Everyone uses the money in his life probably every day. We are buying food, paying for various services, borrow money in debt and so on. Situations where you want to transfer money to another person occur frequently. Today we will talk about the features of the transfer of money in the modern economy.
There are two main methods of money transfer: cash or non-cash transfers.
Cash money transfer is a transfer of money bills from one person to another. This method of money transferring is quite common in countries where there is no a developed banking system.
In countries where the banking system and non-bank financial institutions are well developed cash transfers are very rare, non-cash transfers dominate in these countries.
Let’s focus our attention on non-cash money transfers.
There are several basic ways of money transfers, the main ones are:
- Bank wire transfer.
- Transfer of funds through non-bank organizations.
- Transfer of money through the online payment systems.
Today let’s concentrate our attention on the bank wire transfers.
What is a bank wire transfer or electronic funds transfer?
Bank transfer is a transfer of money from one bank account to another.
Bank transfers in its turn can be classified as follows:
- Depending on the person of the payer and receiver
By this sign are the following types of bank transfers:
- Transfer between entities. In this transfer both parties are legal entities.
- Transfers between legal entities and individuals. In these transfers one part (payer or payee) is a legal entity, and the other part is a private person.
- Transfer between individuals. Both parties of a transfer are private person in this case.
This classification is made because in many countries there are legal aspects of transfers between the various parties.
- Depending on the economic content of transfer.
By this sign are the following types of bank transfers:
- Transfers related to business. These transfers are made to perform certain business arrangements and commitments. This may be a payment for goods or services, or providing repayment of loans etc.
- Private transfers(transfers not related to the business). The transfers are associated only with personal relationships of people belonging to this group. This may be transfers between family members, friends, etc.
Most banks classify transfers under this sign, because it affects the taxes features.
- Depending on payments geography.
By this sign distinguish the following banking transactions:
- Internal (domestic) bank transfer. These transfers occur within a country, so the payer and the payee are in the same country.
- International (global) bank transfer. It is such transfers when any of its parts is in different countries. The main feature of international bank transfers is that they are often made in different currencies and governed by international law.
For the question: how long does a bank transfer take? We can answer that it depends on transfer type. Domestic transfer can take from a few minutes to 1-3 days; international transfers can take up to 7 days.
We need short wire instructions, so let’s now look at what we need to know to make the right bank transfer.
- Bank wire transfer information.
Essential elements (requisites) are the bank transfer info that allows accurate identification of the payer and the recipient of money.
The main wire transfer information of payment is the recipient details most common, such as:
- Beneficiary (payee) name. This may be the name of the legal entity or name of the individual.
- Beneficiary code. In many countries, legal entities have business identifier code and each individual has his own identification code to specify when making payments.
- Beneficiary bank account number. This is the account number of the recipient, which he opened in his bank.
- Name of the bank of beneficiary.
- Beneficiary bank code (bank identifier). In each country banks have their own codes, but in international bank transfers are most commonly used codes of SWIFT banking system-special international electronic transfer system.
- Purpose of payment. The essence of the payment transaction should be briefly described in this information. For example the default appointment of the bank transfer might look like: pay for goods under the account №5 from 06.01.2015 or personal nonprofit transfer.
- Transfer (payment) amount. Each payment must be made for a specific amount that often specified as numbers and words to avoid mistakes.
All information must be carefully specify and verify because wire payments can not be made without all of the above information.
These requisites you must get directly from the payee. If the recipient does not know his requisites, you should contact his bank.
- Size of bank wire fee.
In banking transfers you need to know the amount of bank transfer fee for their implementation. Each bank takes a bank transfer fees for making payments, such banking fees can often be at a rate of 0.1 to 2% of the payment.
- Method of payment.
In the modern world you can make bank transfers via online banking system (electronic fund transfer) in most cases. You need to contact your bank to establish such client-bank system, because it allows making payments without a physical visit to the bank with a special banking key and the digital signature. You can use the online banking systems with a computer, tablet or phone.
Now you know more about the features of bank payments (transfers). In the following articles we will talk about the other money transfer systems.