If you’re using an overseas supplier, perhaps if you’ve been shopping on Alibaba or AliExpress, then you’ll need to find a way to pay them. But paying people or companies abroad is often far harder than making domestic payments. So you might find yourself looking into the world of Telegraphic Transfers. Here’s a guide to how to make one.
First things first: it might not be immediately obvious what a Telegraphic Transfer actually is. In part that’s because there are several different terms that mean the same thing: ‘Telex Transfer’, ‘T/T’, ‘TT’ or ‘TT payment’ all refer to the same way of transferring money.
In the past, international bank transfers used to be made via the ‘Telex’ network of teleprinters - electronic machines that could communicate text-based messages with each other overseas, long before the internet.2 The banks would use this system to arrange the transfer. These days, there are faster ways to send messages abroad, of course, so this precise method of transferring funds no longer really happens. But the term ‘Telegraphic’ or ‘Telex Transfer’ has stuck: it’s still sometimes used to mean an electronic transfer made between banks.1
So really, while the history of the term is different, if you’re talking about a Telegraphic Transfer today you might as well be talking about a bank transfer, a wire transfer, or - probably - a SWIFT transfer. SWIFT is the network through which most international electronic transfers are made now. Ultimately a TT is an international money transfer directly from one account to another, made through your bank.
The actual term ‘Telegraphic Transfer’ is still sometimes used in the UK, especially in business settings, and in Australia and New Zealand.3 In Japan, a ‘Telegraphic Transfer’ rate is a retail exchange rate. In the US and Canada, you’re more likely to hear talk of wire transfers.3
Unlike with domestic bank transfers, its standard for banks to charge a fee for international bank transfers. The recipient might have to pay to receive the money, as well. And don’t forget that banks can choose the exchange rate they use, so if you’re transferring into a different currency, you should check what sort of rate you’re getting.
The exact details of how a TT payment works are down to the banks that it involves: the term doesn’t refer to one fixed method of doing it, so much as the general principle of transferring money from one account to another one overseas, using electronic means. So it’s hard to be precise about how it will work in any one case.
From your perspective as a customer, all you need to do is instruct your bank to send the money and provide the details, and they should sort out the rest and make sure it gets to its recipient. Once they’ve charged you. Find out what steps you need to take in the next section.
The process varies from one bank to the next, but here’s what you’ll need to do in most cases.
- Find out if your bank lets you make international payments online. If it does, you don’t even need to leave the house to make your transfer. If it doesn’t, you might have to pay a visit to the bank. Find out by checking their website or giving your bank a call.
- If you can set up the transfer online, log in to your online banking. And once you’re in, find the section marked ‘Telegraphic Transfer’, ‘International Payment’, ‘Wire Transfer’, ‘Send Money Overseas’, or something similar to that.
- If you can’t do it online, go to a branch and speak to a teller. Make sure to take all the details you need with you: not just your bank details, but also the recipients.
- Check the cost. This is an important one. It’s normal for banks to charge a fee for this service, and they should be able to tell you what it is. But often, other ‘intermediary’ banks are involved before your money reaches its destination - and they might well be able to take a cut of your money, too. And depending on the recipient’s bank account, there might also be a fee they have to pay to receive the money. What’s more, you should check what exchange rate the bank will use to convert your money, and compare it to the mid-market rate to see if you’re getting a decent deal or not. The bank might not be able to give you a precise answer about this, but you should ask all the same because it can make a big difference to the real cost of your transfer.
- Fill in all the necessary information. If you’re happy with the terms of the transfer, you’ll need to provide the recipient’s name and basic bank details - often an IBAN and BIC/SWIFT code. You might need the recipient’s address, and even their bank’s address, as well.
As mentioned above, Telegraphic Transfers are often used as a synonym for SWIFT transfers: most of the time, when banks process international transfers, they use the SWIFT network. It’s a well-established system which operates all over the world, which is good news. However, SWIFT transfers aren’t necessarily a good value for your money, and it can be very hard to work out exactly how much they actually cost ahead of time.
That’s because it’s not just your bank that charges: intermediary banks can charge a fee as well, and so can the destination bank. And if your money is converted into foreign currency, you might lose out on the exchange rate as well: banks are able to charge customers above the real exchange rate - the mid-market rate - so that your money ends up being worth less than it should be. That can be just as costly as all the fixed fees you might be charged.
If you make your international money transfer using TransferWise, the cost is a lot more straightforward - and probably lower. TransferWise always uses the mid-market rate, like you find on Google, and there are no extra banks surreptitiously charging you along the way. All you pay is a single, low percentage cost, stated upfront when you make the transfer. It can work out up to 8x cheaper than using your bank to send money abroad.
Take a look at TransferWise’s free borderless multi-currency account as well: it lets you manage and send money to dozens of currencies, all from the same account, so if you often do business overseas it could be ideal. You even get virtual account details in US and Australian dollars, euros and pounds sterling, so you can easily receive money into it as well. That’s free, too.
If you’d like more information on Telegraphic Transfers, take a look at these articles:
- What is a telegraphic transfer?
- How much are telegraphic transfer fees?
- How long does a telegraphic transfer take?
- What are the telegraphic transfer buying/selling rates?
- What’s the difference between a telegraphic transfer and a wire transfer?
Telegraphic Transfers aren’t as complicated as they might sound. But that doesn’t mean they’re always the right option. Make sure you know what it’ll cost you before you decide how to transfer your money abroad. Good luck!
http://lexicon.ft.com/Term?term=telegraphic-transfer (March 29 2018)
https://www.merriam-webster.com/dictionary/telex (March 29 2018)
https://en.wikipedia.org/wiki/Telegraphic_transfer (March 29 2018)
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