What is a telegraphic transfer?

Learn everything you need to know about how telegraphic transfers work in New Zealand.

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When you’re sending or receiving an international money transfer through a bank, you’ll often see the terms “telegraphic transfer”, “TT” or “wire transfer”.

In this guide, we’ll help you figure out what the different terms mean and the process behind sending money across borders.

Quick definition: What’s a telegraphic transfer?

A telegraphic transfer is what you get when you go to a bank to make an international money transfer. It means your money will be bounced along a network of correspondent banks until it arrives at its destination.

How does a telegraphic transfer work?

A telegraphic transfer works by bouncing money between different banks until it arrives at its destination. Each bank the money passes through en route will have its own fees and processing times, which is why telegraphic transfers can be slow and more expensive than a money transfer service.

This network of banks is called the SWIFT network.

Money will only pass between banks with pre-existing commercial relationships, known as “correspondent banking” relationships. Each correspondent bank en route will take a cut of the money as they handle it, to cover processing fees, and may take a day or two to process the payment.

There are two main reasons why banks can only pass money through other correspondent banks:

  • Anti-money laundering laws require banks to know whose money they’re handling. By ensuring an unbroken chain of trust between banks, the final bank at the destination can safely assume the customer was appropriately vetted, and that it’s handling money in compliance with international law even though it hasn’t personally verified the sender.
  • Banks can’t physically send money around the world every time a customer needs to make a payment. So instead, they maintain a system of “nostro” accounts with each other.

What are nostro accounts?

Correspondent banks hold nostro accounts with each other to facilitate international payments.

With this system, correspondent banks can simply add and deduct amounts from the nostro accounts to account for payments sent to them from partner banks as they pass through.

So when you send a telegraphic transfer, it will ripple through a series of nostro accounts at different banks until it arrives at its destination.

The number of banks in a chain will vary depending on the payment corridor. For straightforward transfers to or from US dollars, there might only be two or three. For other corridors, there will often be more, since US dollars tend to serve as a hub.

For example, if you’re sending money from New Zealand to Europe, it might go something like this:

  • Your bank. You go to your bank. It gets your New Zealand dollars and converts it to US dollars through its nostro account at the intermediary bank.
  • Intermediary bank. Converts the US dollars to euros through its nostro account at a European bank.
  • European bank. Sends the euros to the bank of the person who’s receiving the money.
  • Receiving bank. Receives the money from the other European bank and hands it to its customer – the person you wanted to send money to.

Infographic on how telegraphic transfers work

How can I make a telegraphic transfer?

To make a telegraphic transfer, you will need to do the following:

  1. Go to your local bank’s branch, app or website.
  2. Ask to send an international money transfer.
  3. Fill out the form either in-person or online.
  4. Pay the transfer amount and applicable fees.

What are the fees for a telegraphic transfer?

Your transfer is going through multiple banks, so each one may take a fee. We can break the fees down into four parts:

  1. Sender’s bank fees. Your bank will let you know how much these fees are upfront. In New Zealand, this fee ranges from $6 to $30, depending on the bank.
  2. Corresponding bank fees. These fees come from the banks your money is sent to along the SWIFT network to your recipient. While your bank may warn you about these, it can sometimes be unclear how much they are.
  3. Exchange rate margin. Banks and most money transfer services add a margin to the exchange rate to cover their own fees. This margin can vary depending on your payment method and currency, but banks tend to add more than specialist transfer services.
  4. Recipient’s bank fees. Depending on the bank, there may be fees for the beneficiary to receive the transfer.

When you initiate your transfer, you’ll often be given the choice of paying these fees yourself or having them deducted from the receiver’s funds.

What information or documents will I need?

To send a telegraphic transfer, you’ll need to provide the following:

  • Your (the originator’s) details. This includes your name and bank account details, or the details of the originator if you’re sending money on behalf of someone else.
  • The recipient’s (beneficiary’s) details. This includes the recipient’s bank, bank account number, address, name and contact details. This may include an IBAN or SWIFT code.
  • Transfer details. This includes the amount, the reason for the transfer, the currencies, the date and any other information the bank requests.

Cheaper alternatives to telegraphic transfers

The most important thing to know is that when you send money through a bank, it’ll typically take the form of a telegraphic transfer or TT, and that means it will usually be much more expensive than using a money transfer service instead.

Check out some money transfer services below to see if you can find a better deal. Our table below lets you compare the services you can use to send money overseas. By inputting how much you want to transfer and to what currency, you'll be shown live exchange rates, fees and more.

Min. Transfer Amount Transfer Speed Online Transfer Fee Rate Amount Received Description CTA Details
NZD 250 1 day NZD 0.00 0.628 USD
6,285
SendFX guarantees to match any competitor's exchange rate. T&Cs apply.
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NZD 0 1 day NZD 0.00 0.628 USD
6,279
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NZD 2,000 2 days NZD 0.00 0.628 USD
6,285
Exclusive offer: $0 transfer fee and discounted exchange rates for all Finder customers.
A higher exchange rate applies to non-finder customers. Send money in more than 60 currencies.
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NZD 2,000 1 day NZD 0.00 0.628 USD
6,285
TorFX guarantee to beat any competitor's exchange rate for a transaction. Conditions apply. Go to site Show details
NZD 1 Within an hour NZD 3.99 0.628 USD
6,273
An online money transfer service with cash pickup, bank account to bank account and airtime transfers available. Go to site Show details
AUD 250 1 - 2 days NZD 15.00 0.628 USD
6,275
A higher exchange rate applies to non-finder customers. Send money in 45 currencies. No fee if you transfer over AUD$10,000. Go to site Show details
NZD 1 1 - 2 days NZD 80.00 0.631 USD
6,260
Make online transfers with transparent exchange rates, low fees and low minimum amounts. Go to site Show details
NZD 5 1 - 2 days EUR 3.00 0.626 USD
6,261
Special offer: Zero fees on your first 10 transfers.
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NZD 10,000 1 - 2 days NZD 0.00 0.626 USD
6,260
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Compare up to 4 providers

Disclaimer: Exchange rates change often. Confirm the total cost with the provider before transferring money.

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