Why Wire Transfers Are Expensive (2024)


Wire transfers are the most expensive payment type. Banks and wire transfer services charge between $25 and $50 per transaction for individuals; businesses typically get charged a base fee for a certain number of wires, which may be discounted based on volume, amount, or banking relationship. The fee also depends on whether the money is being sent or received, and whether its destination is domestic or international. Why are these fees so costly? And with other payment methods available, why do businesses continue to use wire transfers despite this cost?

What are Wire Transfers?

A wire transfer is an electronic payment made through a global network administered by banks and money service agencies. Senders fund the transaction from their bank account, and provide the recipient’s name, the receiving bank routing number and account number, and the wire
amount. [1] Domestic routing numbers required are often the same ABA routing numbers used for ACH, but sometimes they have different routing numbers used for wires.

The sending bank relays the payment information and instructions to the receiving bank through a secure system, such as SWIFT, CHIPS, or
FedWire. [2] Once the receiving bank deposits money from its reserve funds into the correct account, the two institutions will settle the payment, which means they’ll adjust the account balances to reflect the transfer.

Timing of Wire Transfers

As long as domestic wire transfers requests are completed before the sending or receiving bank’s cut-off time, they will be processed the same day. Requests made after the cut-off will be processed the next business day. Regulations such as the Uniform Commercial Code are in place to ensure domestic wires run through FedWire settle within one business day. [3]

International wires can take up to two business days to process, as they are also subject to cut-off times, and have to be settled at both domestic and foreign banks, often running through intermediary correspondent banks. International wires are monitored closely by the Office of Foreign Assets Control, a branch of the US Treasury, for anti-money laundering compliance.

Cut-Off Times for Business Wire Transfers

Each bank dictates its own cut-off time for receiving and processing wire transfers. [4]

Are Wire Transfers Safe?

Wire transfers are generally safe, and most services will verify the identity of both sender and recipient to ensure legitimate transactions. Both US and international wires are monitored for fraud protection. However, due to its speed and irreversible nature, wires can be used to commit fraud. It’s important to never send money to anyone you don’t know, protect your personal account information, and monitor your bank statements closely to avoid scams.

Why Do Wires Cost So Much?

Transfer fee amounts vary depending on whether the money is being sent or received, and whether the transaction is international or domestic.

There are few reasons for why wire transfer fees can be steep:

  • Immediate Availability: The number one reason for the higher cost of wires is the immediate availability of funds. Unlike ACH payments, which are processed in batches, wires are processed individually at the time of initiation, with immediate, irrevocable settlement. Because there is no physical transfer of funds [5], the recipient does not have to wait a few days for the payment to clear before claiming the money. This also means that it is difficult to recall the money once it’s been sent, even if there is an error. Banks charge fees because they take on risk to make money accessible quickly by releasing money from their reserve funds.
  • Higher limits: Another advantage of wire transfers is they have higher transaction limits for single payments. In cases where the wire amount is large enough, the transaction fee is insignificant, and often worth making the funds available quickly. One example of this is large B2B payments, such as commercial real estate or acquisition transactions, where the amount of money transferred can be in the millions or more. Wires are also used in personal finance for major purchases such as homes or cars.
  • Global Network: When large amounts of foreign currencies are traded, banks charge other banks a midmarket, or interbank, exchange rate. If the foreign bank has to convert the money on the receiving end, they will usually charge a higher markup. If the sending bank does not have a direct relationship with a receiving bank, there usually will be an intermediary bank, who may deduct a fee as well. However, the benefit is that you can safely transfer money around the world, in any currency. And your SWIFT code provides a unique identifier to make sure the transfer reaches the correct recipient.

Despite their cost, wire transfers are a useful payment method, as they allow businesses to move large amounts of money quickly. If you’re interested in using Modern Treasury to manage wires and other payments, or to help automate your payment operations, sign up or get in touch today.

  • Some banks may also require bank address, account type, currencies involved (such as US dollars to be received in Japanese Yen), and the reason for transfer.

  • SWIFT is the Society for World Interbank Transactions, a large network that allows banks and financial institutions to send and receive wire transfer instructions. Most international wire transfers use SWIFT. FedWire is an electronic funds-transfer service run by the Federal Reserve Board; CHIPS is FedWire’s private-sector counterpart. US wires typically use one of these systems.

  • While banks can dictate cut-off times for receipt and processing of wire transfers, the Uniform Commercial Code (UCC) has rules for the bank’s responsibility to make transferred funds available. Regulation J requires banks to process a wire transfer on the same business day it was received by the Federal Reserve. According to Regulation CC, wire transfers are considered received upon the delivery of information about the account and credit amount.

  • Wire transfers are all completed electronically, so no physical money is moving from bank to bank. The money that becomes readily available for the recipient comes from the receiving bank’s reserve funds. The receiving bank and sending bank will settle, or reconcile their balances, after the wire is complete.

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    Why Wire Transfers Are Expensive (2024)


    Why Wire Transfers Are Expensive? ›

    Wire transfer fees are charges from your financial institution when a wire transfer either comes in or goes out from your bank account. This is the cost the financial institution charges you for the quick and easy release of funds from one place to another.

    Why does a wire transfer cost so much? ›

    Some banks charge a fee for the work required to receive incoming wire transfers or process outgoing wire transfers. And when banks convert money for consumers, they charge a higher markup, a percentage of the amount being sent.

    How can I avoid wire transfer fees? ›

    Ask the Bank to Waive the Fee

    Some banks actually have public-facing fee waiving policies depending on the situation. For example, banks like Chase, TD Bank and Bank of America can all opt to waive wire transfer fees for domestic incoming wires if you have an account with them (in good standing).

    Why are wires more expensive than ACH? ›

    ACH transfers are cheaper because they typically take longer to process and arrive at their destination. Wire transfers usually take a few hours to process, whereas ACH transfers can take up to four business days.

    Which bank has no wire transfer fee? ›

    Wire Transfer Fees
    Bank/Credit UnionDomestic OutboundDomestic Inbound
    Goldman SachsFreeFree
    M&T Bank$32$16
    24 more rows
    Apr 20, 2024

    What is cheaper than wire transfer? ›

    ACH payments are less expensive than wire transfers. ACH payments are generally more secure compared to wire transfers. Wire transfers can be sent internationally, whereas ACH is a U.S.-only network. ACH transactions are ideal for businesses that process payments in bulk.

    What are the disadvantages of wire transfer? ›

    Wire transfer pros and cons
    Typically sent and received quickly Considered a safe method of sending money No risk of insufficient funds Can send large sums of moneyBoth sender and recipient may incur fees There may be limits as to how much you can transfer Other transfer methods may be faster and less expensive

    Why are wire transfers bad? ›

    Sending money this way is like sending cash in that, once sent, the wire transfer typically cannot be reversed. Wired funds are considered the property of the recipient and wire transfers may be final. For this reason, wire transfers can be a preferred payment method for fraudsters.

    Can I ask my bank to waive wire transfer fees? ›

    Check if your bank or provider offers fee discounts

    Some US banks and transfer providers do offer fee discounts — or could even waive wire fees entirely — for some customers. Ask your bank if there's an option to cut your costs, or have a look at your specific account terms and conditions to understand your options.

    Is Zelle considered a wire transfer? ›

    As we've clarified, Zelle relies on ACH payment methods, as opposed to wire transfers. However, the platform also leverages its close connection with network banks to expedite processing making it seem closer to wire transfers in certain applications.

    What happens if you use a wire routing number instead of an ACH? ›

    know that banks have two separate routing numbers. One for wire transfers and one for ACH transfers. If you used your banks wire transfer number it will still go to your bank but the banks computer systems will not know where to put the money and there is a good chance they will reject it.

    How long does a wire transfer take? ›

    If transfers occur between accounts at the same financial institution, they can take less than 24 hours. Wire transfers via a non-bank money transfer service may happen within minutes. If you're sending money to another country, however, it may take as many as five days for the recipient to receive their funds.

    Why is wire transfer so expensive? ›

    Wire transfer fees are charges from your financial institution when a wire transfer either comes in or goes out from your bank account. This is the cost the financial institution charges you for the quick and easy release of funds from one place to another.

    How to reduce wire fees? ›

    How to Avoid Wire Transfer Fees
    1. Select a bank or other financial institution that may reduce or waive wire transfer fees or offer lower costs than competitors. ...
    2. Contractually transfer the cost of wire transfer fees to the payee. ...
    3. Factor bank wire transfer costs into pricing.

    Who pays wire transfer fees? ›

    Wires are one of the most expensive ways to transfer money, because banks generally charge outgoing wire transfer fees. Some banks and accounts may even charge for incoming wire transfers.

    Are wire transfers worth it? ›

    Wire transfers are an easy way for you to send money. But scammers can also use them to take advantage of unsuspecting victims. It's important to know some of the common wire transfer scams out there, so you can protect yourself.

    How much is the fee for receiving a wire transfer? ›

    Bank charges for wire transfer fees
    BankIncoming DomesticOutgoing Domestic
    Wells Fargo$15$30
    US Bank$20$30
    PNC Bank$15$25–$30
    6 more rows
    May 15, 2023

    Are wire transfers for large amounts of money? ›

    You need to move large amounts of money.

    Though limits vary based on the money transfer provider, they tend to be high. For this reason, wire transfers are often used to pay invoices, to send funds among family, or for real estate transactions.


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