How Money Transfers Work
Sending money online is a technology that most of us take for granted, even though the ability has only been with us for a few years. Today, we accept at face value that money we send in one part of the country will arrive safely in another part of the country in a matter of hours. Even sending money around the world is possible, making international payments as simple as filling out a form? How does this international payment system work, though? More importantly, why do banks trust it?
The Lowdown on Money Transfers
There are a number of ways to send a wire transfer, however, you want to be able to do it in the most convenient way possible for both parties. Veem is a platform for business to business payments in the most simple and inexpensive manner. This platform currently runs across 60 countries, and is continuing to add countries to make payments even that more convenient for businesses.
The term wire transfer stems from a bygone era when financial transactions were transmitted via the telegraph. The telegraph wires transmitted the instructions and details of the transaction, which authorized the receiving institution to act.
Today, the process is only changed by the method of transferring those instructions. Instead of telegraph wires, banks use telecommunications services and the internet to transfer financial instructions within a brief 24 hour period. Still, no money is really moved in a physical sense. The information transmitted tells the receiving institution or company how much money has been authorized, from which account holder it was drawn, and also confirms the sender’s bank account number.
Wire transfers sent via a service usually don’t require a bank account number, because the sum, along with a fee, is paid upfront. The sender does usually need to provide the recipient’s name, the amount to be transferred, and the destination.
Bank Security and Money Transfers
One might wonder how or why banks allow wire transfers, particularly when sent to an entirely different financial institution. The answer is simpler than you might expect. The issuing bank won’t allow money to be sent that isn’t already cleared in the sender’s bank account. As long as the sender has the money to send, the transaction is treated similarly to any other electronic transaction.
Once the recipient is able to access the money, the issuing bank clears the transaction and allows the recipient to spend it or withdraw it.
It should be noted that the sent funds are immediately withdrawn from the sender’s account as soon as the transfer is processed. This includes the transfer fees, which typically amount to between $25 to $43. The fee depends on the financial institution and on the amount sent.
In the past, wire transfers had to be completed in person at the issuing bank or a money transfer service location. Today, that method is still an option, but the convenience of the internet has made the process even simpler.
By going to the financial institution’s website, or that of the money transfer service provider, a transfer can be completed without leaving home. The sender receives a tracking number and other details specific to the transfer as a means of following the order and maintaining a record of the transaction. Banks, money transfer services, and other financial institutions maintain a very high degree of security and problems with wire transfers are rare. The tracking number is just one additional failsafe.
The digital revolution has advanced the way we do most things. Changing the way we send money is one such advance and it makes our lives that much easier, allowing us to avoid the red tape and complications of the past. Sending money to a needy loved one or to pay for a service or product has never been easier or safer.
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