by Wire transfer, bank transfer, or credit transfer, is a method of electronic funds transfer from one person or entity to another. A wire transfer can be made from one bank account to another bank account, or through a transfer of cash at a cash office.
Different wire transfer systems and operators provide a variety of options relative to the immediacy and finality of settlement and the cost, value, and volume of transactions. Central bank wire transfer systems, such as the Federal Reserve’s Fedwire system in the United States, are more likely to be real-time gross settlement (RTGS) systems, as they provide the quickest availability of funds. This is because they post the gross (complete) entry against electronic accounts of the wire transfer system operator. Other systems, such as the Clearing House Interbank Payments System (CHIPS), provide net settlement on a periodic basis. More immediate settlement systems tend to process higher monetary value time-critical transactions, have higher transaction costs, and have a smaller volume of payments. A faster settlement process allows less time for currency fluctuations while money is in transit.
Most international transfers are executed through SWIFT, a co-operative society founded in 1974 by seven international banks, which operate a global network to facilitate the transfer of financial messages. Using these messages, banks can exchange data for the transfer of funds between financial institutions. SWIFT’s headquarters are in La Hulpe, on the outskirts of Brussels, Belgium.
SWIFT also acts as a United Nations–sanctioned international standards body for the creation and maintenance of financial-messaging standards. See SWIFT Standards.
Each financial institution is assigned an ISO 9362 code, also called a Bank Identifier Code (BIC) or SWIFT Code. These codes are generally eight characters long. For example: Deutsche Bank is an international bank with its head office in Frankfurt, Germany, the SWIFT Code for which is DEUTDEFF:
- DEUT identifies Deutsche Bank.
- DE is the country code for Germany.
- FF is the code for Frankfurt.
Using an extended code of 11 digits (if the receiving bank has assigned extended codes to branches or to processing areas) allows the payment to be directed to a specific office. For example: DEUTDEFF500 would direct the payment to an office of Deutsche Bank in Bad Homburg. SWIFT deviates slightly from the standard, though, by using position nine for a Logical Terminal ID, making its extended codes 12 digits long.
European banks making transfers within the European Union and within Switzerland also use the International Bank Account Number, or IBAN.
SWIFT Transaction
SWIFT is a messaging network that financial institutions use to securely transmit information and instructions through a standardized system of codes.
SWIFT assigns each financial organization a unique code that has either eight characters or 11 characters. The code is interchangeably called the bank identifier code (BIC), SWIFT code, SWIFT ID, or ISO 9362 code. To understand how the code is assigned, let’s look at Italian bank UniCredit Banca, headquartered in Milan. It has the 8-character SWIFT code UNCRITMM.
- First four characters: the institute code (UNCR for UniCredit Banca)
- Next two characters: the country code (IT for the country Italy)
- Next two characters: the location/city code (MM for Milan)
- Last three characters: optional, but organizations use it to assign codes to individual branches.
Process
To avail of this Service, a remitter goes to any one of the Western Union locations in the countries in which the Service operates, fills up a form to send the amount and pays principal amount and charges. The sender gets a unique Money Transfer Control Number / Reference Number on a receipt after the transaction is sent through the system. Thereafter, the sender calls up his/her payee and gives information on the money sent. The Payee / Receiver goes to the Post Office fills up a form to receive money, shows valid identification and receives money along with the receipt, once the transaction is verified. This entire process is completed within ten minutes.
The Payee receives the full amount in Indian Rupees. There is a maximum limit of 2500 USD that can be sent at a time as per applicable RBI regulations which must however be only for personal use.
Amounts up to INR. 50,000/- may be paid to the beneficiary in cash. Any amount exceeding this limit shall be paid by means of account payee Cheque or credited directly to the Savings Account standing in the Post Office in the name of the beneficiary. However, in case of foreign tourists, higher amounts can be payable in cash.
Only 30 transactions can be received by a single beneficiary in a calendar year.
The Post Offices have been directed to treat the payee as “Most Favoured Customers”, which ensures courteous and efficient service to them.
Under the KYC / AML / CFT guidelines issued by the RBI to prevent the system of cross border inward money transfer into India to be used by criminal elements for money laundering or terrorist financing activities, beneficiaries / recipients of the money transfers need to provide sufficient information necessary to establish their identity and proof of residence through reliable Govt issued documents like:
- Election Card
- Driving License
- PAN Card
- Ration Card
- Aadhar Card etc copy of which also has to be provided to the Post Office for receiving a transfer.
This International Money Transfer Service is safe, legal, fast & reliable. Also, it is approved by the Reserve Bank of India and is being provided by a Department of the Government of India i.e. the Department of Posts.
