Direct Deposit vs. Wire Transfer

Technology has transformed several aspects of modern life in post-industrial countries. Money and payments are no exception. Electronic transmissions have largely replaced paper checks as a form of payment for both consumer and commercial financial transactions. Although direct deposits and wire transfers are two forms of electronic transactions that share similarities, they serve different functions.

Many wire transfer operations are actually scams designed to separate victims from their money. The scam artists may request that you deposit a check from them in your bank account, and wire them the cash to cover the check. Other scams involve pleas for money from individuals with whom the victim has formed an online romantic relationship, online "vacation rental" services or sellers who insist on payment by wire transfer. However, a wire transfer is like cash -- once you have initiated the wire transfer, it is nearly impossible to cancel the transaction or to get your money back.