Friday, 20 October 2023, 3 minute read
Sending money across international borders has become increasingly common, and with so many FX payment options available, it can be hard to know which is the safest, easiest and most cost-effective method. That’s why it’s so important to understand what each international payment method involves.
Today we’ll be looking at telegraphic transfers; one of the most common ways to transfer money internationally. We’ll break down what they are, how much they cost, how long they take and why they're such a popular choice for managing foreign transactions.
What are telegraphic transfers?
A telegraphic transfer, often called simply a ‘TT’ or ‘telex transfer’, is a secure and efficient method of transferring money from one bank or financial institution to another, especially across international borders. Telegraphic transfers are used most commonly for CHAPS or Swift payments.
Telegraphic transfers are widely used for a range of purposes, from paying for imports and exports to sending money to family members abroad.
How did the telegraphic transfer get its name? In the past, financial institutions used telegraph wires to transfer money to one another - similar to how telegrams used to work.
As technology advanced and the telegraph became outdated, the concept of transferring funds evolved and went digital. Today, funds are transmitted through cable networks or cloud-based application., But the name ‘telegraphic transfer’ has stuck around!
Key characteristics of telegraphic transfers
Here are four of the main features of telegraphic transfers:
Electronic transaction: Telegraphic transfers are electronic, making them relatively speedy and safe.
Bank-to-bank transaction: These transfers involve a direct transaction between the sender's and recipient's banks, making sure the funds reach the intended destination.
Currency conversion: If the sender and recipient have accounts in different currencies, the funds are typically converted into the recipient's currency during the transfer.
Security measures: Telegraphic transfers are known for being fairly safe thanks to their security features, which help protect both the sender and the recipient from potential fraud.
Telegraphic transfer fees
Just like any other financial service, telegraphic transfers can come at a price. Telegraphic transfer fees can vary depending on several factors, including your bank, the recipient's bank and the amount being transferred. For example, fees for sending an overseas transfer with Swift can range from £10 to £30.
Here are some standard fees associated with telegraphic transfers:
Sender’s bank fees: Your bank may charge a fee for processing the telegraphic transfer. This fee can be a flat amount or a percentage of the transfer amount.
Recipient’s bank fees: The recipient's bank may also charge fees for receiving the telegraphic transfer. These fees can vary between banks and may be deducted from the received amount.
Corresponding bank fees: Sometimes, corresponding banks are involved in telegraphic transfers, and their exact fees can be hard to determine.
Exchange rate margin: Banks often hike up exchange rates by adding margins to cover their own fees. This margin varies depending on your chosen payment method, and is typically higher when banks are involved.
Crezco can help
Crezco is an open banking payment platform that lets you make and collect international payments quickly, securely and affordably. Crezco ensures you get the most competitive rates when making international payments, and helps you avoid any extra charges or hidden fees.
How long does a telegraphic transfer take?
The time it takes for a telegraphic transfer to reach its destination can vary depending on several factors, including:
The banks involved: Some banks may process telegraphic transfers more quickly than others.
Currency conversion: If you’re sending money overseas and currency conversion is needed, it can add extra time to the transfer.
The recipient's bank: The recipient's bank and its processing times can also affect how long the transfer takes.
Regulatory requirements: International transfers must comply with various regulatory and anti-money laundering requirements, which can lead to delays as banks verify the transaction's legitimacy.
Time zones and holidays: Differences in time zones and bank holidays can also affect the speed of your transfer.
While telegraphic transfers are generally considered a relatively fast way to send money internationally (usually taking between two and four business days), they can take anywhere from a few hours to several business days.
You should check exact transfer times with your bank if you’re unsure.
Read more: How to pay an invoice by bank transfer?
What is the difference between Swift payments and telegraphic transfer?
Swift (Society for Worldwide Interbank Financial Telecommunication) payments and telegraphic transfers are related but different.
Swift is a messaging network banks use to securely transmit financial information, including payment instructions and confirmations. It facilitates communication between banks, but it doesn't directly transfer funds. On the other hand, a telegraphic transfer is a method of transferring money from one bank account to another.
Read more: How to send money overseas?
You’ve understood telegraphic transfers!
Telegraphic transfers are a reliable and secure means of transferring money across borders. While they come with associated fees and may take some time to complete, their efficiency and security make them a solid choice for foreign transactions.
Understanding how telegraphic transfers work, the costs involved, and the factors influencing their processing time can help you make informed decisions when sending money internationally. Good luck!