Technology has made it super easy for you to transact across the globe with ease and comfort. Today, you can conveniently complete any transaction with a wire transfer or bank transfer.
But what are the differences between wire transfers and bank transfers, if I can complete them electronically? This article explains the glaring differences between both transactional processes.
What Is A Wire Transfer?
A wire transfer is the process of sending money electronically from one financial institution (e.g bank) to another. They are initiated by eligible financial institutions and usually happen over secure networks– like the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system– and are efficient for local and international transactions. However, they are mostly preferred for foreign transactions because of the perks they offer, like speed.
Many foreign remittance institutions you use operate with wire transfers, and a solid example is Kyshi– through the Express feature. There will be more details on Kyshi’s wire transfer in this article. But next, what is a bank transfer?
What Is A Bank Transfer?
A bank transfer, like a wire transfer, is a payment service that allows you to send money between accounts. But unlike wire transfers, it is initiated by banks and has other types of transfers– (including wire transfers)– like the Automated Clearing House (ACH) transfers and Electronic Funds Transfer (EFT). And yes, a bank transfer supports internal transfers within the same bank.
ACH transfers are the most common type of bank transfers. An ACH system is just a group of financial institutions that receive and remit money between banks. There are only main types of this system. They include:
Direct deposits
Direct payments
What Are Direct Deposits?
Direct deposits are payments made by a sender to transfer money to an account. An instance of a direct deposit can be to pay interests and annuity, or to pay a worker’s salary. They are usually done by government bodies and profit organizations.
What Are Direct Payments?
Direct payments, on the other hand, are made by the receiver. In these payments, the receiver requests money from the sender and the transaction is completed using the debit and credit system. An example of this kind of transaction is an automatic payment for a recurring bill– e.g a subscription service.
It is vital to note that while bank transfers allow you to conduct local and international transactions, they have varying processing times and costs across the transfer types. This is one distinctive feature from wire transfer.
Differences Between Wire Transfer And Bank Transfer
What features differentiate a wire transfer from a bank transfer? Find them below.
1. Processing Time
When it comes to sending money, speed is one of the most important factors to consider. Cross border transactions with wire transfers usually take from a few minutes to 24 hours to complete. However, bank transfers can take from within 24 hours to about 3 days to complete. The processing time depends on the type of transfer and destination.
2. Transaction Cost
Wire transfer transactions are considered to be more expensive than bank transfers as wire transfer charges can be up to 3% or more. But bank transfer charges are lesser, as they are often on a flat rate and in some conditions, free.
3. Risk Of Money Loss And Recovery
Every transaction you perform across a wire transfer or a bank transfer is safe. However, what happens when there is a transaction error that needs a reversal? It is easier to reverse a transaction from a bank transfer than on a wire transfer. One of the reasons is that bank transfer transactions take a while to complete, however, wire transfer transactions are almost instantly delivered. Also, error reversals with wire transfers typically take long official processes.
4. Source Of Transaction Initiation
You may be generally familiar with the knowledge that payments are initiated by the sender only. And yes, this is typical with wire transfers. However, with bank transfers, the receiver can also initiate transactions in the form of requests. See it as the receiver requesting for their payment. This is the situation with your automatic subscription renewals. The receiving bank requests payment for their services from you, and you get a debit for paying.
5. Service Providers
Wire transfers are open to several qualified financial institutions, from financial service providers to companies and banks. All they need is to pass necessary due diligence and compliance processes. However, only banks have the license to provide bank transfer services.
6. Reason For Transfer
Wire transfers are primarily used for personal transactions, including sending money to loved ones, paying for tuition, starting a business, etc. However, bank transfers have a wider usage, including bill payments.
7. Transfer Type
Wire transfers are typically electronic, as you don’t need to visit any service center to complete your transaction. However, you can complete bank transfers either physically or electronically.
Kyshi Express As A Convenient Wire Transfer Medium
Kyshi Express is a feature that allows you to send money from the UK to Nigeria in seconds using the wire transfer system. With Express on Kyshi, you can send GBP to your loved one back home and they will receive it as USD in their domiciliary account or Naira in their Nigerian bank account.
However, unlike most wire transfers, Kyshi Express transactions are instant and inexpensive.
What You Should Know
Wire transfers and bank transfers are efficient means of sending money internationally. However, they have their unique perks that cater to different needs. While wire transfers are quick, they can be expensive. And, bank transfers, on the other hand, can be slow but more affordable and allow you to interact physically.
If you need to send money from the UK to Nigeria (in Naira or USD), use Kyshi Express to send money swiftly, safely, and affordably.