Wire Transfer
Definition
A direct electronic transfer of funds between banks, processed individually in real time for same-day delivery. Faster but more expensive than ACH transfers.
A wire transfer is a direct bank-to-bank payment that processes individually (not in batches like ACH) and settles on the same day, often within hours. This makes wire transfers the preferred method for urgent, high-value transactions like real estate closings, international payments, and large investment purchases.
Domestic wire transfers in the US are processed through the Fedwire system, operated by the Federal Reserve. International wires use the SWIFT network, connecting banks across countries. Domestic wires typically settle within hours; international wires may take 1-3 business days due to correspondent banks and time zone differences.
The main drawback of wire transfers is cost. Banks typically charge $15-$35 for outgoing domestic wires and $35-$50 for international wires. Receiving banks may also charge $10-$25 for incoming wires. These fees make wires impractical for routine payments or small transfers.
Wire transfers are essentially irreversible once processed. Unlike ACH transfers, which can be returned within a few days, a completed wire transfer can only be reversed if the receiving bank cooperates. This makes wire fraud a significant concern — scammers who trick victims into wiring money are notoriously difficult to recover from.
For large financial transactions, wire transfers provide certainty. Real estate closings, car purchases, and large brokerage funding almost always use wires because the sender needs confirmation that the funds will arrive on a specific day, and the receiver needs assurance that the payment is final.
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Frequently Asked Questions
When should I use a wire transfer instead of ACH?
Use a wire transfer when you need same-day delivery (real estate closings, urgent payments), for large amounts where the speed justifies the fee, or for international transfers. For routine payments and transfers, ACH is cheaper and sufficient.
Can a wire transfer be reversed?
Once processed, wire transfers are nearly impossible to reverse. You can request a recall through your bank, but it requires cooperation from the receiving bank and account holder. This is why wire fraud is so dangerous — verify all wire instructions carefully before sending.