A telegraphic transfer is an electronic means of sending money that gets mainly used for international wire transfers. Telegraphs were used to coordinate financial transactions between financial institutions, as the name implies.
On the other hand, Telegraphs have become obsolete, as modern technology now allows funds to transfer via cable networks. Therefore, the telegraphic transfer can also be referred to by the more generic term wire transfer.
Telegraphic transfers are a secure way to send money abroad, but it is essential to understand what is involved and the possible drawbacks.
How do they work?
For international transactions, funds get usually sent via the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
When sending a telegraphic transfer, there are typically three steps:
- The sender instructs their bank to transfer funds to a beneficiary in another nation. It gets done in person or by online banking.
- The funds get sent from the sender's bank to a bank in the destination country. The funds are credited to the beneficiary's account, whether he or she has one at that bank, and the transaction is complete.
- If a different bank holds the beneficiary's accounts, the funds get transferred to that bank, and the transaction gets completed. The funds will likely get routed through two or three correspondent banks before arriving at the beneficiary's branch.
What are the differences between wire transfers and telegraphic transfers?
Speed
Money is usually moved between bank accounts in three business days using wire transfers. International transfers will take up to five business days, with the possibility of taking much longer. This is since certain countries' financial structures are obsolete and outdated.
Online telegraphic transfers get completed within one business day, and in some cases, are instantaneous!
Security
When transferring funds to bank accounts, both methods are highly stable. When sending cash via wire transfer, however, there is a chance of fraud.
A false identity may be used on the receiving end since the wire transfer cannot get tracked until it gets converted to cash. Transactions made with online transactions can be reversed, protecting you from fraud. Mistakes happen, and if a company overcharges you, you get refunded.
If you make an online purchase, you also get covered by fraud liability rules. So, if you pay with your card for anything defective or not shipped, you are safe and can get a refund
Method
Depending on the size of the payment, sending a wire transfer can necessitate a trip to the bank to fill out paperwork. Wire transfers may also get submitted via an online banking website or a wire transfer processing business.
Transferring money online, particularly from one person to another, is very simple. They usually entail completing a simple online form. There is no need to visit a money wiring office, telegraph station, or even a bank by using online telegraphic transfers.