Money Transfer

Money transfer

Money transfer generally refers to one of the following cashless modes of payment or payment systems:

 Wire transfer

an international expedited bank-to-bank funds transfer  Electronic funds transfer

an umbrella term mostly used for bank card-based payments

 Email Money Transfer, an online banking transfer between Canadian banks

 Giro, also known as direct deposit

 Money order, transfer by postal cheque, Money Gram or others

 Paypal, transfer by email on Paypal.

It can also refer to the following cash-based wire transfer systems:  al-Barakat, an informal money transfer system originating in the Arab world

 Hawala (also known as hundi), an informal system primarily used to send money to and from the Middle East, North Africa, the Horn of Africa, and South Asia

 Remittance, transfer of money by a foreign worker to his or her home country

Wire transfer

Wire transfer or credit transfer is a method of electronic funds transfer from one person or institution (entity) to another. A wire transfer can be made from one bank account to another bank account or through a transfer of cash at a cash office. Wire transfer systems are intended to provide more individualized transactions than bulk payment systems such as ACH and Check21.

Process

Bank wire transfers are often the most expedient (expeditious) method for transferring funds between bank accounts. A bank wire transfer is effected as follows:

1. The entity wishing to do a transfer approaches a bank and gives the bank the order to transfer a certain amount of money. IBAN and BIC codes are given as well so the bank knows where the money needs to be sent.

2. The sending bank transmits a message, via a secure system (such as SWIFT or Fedwire), to the receiving bank, requesting that it effect payment according to the instructions given.

3. The message also includes settlement instructions. The actual transfer is not instantaneous: funds may take several hours or even days to move from the sender's account to the receiver's account.

4. Either the banks involved must hold a reciprocal account with each other, or the payment must be sent to a bank with such an account, a correspondent bank, for further benefit to the ultimate recipient.

Banks collect payment for the service from the sender as well as from the recipient. The sending bank typically collects a fee separate from the funds being transferred, while the receiving bank and intermediate banks through which the transfer travels deduct fees from the money being transferred so that the recipient receives less than what the sender sent.

Regulation and price

In 2002, the European Commission relegated the regulation of the fees that a bank may charge for payments in euros between European Union member countries down to the domestic level,[1] resulting in very low or no fees for electronic transfers within the Eurozone.

In 2005, Iceland, Liechtenstein, and Norway joined the EU regulation on electronic transfers. However, this regulation is intended to be superseded by the Single Euro Payments Area (SEPA), consisting of 32 European countries.

In 2009 EC published a new regulation (EC) No 924/2009 [2] on cross-border payments in the Community and repealing Regulation (EC) No 2560/2001.[3] The new regulation (EC) No 924/2009 Article 1 (q.v., Ref.4) states that an IBAN/BIC transfer within SEPA must not cost more than a national transfer, no matter which currency is used. But receiving bank can charge for exchanging to local currency. However, according to Article 7 any current arrangements (made between payment services before November 1, 2009) can be honored up to November 1, 2012.

In the United States wire transfers are costly. For example, as of November 2011 the Bank Of America charged $25 to send a wire and $12 to receive one within the U.S. For international transfer, it charged $35–$45 outgoing, $16 incoming.[4] However, fees may vary from bank to bank. ACH transfers are much less expensive or even free of charge as part of on-line banking packages.[5]

In the United States, domestic wire transfers are governed by Federal Regulation J[6] and by Article 4A of the Uniform Commercial Code.