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.
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.
How can I make a telegraphic transfer?
To make a telegraphic transfer, you will need to do the following:
Go to your local bank’s branch, app or website.
Ask to send an international money transfer.
Fill out the form either in-person or online.
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:
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.
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.
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.
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.
Disclaimer: Exchange rates change often. Confirm the total cost with the provider before transferring money.
Frequently asked questions
Nothing. When you send an international bank transfer, your bank is sending your money as a telegraphic transfer. Wire transfer is another name for this and is more often used in the US; whereas telegraphic transfer is more often used in New Zealand, Australia and the UK.
No. Telegraphic transfers will typically take several days. If you want a fast transfer, you can send money overseas instantly and more cheaply if you use a cash transfer service.
Telegraphic transfers will generally take from three to 10 business days to arrive, depending on where you’re sending money to and from, which currencies you’re sending and which bank you and the recipient are customers of.
Telegraphic transfers are the standard system used by almost the entire financial world, making them one of the safest and most reliable ways of sending money overseas.
But this doesn’t mean they’re entirely safe. As always, you still need to be aware of money transfer scams that are out there. There’s very little chance of recovering money lost to overseas scammers. Generally, you should only send money to people you know.
Andrew Munro is the cryptocurrency editor at Finder. He was initially writing about insurance, when he accidentally fell in love with digital currency and distributed ledger technology (aka “the blockchain”). Andrew has a Bachelor of Arts from the University of New South Wales, and has written guides about everything from industrial pigments to cosmetic surgery.
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