Banks have been around for centuries, with early models dating back a few millennia. Banks are known for safekeeping and investment. This financial institution is considered a forerunner when it comes to innovating products and solutions that will benefit both businesses and consumers alike. Most, if not all, of these, are mainly focused on handling and moving money around.
The primary way of moving money is by hand exchange from person to person. Banks improved on this method by creating a process that lets users send cash over great distances, and this approach is currently known as Wire Transfer.
Here are things you should know about it:
Wire Transfer Overview.
Banks have given business owners a broader reach by providing their customers the ability of sending cross-border payments via wire transfer. Such service opened a way for users to purchase products from entrepreneurs that either has no physical store or have shops that are located far away. The beauty about wire transfers is that it is not limited between customers and companies, it can also cover business to business transactions.
Wire transfer benefits include:
1. Security.
Money need not be transported physically across borders by a customer or a business representative. This minimizes the risk of danger as the responsibility for cash movement is given to the bank. Banks have insurance coverage, which adds another layer of security for their patrons should any untoward incident happens.
2. Business Opportunity.
Wire transfers need not be limited to banks. Several companies have emerged focused mainly on transferring cash from one client to another. This type of business offers does not require bank accounts to be maintained by both the sender and recipient. Service fees can either be a flat rate or a percentage of the amount being sent. People use this service because:
- Transactions are often completed in a short time.
- Multiple currencies are supported including automatic conversion.
- Satellite branches are closer to the users.
- Longer office hours than banks.
Unfortunately, money transfer businesses are susceptible to fraudsters since identification cards can be forged. Bank accounts go through a more stringent identification process before being created and used; therefore bank wire transfers are more secure. The money transfer model has expanded over mobile applications too, providing a much easier, simpler, and faster way to send and receive funds.
How It Works.
Wire transfer, as the term implies, is a transfer of data from one user to the other via wires. Early records show Western Union conducting a successful wire transfer through the use of the telegraph lines back in the late 1800s. Electronic data contained these basic elements:
- Sender Information
- Recipient Information
- Amount
- Location ID of Origin
- Location ID of Destination
These five items are used to identify and track each transaction. Eventually, more parameters were added to include date, time, and transaction ID tags, to name a few. For banks, the process flow for wire transfers is similar to making a deposit. The difference is that the target account is that of the recipient, not the sender. This can be done over the counter, where a bank teller assists to complete the transaction.
Account to account transaction is another form of wire transfer. Both the sender and recipient have bank accounts. They need to fill out a form that adds each other’s account numbers to their trusted recipient list. It’s also possible that only the sender that adds the recipient’s account number to his record and the recipient does nothing.
A perfect example is a parent providing an allowance to their child who’s living and studying away from them. Both parties have individual bank accounts. The parent adds their child’s account to their trusted recipient list. The parent can now move funds from his account to his child’s. With today’s technology, this can be done through an ATM or the bank’s mobile banking services.
For money transfer businesses, the process involves filling up a form that has:
- Sender’s basic information like name, address, and contact number.
- Recipient’s basic information such as name, address, and contact number
- Amount of money being sent.
As you can see, there are no account numbers needed, and account to account transactions do not happen when a customer uses money transfer services. The recipient has to claim the amount sent personally and has to present valid identification before the money is released. The sender is provided with a transaction number which he sends to the recipient. The recipient will use the transaction number as a reference when he claims the cash.
Conclusion.
The wire transfer model has withstood the test of time and has proven itself to be a very reliable way to move funds. Innovations and upgrades have happened over the years, and it has helped evolve the technology that made wire transfers go mobile, providing the customer of today more security and further convenience.
