Telegraphic Transfer vs. Wire Transfer: The differences — Exscudo Blog

If you have ever sent money abroad, you heard about telegraphic and wire transfers. Also, you may be wondering what is telegraphic transfer vs wire transfer. How these two services are different in terms of processing, cost, and time?

Read on to get these questions answered!

Telegraphic Transfer vs Wire Transfer: Overview

Telegraphic transfer and wire transfer have something in common, too. Basically, both methods deal with the transactions made electronically. Thus, they fall under the category of Electronic Funds Transfers (EFT).

Before we juxtapose telegraphic transfer vs wire transfer, let’s briefly explain some basics.

What Is Electronic Funds Transfer (EFT)

You can perform an EFT via your credit card, computer or another device, POS or ATM. It may be a purchase, mortgage payment, credit transfer, etc.

What Is a Wire Transfer

For instance, you need to send some money to your friend Alice, who lives in another country. For it, you contact your bank and provide the data they require to make this transaction. These data are:

  • the sum of money you transfer
  • IBAN/SWIFT code of the bank where the money goes to
  • name of receiver (payee)
  • her account details

How a Wire Transfer Works: Example

Then you just wait until the funds reach Alice’s account. Normally, it takes between a few hours to several business days.

It sounds like a good method (though a little bit slow). On the downside, you have to pay a fee on every step of the way. For example, both you and Alice will have to pay for sending/receiving funds. You will pay a fee when you send money (you give the bank extra money for processing the transfer). In her turn, Alice receives less money than you sent, as her bank has deducted its fee. Also, If there are any intermediaries (correspondent banks) they take their percentage of the sum, too.

An Alternative: Western Union And the Likes

What Is a Telegraphic Transfer (TT)

The term has an interesting origin. In the past, banks used to move money between accounts by means of telegraphed messages. This method was advanced compared to bringing cash and banknotes from one place to another.

Back then, if you wanted to send some money to your friend Alice, you had to go to your home bank. There, you provided the required data about the amount sent and the recipient. An operator at your bank would send a message to the recipient’s bank using Morse code. That is how the term ‘telegraphic transfer’ was coined.

These days, we use it as a general term for a variety of money transfer methods, both local and international. In the UK, the ‘telegraphic transfer’ term normally refers to the transfers via Clearing House Automated Payment System (CHAPS). In Europe, it most likely refers to SEPA transfers. Also, they widely use it for SWIFT payments.

SWIFT payments

In 1973, SWIFT (the Society for Worldwide Interbank Financial Telecommunication) was launched. It replaced the outdated Telex messages. The system facilitated cross-border transfers between banks by introducing uniform standards. Due to this innovation, banks began to process transfers much faster and without mistakes. Of course, convenience has its price. The system that makes millions of international transfers daily collects hefty fees from its customers.

SWIFT payments stand for international wire transfers made using this particular system. Sometimes, the terms SWIFT transfer and telegraphic transfer are interchangeable.

CHAPS payments

Telegraphic Transfer vs Wire Transfer: The Difference

Telegraphic Transfer vs Wire Transfer: Way You Make Them

A wire transfer can be either a bank-to-bank transfer or use a service like Western Union. In the first case, every party involved (sender and receiver) pays a fee. Plus, correspondent banks charge their fees, too. The second scenario means the sender pays for making the transfer. For the receiver the service is free.

If you send money using a telegraphic (TT) transfer, you give instructions to your bank and it sends funds to the recipient’s bank. As a rule, we use this type of transfer for international payments.

Telegraphic Transfer vs Wire Transfer: Speed Of Processing

A telegraphic transfer is usually faster. It takes 1–4 days to move money from one bank to another.

Telegraphic Transfer vs Wire Transfer: Costs

Telegraphic transfers are normally international, meaning they often involve two or more currencies. To earn more, banks may apply unfavorable exchange rates, and it increases the amount a client loses. TT transfers usually feature rather high processing fees. Every bank — sender’s, recipient’s and intermediary — takes a percentage. Finally, it may sum up to a tidy amount. In general, the price of a telegraphic transfer may vary greatly depending on the currency, amount, destination, etc. There are no standard fees — different financial institutions may charge more or less.

We hope, this article helped you understand the difference between telegraphic and wire transfers.

Originally published at Exscudo Blog. Check it out for more articles on crypto, blockchain, finance, trading, and technology.

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