Trying to send money internationally? Wire transfers and money transfers are the most common methods of payment. What are the differences?

Wire Transfer

Wire transfers offer a secure means of transferring funds between banks.  Founded in Belgium in 1973, it facilitates about half of all international fund transfers. Between 1995 and 2015, it grew by over 1000%; an alternative to the SWIFT network is Fedwire.

These are bank-to-bank systems.

The sending bank forwards payment instructions to the recipients. This includes account numbers as well as routing numbers. Generally, the recipient’s bank account is credited within 24 hours of receiving the funds. However, trying to reverse a transfer is tricky. In some cases, a wire transfer cannot be reversed, even if fraud is involved.

While wire transfers are quick, they can also be expensive; Particularly, they are best suited to transferring large sums of money or making one-time international payments.

Money Transfer or ACH

Given the ease of a wire transfer, why would someone prefer a money transfer?

It turns out that money transfers are both less expensive and more secure. Fees are typically less than 1% to the sender and zero for the recipient. It is also easier to reverse the transaction if necessary. The disadvantage is that they can take longer to process than a wire transfer, up to 3 days to get to the recipient’s bank. Then there may also be additional wait time while the bank processes the payment.

There are times when, despite the advantages of cost and security, a wire transfer may be the bestpreferred. This isust as there are times when a money transfer is the most suitable.

The Automated Clearing House network or ACH facilitates money transfers within the United States. This network includes a variety of financial institutions that use the network to create batch transactions. It is generally more economical to make ACH transfers in batches than one-by-one, but it adds to the wait time. For recurring payments, direct deposits are opreferred recommended.

ACH is, however, only used in the United States.

So, what can you do if you want to send money overseas but don’t want to choose to go with a wire transfer?

International Money Transfer

What do you do if you want to send money to India and don’t want to use a wire transfer? There are a couple of options, including that reliable standard, Western Union. Over 160 years ago, it was used to send international funds. It also gives you a lot of flexibility, as you can send funds via your bank, online, or through a mobile app. In the following days, depending on time zones and exchange rates, the transaction will be processed between 1 and 5 days.

Another option is to use a global ACH. However, while a governing body guides the ACH process within the United States, Nacha, no such organizations provide international ACH transfers standards. Therefore, the process is inherently riskier.

So, what is the best way to send funds internationally? It depends on what matters to you. Wire transfers are faster, while money transfers are more secure and have minimal cost.

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