the transfer, and the sending bank sends a message through a secure system to the receiving bank.

This message contains all the important information about the transfer, including the sender’s data, the recipient’s data, and the amount to be transferred.

One benefit of wire transfers is the security in transactions between institutions or individuals from one country to another, which can be done safely and quickly.

How Long Does the Wire Transfer Process Take

Talking about transfer speed, wire transfers depend on the type of wire transfer you use.

Domestic bank transfers may take up to three days in Indonesia, but they are usually much faster, especially if the sender and recipient use the same banking institution.

For international wire transfers, it can take up to five business days. However, human error and other factors can sometimes cause delays, in extreme cases up to three weeks.

Read Also: How to Transfer Money Abroad Through BRI

Things to Consider in the Wire Transfer Process

Now that you understand what a wire transfer is, let's discuss various aspects related to the technical definition of wire transfers, particularly regarding the costs, which you need to consider before making a wire transfer.

Wire Transfer Fees

It's important to note that no physical money is transferred between banks or financial institutions when making a wire transfer.

Instead, information is sent between banking institutions about the recipient, the recipient's bank account number, and the amount transferred.

Regarding the costs, this can be somewhat complex as there are various wire transfer fees that you need to find out from different wire transfer providers to compare which one is more affordable.

Full Amount Transaction Fees

The term “Transfer full amount” means that the recipient will receive the entire amount of money you send without any deductions.

For example, if you send US$100, the recipient will receive the full US$100. However, as the sender, you will be charged a transfer fee upfront, which usually ranges between US$20-30, depending on the policy of the fund transfer service provider.

Non-Full Amount Transaction Fees

In contrast to full amount transactions, in this category, the recipient will receive the funds after transaction fees have been deducted.

The amount of this deduction varies depending on the policies of each bank and transfer institution, but it generally ranges between US$10-15. In other words, the recipient will bear the transaction fees.

Minimum and Maximum Transfer Using Wire Transfer

In addition to the above fees, different banks or institutions typically charge additional fees.

This is something you need to pay close attention to. You also need to understand the minimum and maximum transfer limits when using wire transfers.

These limits vary between banks and remittance service providers. Generally, the minimum transaction is between Rp 100,000 and Rp 1 million.

For foreign currency transfers, customers have a maximum limit of Rp 100 million per month. If you wish to send an amount exceeding this limit, the bank or related institution will require you to provide appropriate supporting documents.

Reputation and Licensing of Fund Transfer Service Providers

You don’t need to worry about the reputation and licensing of fund transfer service providers. As mentioned above, only banks and non-bank institutions that have obtained licenses from Bank Indonesia can provide wire transfer services.

Know the SWIFT Code of the Sending and Receiving Bank

There has been a discussion about SWIFT. What is it actually? SWIFT stands for Society for Worldwide Interbank Financial Telecommunication.

Kode SWIFT diperlukan saat Anda melakukan wire transfer, karena berfungsi sebagai identifikasi unik yang memungkinkan pertukaran data yang aman dan menjaga kerahasiaannya antara dua lembaga keuangan.

Every bank in the world has a unique SWIFT code, so make sure you understand the SWIFT codes for both the sending and receiving banks in your destination country before making a transfer.

How to Send Money via Wire Transfer

Many individuals or institutions may still be doing offline wire transfers.

Hal tersebut tidak bisa disalahkan juga karena ada lembaga seperti kantor pos yang memang layanan wire transfernya Anda harus ke kantor pos terlebih dahulu.

Here are the steps for sending money via offline wire transfer:

1. Visit a bank or institution that provides wire transfer services. Make sure to bring your bank book, ATM card, and identification card.
2. Fill out the remittance form with information such as the sender's name and identity, recipient's name and identity, the amount of money to be transferred, destination bank name, recipient's bank account number, and other data. Ensure all information is correctly and completely filled out.
3. If the company does not have an account with the bank or institution, you can deposit the funds directly. However, if the company is a customer, the funds to be transferred can be debited directly from the company's account.
4. After the process is complete, make sure to request and keep the transfer receipt properly.
5. Check within 3-5 business days to ensure that the funds you transferred have been received in the destination account. You can confirm this with the sending bank or directly with the recipient.

Alternatives to Wire Transfer

What if you find wire transfers difficult but still want to send money abroad? The best way is by using telegraphic transfer from Easylink!

Easylink meets your need for transferring money abroad without the Global Transfer facility. Easylink is a trusted platform for fund transfers with a license from Bank Indonesia.

With a guarantee of over 170+ countries in local currencies and USD, your fund transfer process will be smooth, fast, secure, and simple.

Come on! Send money abroad now using Easylink, which will always ensure safe, fast, online, and cost-effective wire transfers for both individual and business needs, with the best Customer Service team support!