Wire transfer is simply the electronic transfer of money. Wire transfers can be made with any entity irrespective of its size. Many a time banks transfer a huge sum of money between themselves via wire without any actual money being moved. All accounting procedures for these types of transactions are made electronically. This has been proved as a secure way to transfer large amount of money.
Wire transfers are mostly used for transactions like credit card balance transfers. Note that there is no actual cash money being moved in this process. An example of wire transfer will be transferring of money from your savings account into your checking account. Some people also use ATM card to purchase good. It will be considered as wire transfer too. Whenever your retailer passes your ATM card through the machine, you allow a wire transfer thereby allowing funds to be moved from your account into your vendor’s account.
Note that a wire transfer may or may not be free to the consumer. Point of Sale (POS) transactions generally costs you a small fee. While most of the other transactions are for free.
A different kind of wire transfer will be signing up for automatic bill paying through your bank. This kind of bill paying is picking up pace because of the infusion of technology and easier and safer use. Many utility companies like water, electric, and phone, today use automatic bill paying to collect their payment. This mode of bill payment is becoming very popular as there is surety that the funds will be in your account on the date that is accessed by the billing company. It is a good way to pay bills without having the hassles of mailing.
However the disadvantage of automatic payments is that the money will have to be in your account otherwise the bill will not process through. It might at times lead to confusion and possible cut off of services if not monitored closely and carefully.
You may also use wire transfer services of third-party companies such as Western Union. For example you want to send international money transfer to someone who does not have a bank account or is not able to receive funds in a more traditional way, you may always use wire transfer with a certain amount of fees. However, the fees associated with these mainly depend on the amount of money that is being sent out.
The ideal place to gain information about wire transfers and how they help you is your local banks. They also help in setting up various transfer plans on your request. They also make you familiar with the safety and security features of wire transfers.