What is a Wire Transfer and How Does It Work?

In this article, we cover what a wire transfer is, how they work, if they are safe and the fees involved.

What is a wire transfer?

Put simply, a wire transfer is an transfer of money electronically.

These days, that applies to just about every payment but to be precise, this term refers to a very specific method payment. It's a reasonably quick and secure transfer of funds from one bank or credit union to another financial institution using an electronic network such as Fedwire or SWIFT. Traditionally, wire transfers are fast. If a payment takes several days to clear as available funds in the recipient’s account, it is not technically a wire transfer.

How safe is a wire transfer?

Basically, when funds go from one bank to another, and then straight to the recipient’s account, the process is secure and safe. Within New Zealand, each person involved in a wire transfer must have a bank account. That means they must have satisfied identification criteria as part of the process of opening that bank account.

Banking anonymously is virtually impossible in New Zealand – and most other countries – so that means that it is very difficult for thieves to conduct a scam involving wire transfer of funds. Of course, scammers do have inventive ways to get around security and they can still happen.

The primary risk around wire transfers could be if your money is intercepted and wired to a different account and then you don’t realise it’s gone into another account until it’s too late.

If somebody from overseas asks you to wire funds to their account, it’s very important that you do your due diligence and think very carefully about where you are sending it and how much you know about the person providing the details.


Avoid risky transactions

Some wire transfer transactions are particularly risky and these should be avoided. Wiring money to any office that pays its money out in cash, for example (known as a retail money transfer and done through places such as Western Union), can be impossibly difficult to trace back to any real person. Especially when you consider that fake identification could be used by the person collecting the cash.

Global transfers

How it works

Talk to your bank or financial institution. You’ll be asked to supply specific information about the bank account of the intended recipient and you usually have to use a special form that is supplied by your bank.

Information that is required every time:

1. SWIFT code of the bank you are sending the money to.

2. The name of the bank.

3. An Account name.

4. An Account number.


Other information you may need:

  • The address of the bank you are sending the money to.
  • The address of the person or company you are sending the money to.

Although some banks do let you do this online, others still require physical signing on a paper form. There is a fee associated with wire transfers and this differs from bank to bank.

Receiving a Wire Transfer

First, you need to supply your correct bank account details to the person or business who needs to send you the funds.

Asking your bank for instructions to do with incoming wire transfers will ensure that you are given the correct details to give to the sender.

Some banks charge a small fee to receive funds through wire transfer, while others do not charge at all.

Receiving wire payments is a much safer proposition because money is only wired out to a different bank account if the funds are actually available in the sender’s account.

Once the money lands in your account, it is usually processed as available funds within one business day. Although, there may be some exceptions between financial institutions. Cancelling the wire transfer and recalling the money from the account it has already landed in is virtually impossible for the sender to do.

It’s important to note that some electronic payments can be reversed, and crooks can take advantage of your confusion around this. If money was promised to be sent to you by wire transfer and then reversed, it is more likely that the money was sent via another electronic method so asking for a receipt of the wire transfer is one way to safeguard against this scam happening.

How long a bank wire transfer takes

Because genuine wire transfers are very fast, cleared funds are available almost immediately. Wire transfers can also be easily tracked – giving you added peace of mind. If you are sending money overseas, it can take between 1 and 5 business days. Click here for more information.

The costs to wire money

Each New Zealand bank will charge a different fee for a bank wire. Please note that a bank wire fee is paid by the person sending the money. The bank that receives the money on the other end may charge the recipient as well.

ANZ Bank charges $9 for international money transfers if you use internet banking, or $28 at a branch

Bank of New Zealand charge $15 for online transfers and $25 for any transfer that is staff assisted

Westpac Bank charges $20 for international money transfers if you use internet banking, or $30 at a branch

ASB charge $15 for online transfers and $30 for any transfer that is staff assisted


Other electronic transfers

Although the term wire transfer is widely used to describe a variety of electronic funds transfers, this isn't the case. Wire transfer refers to one very specific type of transfer.

By Justin Rampono Updated January 3rd, 2019