The Loans Canada team sits down with Gary Schwartz of the Canadian Lenders Association to talk about open banking.
What is a Wire Transfer?
Loans Canada: The Country's Best Loan Comparison Platform
There are a variety of ways you can send money, particularly in this day and age with the accessibility and ease of banking technology. Wire transfers are one of the many ways to send money but are especially useful if you want the money to get where it is supposed to be fast. To learn more about what wire transfers are and how they work, keep reading.
How Do Wire Transfers Work?
A wire transfer is a quick way to move money from one individual to another using electronic banking. Wire transfers do not require the use of a third party to transfer funds. To complete a wire transfer, you need the recipient’s full name, address, banking or credit union information, and account information. For international wire transfers, you will also need the routing number of the recipient. Once you have all the information, you will need to visit your bank to complete the wire transfer.
The secrets your bank doesn’t want you to know, click here.
Often wire transfers are completed through a bank, but it can also be done using a nonbank provider. In addition, wire transfers can be domestic, within Canada, or international, outside of Canada. An interesting fact about wire transfers is they come from the olden days when banks relied on telegraph wires to make a money transfer, that’s how they got their name!
Do you know the difference between a bank and a credit union? Find out here.
When is a Wire Transfer the Right Option?
As a general rule of thumb, wire transfers are ideal when time is a concern. If you need to get money from one place to another in a short period of time, wire transfers are the best method.
Common instances when wire transfers are used include sending money to family or friends who are far away and sending a large sum of money for a big ticket purchase. For big purchases, such as a house purchase, the funds are verified before they are sent which will make the transaction go smoothly. Other methods of payment, for example, cheques, can have complications and therefore fail to be processed, all of this is avoided with wire transfers.
How Long Does a Wire Transfer Take?
A wire transfer is not instantaneous, the process can take two to five business days to be completed. The reason a wire transfer is not instant is that the payment needs to be cleared through the sender and receiver’s bank. Banks have clearing processes in place before wire transfers are completed which take time.
Usually, international transfers take longer than domestic transfers. This is because an international transfer needs to go through more clearing than a domestic transfer does. A domestic wire transfer could be completed within the same day it is sent whereas an international transfer could take several days.
Want to know how to get a bank account for free in Canada? Check this out.
Does it Cost Anything to Wire Money?
Given the convenience and speed of wire transfers, there is a price, particularly if you go through a bank. The price of a domestic transfer is cheaper than an international transfer. The sender always has to pay a fee, but sometimes the recipient does as well. It depends on their bank and whether they charge a fee for receiving wire transfers or not. If you want to save money on the cost of a wire transfer, a good alternative is using a nonbank provider.
There are a number of fees related to wire transfers that you can expect from Canadian banks. These fees include incoming domestic fees, outgoing domestic fees, incoming international fees, outgoing international fees, initiation fees, and tracing fees. You may not be subject to all of these fees when doing a wire transfer, it depends on the nature of the transfer you’re trying to complete. Below is a summary of how much each fee is for the major banks in Canada.
For the good, the bad, and the ugly of Canadian banking fees, check this out.
Can You Reverse a Wire Transfer?
As soon as the wire transfer recipient’s bank accepts the payment, the wire can’t be reversed. However, there is a period between the time when the wire transfer is sent and when it is accepted by the recipient’s bank that the transfer could be cancelled. If a cancellation notice is sent from the sender’s bank to the recipient’s bank in this period, the wire transfer can usually be reversed.
That being said, it is not wise to rely on wire transfer cancellations. More often than not, once a wire transfer has been completed, it is a done deal that cannot be reversed.
Are Wire Transfers Safe?
Sending a wire transfer is a secure way of sending money. There is no risk that the money will be deposited to an incorrect account because you need the recipient’s personal information to complete the transfer. In addition, banks have been doing wire transfers for many decades, they have perfected the process over that time to ensure it is safe.
Although, there are scams associated with wire transfers that you should be cautious of. An example is a fraudulent email stating that you’ve won a prize and to claim your prize you must wire some money to the prize holder. Another example is an email that states someone needs your banking information so they can send you a wire transfer. It should go without saying that you should never send money or your personal information to someone you don’t know or trust. If an email from a stranger seems too good to be true, it probably is!
Wire transfers are often implemented in financial scams, check out this video below to learn more about how to protect yourself against loan scams.
Wire transfers are a safe, convenient, and fast way to send money to someone. If you have additional questions about how to send a wire transfer or the applicable fees, reach out to your bank. Each bank has unique processes and fees, they can explain the precise specifics that you have questions about. Wire transfers will give you peace of mind the next time you need to send someone money!
Rating of 4/5 based on 10 votes.
Largest Lender Network In Canada
Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.
goPeer — Helping Consumers Achieve Financial Freedom by Connecting Canadians Looking For Financing With Canadians Looking to Invest
goPeer is Canada's first consumer peer to peer lending platform and connects creditworthy Canadians looking for a loan with everyday Canadians looking...