Telegraphic transfer, or wire transfer, is a traditional method of transferring large sums of money from one bank to another locally or internationally. This blog discusses what a telegraphic transfer is, how it works, the difference between a telegraphic transfer and a bank transfer, and the advantages and disadvantages of this money transfer method.
What is a Telegraphic Transfer?
A telegraphic transfer or TT is a way to send money internationally quickly. It allows you to transfer funds from your bank account directly to someone’s bank account in another country. In earlier times, money used to be moved between banks via telegraph systems. Nowadays, the funds are transferred electronically through banking networks and systems.
A TT can be used to pay someone overseas instantly, like paying a supplier or contractor abroad. It can also be utilised to send money to family and friends in other nations. You need to visit your local bank branch or use online banking to do a TT. The bank will then send the funds to the designated foreign bank account, usually within 24-48 hours on payment of charges and currency conversion fees, if any.
Why is it called Telegraphic Transfer (TT)?
‘Telegraphic Transfer’ originated from the old method of transferring money internationally between banks via telegraph systems. In the past, before modern banking networks existed, both the sending and receiving banks would communicate via telegraph to transfer funds internationally.
When a customer wanted to pay someone abroad, their local bank would telegraph the details, like the recipient’s name and amount, to the foreign bank using telegraph lines and messages. After deducting charges, the foreign bank would pay the funds to the receiver mentioned. This whole process of transferring money globally through telegraph communication gave rise to the name ‘Telegraphic Transfer’.
What Are the Key Characteristics of a Telegraphic Transfer?
The process of international fund transfer is still called a Telegraphic Transfer, even though modern technologies are used. Here are a few reasons why:
- In the past, banks relied on telegraph systems to communicate and transfer money between countries, as it was the fastest means of communication internationally at the time.
- When a customer requested a transfer, the sending bank would telegraph details like the recipient’s name and amount to a foreign bank.
- After deducting charges, the foreign bank used this telegraphed message to credit the recipient’s account.
- This system of coordinating cross-border payments through telegraph lines was called a ‘Telegraphic Transfer’.
How Does Telegraphic Money Transfer Work?
A telegraphic transfer allows customers to transfer funds internationally from their bank account directly into a recipient’s foreign bank account. The process is relatively straightforward.
- The sender visits their local bank branch or uses online banking to submit the TT request.
- They provide details of the recipient, such as name, bank name, country, bank account number and address.
- The sending bank then transmits the transfer details and payment instructions electronically via banking networks to the recipient’s bank abroad.
- Upon receiving the transmission, the foreign bank will credit an equivalent amount in their customer’s local currency within 1-2 business days, minus any charges.
- The banks communicate seamlessly behind the scenes to coordinate the international movement of funds from one account to another across borders.
What is a Wire Transfer?
A wire transfer is a way to electronically transfer funds from one bank account directly to another internationally. When you wire money, your bank electronically sends the specified amount to a recipient’s bank somewhere else.To complete a wire transfer, you must provide your bank with specific vital details such as the full name, bank name, and routing number of the person receiving the funds. You must also state the amount being sent and in which foreign currency.
Telegraphic vs wire transfer: what’s the difference?
| Telegraphic Transfer | Wire Transfer |
|---|---|
| Originally referred to international funds transfers done through telegraph systems by banks. | Refers to the modern electronic/digital method of sending money directly from one bank account to another globally. |
| The term is used more in certain regions like the UK and India, while wire transfer is ubiquitous. | Both terms mean the same thing now and are used interchangeably. |
| Due to outdated technology associations, it may involve slightly higher fees/charges than wire transfers. | Fees are often lower as the entire process is automated electronically without reliance on slow legacy systems. |
What details or documents do you need to send a telegraphic transfer
Here is the critical information necessary for a telegraphic transfer in point form:
- Your full name and contact information as the sender
- Recipient’s full name and address overseas
- Name of recipient’s bank and address
- Account number of recipients at their bank
- IBAN, if transferred within Europe
- SWIFT code for banks globally
- Amount to be sent and currency
- Your bank account details for debiting amount
How to do Telegraphic Transfer?
- Visit your bank branch or use online banking.
- Fill out a telegraphic transfer/wire form providing details of the sender and receiver.
- Receiver’s name, bank name, address, account and Swift/IBAN
- Specify currency type and exact amount to send
- Provide your bank account for debiting funds
- Mention the reason for the transfer, like paying the invoice
- Verify all details and submit a transfer request
- The bank will process the transfer electronically
- Funds are deposited in 1-3 business days
- Confirmation sent on completion
What are the Charges & Time required for TT payments?
- Banks charge a transfer fee, typically a certain percentage of the amount sent.
- Additional charges may apply for currency conversion in international transfers.
- Fees vary per bank and destination country but usually range from $15 to $40.
- Transfer time typically takes 1-3 business days to credit funds in the recipient’s account and overseas bank.
- Transfers within the same currency zone are faster, taking only one business day.
- Premium same-day or urgent wires are offered for a higher fee in case of urgency.
- Timing depends on bank processing times and correspondent bank relationships.
- Use your bank’s online tracker to monitor a TT payment’s status and credit date.
What is a Bank transfer & the Difference Between Telegraph Transfers and Bank Transfers?
A bank transfer allows you to move money from your account to another account. You can transfer funds within the same bank or to another bank. It is a simple process where you provide the details of the account to which you want to send money.
| Telegraph Transfer | Bank Transfer |
|---|---|
| It involves visiting a bank branch to submit the form | This can be done online without visiting the branch |
| More time is taken, usually two days | Faster, within the bank is instant, other banks one day |
| Higher fees applicable | Lower fees in most cases |
| Tracked via physical telegram | Tracked online via net banking |
Advantages & Disadvantages of Telegraphic Transfer
Advantages of Telegraphic Transfer
- Secure method of money transfer between banks located in different cities or countries.
- Useful when transferring large sums of money internationally.
- Provides proof and receipt of money exchanged.
Disadvantages of Telegraphic Transfer
- It is a slower process than online bank transfers, and it takes 1-2 working days for funds to be credited.
- Banks charge a fee for this service, usually a percentage of the transferred amount.
- The recipient has to visit their bank branch to receive the funds.
Final Word
While telegraphic transfers provide a reliable option for sending significant amounts of money overseas or between banks, the process can be slow and involve higher fees than online transfer methods. Other digital options may prove more convenient and cost-effective for domestic or smaller transactions. Evaluating one’s specific transfer needs helps determine the most suitable approach.
FAQs
Telegraphic transfer, or wire transfer, allows a fast transfer of funds between banks in different cities or countries.
Yes, telegraphic and wire transfers are used interchangeably to refer to the same electronic funds transfer process between banks.
No, SWIFT is a network that enables global telegraphic/wire transfers between banks, but it is not the same as a telegraphic transfer.
While both allow inter-bank transfers, RTGS is for high-value domestic transfers in India and real-time, whereas telegraphic transfers can be cross-border.
Usually, it is 1-2 working days, depending on the transfer amount and whether it is domestic or international.
Disclaimer
This article is solely for educational purposes. Stable Money doesn't take any responsibility for the information or claims made in the blog.
