A wire transfer involves the electronic transmission of money between financial institutions or money transmittal businesses. Typically, funds from an incoming domestic wire should appear in your checking account on the same day the transfer occurs. However, wire processing rules vary between banks and a number of factors can delay the transfer.
Federal banking regulations limit the amount of time a bank can hold on to a deposit before crediting the money to your account. Wire transfers must be credited to your account before the end of the business day following the business day the money was received. At some banks, the end of the business day or deposit processing cut-off occurs before the bank actually closes its doors for the day. Wires received after cut-off time are regarded as having been received on the next business day. However, banks typically credit money to the account upon receipt.
Wire transfers are facilitated by the Federal Reserve Banks' electronic transfer system which is known as the Fedwire. The Fedwire operators basically act as an intermediary and move funds between banks. Each bank establishes its own cut-off time before which wire transfer requests must be accepted in order for the funds to be transferred on that particular business day. The wire transfer cut-off time is not necessarily the same as the bank's deposit processing cut-off time. Your wire may take an extra day to process if the sender initiates the transfer after the end of the sending bank's wire cut-off time.
The sender must provide the originating bank with your name, address, account number, the name of your bank and your bank's wire transfer routing number. Upon receipt, your bank uses this information to direct the cash to your checking account. Incorrect information could cause a processing delay and in some instances your bank may simply return the wired funds to the originating bank. Many banks use one routing number for direct deposit services and a separate number for wire transfers. Confusion between these two numbers is often the cause of wire transfers being rejected. Wires should not be confused with automated clearinghouse transfers such as direct deposits, which are simply checks in an electronic form. Wire transfers involving banks always pass through the Fedwire system while those involving cash transfer businesses involve other types of electronic processing systems.
In order to receive wire transfers, your bank must have a federal wire routing number. Some small rural banks and credit unions do not have routing numbers and instead partner with larger institutions that act as intermediaries. In such instances, the intermediary receives the incoming wire before passing the money on to your bank as an automated clearinghouse electronic item. The involvement of an intermediary can add a day to the entire wire transfer process. Additionally, since an extra party is involved there is more chance of an error causing a further delay.
In order to send and receive international wire transfers a bank must have an International Bank Account Number, or IBAN. While multi-national banks have IBANs, many smaller rural banks do not. Such banks use mutli-national banks as intermediaries when sending international wires. The involvement of one or more intermediaries on either side of the transaction may cause the process to take a few days. Time differences between nations can cause further delays. Certain nations are regarded as "slow pay" countries and wires from these nations can take several weeks to process. Additionally, incoming wires from some economically sanctioned nations are subject to scrutiny, delay or even rejection.
- Financial Solutions: Regulation CC Matrix
- Federal Financial Housing Agency: Payment Systems Wire Transfers and Automated Clearing House (ACH)
- United States Department of The Treasury: Frequently Asked Questions and Answers
- United States Securities and Exchange Commission: Instructions for Wire Transfer (FEDWIRE)
- Bank of America: Transfer Funds Overview
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