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.
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 slower 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 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:
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 USD, there might only be two or three. For other corridors, there will often be more since US dollars tend to serve as a hub.
If you're sending money from Australia to Europe, it might go something like this:
| Response | |
|---|---|
| Money transfer specialist (eg. TorFX or Western Union) | 48.89% |
| Bank | 41.11% |
| Other | 10% |
To make a telegraphic transfer, you will need to do the following:
Your transfer is going through multiple banks, so each one may take a fee. We can break the fees down into four parts:
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.
To send a telegraphic transfer, you'll need to provide the following:
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.
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