29 Jul 2022
Now that online money transfers have become easy and convenient, would you not like to know what they were like just before what they have become today? Until about a couple of decades ago, expatriates would send money across the borders through banks. Take an example of the world’s 75th economy Ghana which has a rich resource base. Its people travel to developed countries to earn better and send money to Ghana to support their family needs.
They go to developed countries like the UK, Europe, Canada, Australia, Switzerland, and other parts of the world to find better employment opportunities. Multiple remittance transfer methods are available for them to transfer funds internationally. Wire transfer is one of the popular methods most expatriates use for their cross-border payment transfers.
Let’s learn more about wire transfers and the best way for expats to send money home.
Before the advent of online money transfer companies, banks did transactions through wire transfers. It was a time when worldwide banks monopolised international remittance transfers, and the expatriates only had banks as the legal channel to remit money from one country to another.
Over time, banks gained the people's trust, leading to an increase in banks' customer base worldwide.
A wire transfer is an electronic transfer of funds from one bank to another. A wire transfer can also occur in two different accounts of the same bank or two other accounts in different banks.
Banks use networks such as Fedwire Funds Service (Fedwire) or Society for Worldwide Interbank Financial Telecommunication (SWIFT) for wire transfers.
The term ‘wire transfer’ originated in the past when long-distance communication took place through telegraph wires.
Wire transfers have two types only. They can either be domestic or international.
As the name suggests, a domestic wire transfer is sent and received within the same country. The banks can be the same or different, but a transfer from one city to another in the same region is considered a domestic or local wire transfer.
An international wire transfer takes place between two different countries. In this too, the banks can be the same with different branches in different countries. An electronic transfer of money from one bank in a country to another in a different country is considered an international wire transfer. Many expats from Ghana who haven’t turned to online platforms use this method to make a money transfer to Ghana when their families need financial help.
Let’s now see what a wire transfer takes to initiate.
As a first step to initiating a wire transfer, you need to connect to your bank. Depending upon the bank, you will be asked to provide specific details, which can differ from bank to bank but primarily, these details include the following:
Domestic wire transfers can process funds in about two to three days. An international wire transfer takes between three to five business days to transfer funds.
Bank wire transfers are always costly. But the following factors determine the fee and charges for a wire transfer.
Where the advent of online money transfer companies such as ACE Money Transfer has questioned the banks' monopoly in international money transfers, a large segment of the global population still prefers to send money online through banks. Some of the reasons include:
Since banks were the first institution to have facilitated online money transfers, they gained the customers' trust that continues to date. People prefer to send money through banks instead of remittance companies as the banks hold the trust and respect of the customers.
A wire transfer lessens fraud risks as the sender has ample funds in the account to initiate a wire transfer. Whereas a cheque can bounce and you need not have sufficient funds to create a transaction through cheques. It is one of the reasons that many financial frauds stem from cheques.
Where the pros of a wire transfer are less, the cons are more and multiple.
If you wire money to a stranger with dubious credentials, you cannot verify who will collect the funds. Anyone with a fake ID could collect the funds; there is little you can do to prove the recipient or track them.
Once initiated, you cannot cancel the wire transfer. Local wire transfers are hard to cancel and reverse, but international wire transfers can be halted in certain situations.
Banks typically charge a considerable fee for their services, regardless of whether the transactions are local or international. In addition to the standard cost, banks can charge additional amounts depending upon if the transfer is international and if the nature of the transfer is regular or urgent.
Banks offer fixed currency exchange rates contrary to the international exchange rate market. Not only are the rates static, but the banks also charge additionally when converting the foreign currency into the local one.
Despite the technological advancement, local and international wire transfers take an awful lot of time to complete. Typically, these transfers take between three to five days, but this time can extend depending upon various factors.
Although many of you might find a wire transfer the only good option to transfer funds across borders. However, an online money transfer is the best and most economical alternative for expatriates to send money home, considering speed, security, and efficiency.
Based on the information provided above, if you decide to switch from wire transfer to a swift and more convenient method of funds transfer, sending money online is best for you. You can send money to Ghana online in a few moments through several online money transfer companies, including ACE Money Transfer. It enables you to initiate a transaction through its website or international money transfer app, any time, anywhere, with speed, efficiency, security, and competitive rates in exchange for a minimum fee.