If you’re thinking of expanding your business to a more global audience, you’ll most probably need to deal with international customers and be required to send payments overseas. Or perhaps you wish to sell internationally and receive payments from international clients.
Either way, you’ll need to know your options for sending and receiving the money to and from international customers. One of the best choices is a telegraphic transfer.
This article at a glance:
1. When will I need to use a telegraphic transfer?
You will need to do a telegraphic transfer when you’re doing a cross-border payment, that is, sending money to an overseas account.
2. How will I know when my payment has been received by the recipient?
You can either contact your bank to ask if your payment has been successful, or use SWIFT GPI.
3. How will my payment be converted into the currency of the recipient’s bank?
Either the sender’s or recipient’s bank will do the forex conversion based on the rates at that time, so there is a chance the conversion rates may not be optimal. Consider using a multi-currency account to save on forex conversion rates.
What is a Telegraphic Transfer?
A telegraphic transfer (also known as Telex transfer, TT payment, or TT), is a mode of online payment and is mainly used for overseas wire transactions. Basically, if you need to send money to a business partner that is not located in the same country as you, you can do so via a telegraphic transfer.
So when will you need to do telegraphic transfers then? Imagine you’re an electronics businessman from Switzerland and need to import parts from Vietnam. You could place an order with a Vietnamese company and do a telegraphic transfer for the purchase of the parts.
How Long Does it Take For a Telegraphic Transfer to Reach The Receiver?
If you’re wondering if telegraphic transfers (like their name suggests) are inefficient, you’ll be glad to hear that while the telegraph has become ancient, telegraphic transfers are fast and take about two to four business days to complete. This, however, depends on where you’re sending from, your destination of the transfer, and any currency exchanges that need to be done.
Is a Telegraphic Transfer The Same as a SWIFT Wire Transfer?
If you are requested to make a telegraphic transfer, TT payment, or telex transfer from say, an overseas partner, but your bank only offers a wire transfer, what do you do? There’s no need to panic - these terminologies are sometimes confusing and interchangeably used, although there is a simple explanation.
In the olden days when Internet banking was not available, banks had to move money from accounts A to B without handling physical cash notes. How was this done then? Firstly, you would have to call up or show up physically at your bank, where an operator will send a message via Morse code to the recipient bank. This is how the name ‘telegraphic transfer’ came about.
Then came the time when banks realized more people were doing transfers and they needed a globalized and general system to handle transfers. This was how SWIFT (the Society for Worldwide Interbank Financial Telecommunication) came into play in 1973.
To put it in simple terms, telegraphic transfer refers to the broad description of methods to move money between accounts either locally or across borders. SWIFT payments refer to those money transfers specifically using the SWIFT network. Hence, a telegraphic transfer can be a SWIFT transfer as well.
Is a Telegraphic Transfer Different from a Domestic Bank Transfer?
Yes. When you transfer money internationally, always be prepared to be charged a fee for the convenience it provides. Depending on the type of transfer, the sender might have to pay the fee. Alternatively, the recipient will bear the fees. Not forgetting the exchange rate, which is determined by the bank.
A domestic bank transfer will most probably not incur any additional fees. So, if you’re simply transferring money to an account that’s in the same country as you, opt for domestic bank transfers instead of telegraphic transfers.
What Kind of Information Will You Require for a Telegraphic Transfer?
It depends on your bank’s requirements, actually. Nonetheless, here’s a general guide on the steps you can follow, if you’re sending money into an international account.
Check if your bank offers international payment options
- If it does, you can simply do an online transfer.
- If it doesn’t, you may need to call up your bank and ask for more information.
Once you’re into the online banking page, find “transfers” or “payments”
- You may also look out for terms such as “Telegraphic transfer”, “Wire transfer”, “Send money overseas”, “International payment/transfer” etc.
Check how much it’ll cost
- Banks usually charge for their service, and you’ll know how much it’ll be.
- If intermediary banks are involved, there may be extra fees.
Check the exchange rate
- If you’re transferring money to a country with a different currency, the funds will be exchanged by either the sender or recipient bank.
- You can check with your bank what their exchange rate is, and compare it against the market rate.
Fill in all the necessary information, and you’re good to go
- You’ll require the recipient’s full name, bank details, address, their bank’s address and most likely an IBAN/BIC/SWIFT code.
Can You Track a Telegraphic Transfer?
Well, it was troublesome to track where your money was before, as a money transfer is unlike a parcel delivery where you could track the estimated location of your delivery.
However, you can also request a trace on the payment transfer through your bank by doing a little more legwork. Take note that they’ll only be able to notify you if the money has been credited into the recipient’s bank account. You’ll also need your Federal Reference number that is usually 16-20 digits.
Alternatively, as SWIFT rolled out its latest system (SWIFT GPI) for cross-border payments, you can now see where your payment is at any given moment. Simply go onto the SWIFT website and track your payments end-to-end in real-time.
How Can You Avoid Bad Foreign Exchange Rates When Doing Cross-border Transfers?
If you’re worried about the foreign currencies exchange rate when you send money, we’re here to help.
At Silverbird, we offer you a smart alternative. One that allows you to hold, transfer and exchange foreign currencies online simply by using a single account. In order to avoid facing low forex rates when transferring your funds, we offer multi-currency accounts catered to international merchants like yourself, so that you can convert over 30 currencies within a single account.
Start onboarding today.
Author: Syahirah Aiman
Illustration: Kate Faldina