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How To Wire Transfer Money: My Experience
Why do I need to do wire transfers?
As you know from my very first post in this blog, I am actively working on buying an established website. I am using a help of two online brokers (I will write about them in a separate post), and they both accept payments by wire transfers.
So, being able to make wire transfers is a must for my endeavor.
What Is a Wire Transfer?
This is how Wikipedia explains it: “Wire 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.”
Wire transfer is a type of EFT, which stands for electronic funds transfer. EFT is the electronic exchange, transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer-based systems.
The wire transfers can be of two types:
Domestic wire transfers are the ones that involve banks or financial institutions located in the same country or financial union like the European Union.
International wire transfers are the ones that involve financial institutions located in different countries or financial unions.
Wire transfers are often the cheapest method of transferring big amounts of money between bank accounts. It can cost somewhere between $10 – $45 and can take from 4 hours to 5 days to complete. All depends on the locations of the banks involved in the transaction. The fastest and cheapest are domestic transfers, and the international ones are the longest and most expensive ones.
In my case, I am looking at websites that cost quite some money. The price may be anywhere from $1,000 to $20,000 to $100,000 and higher, and the owner may locate in another country, not Canada. Given all that, it makes a total sense to use wire transfers as a payment method.
How to Do a Wire Transfer
Normally banks require customers to come in person in order to do a wire transfer. I would say this is a traditional way. It is also a very inconvenient way because you have to go to the closest branch in person, wait in line, and then go back from the bank to the place where you came from. Too much time wasted!
Some banks allow to use a more modern way by doing a wire transfer by phone or online.
When I was choosing an American bank for my online business, the wire transfer method was the most important criteria.
In my short list, I had three banks, and all three of them do not require showing up in person to do a wire transfer. RBC Bank and BMO Harris allow to do it over the phone, and HSBC Bank USA has an online solution. This is how the transfer should be done in the modern world!
As you know, I chose BMO Harris, and here I will explain to you how this bank implements wire transfers.
Setting up Wire Transfer (With BMO Harris)
According to the information from their website, wire transfers by telephone are “permitted on an exception basis”. When I called the bank the first time, the agent said they do not do wire transfers by phone. I did not give up and called the second time. This time, the agent said that it is not a problem though it requires some paperwork. But the websites says it is permitted on an exceptional basis? Hmmm.. So I called the third time. This time, the agent confirmed the words of the previous agent – wire transfers can be done by phone. Hurray! I finally believed it and opened an account with them.
After that, I called them again to ask about the paperwork.
This time, I got yet another portion of BS. I was told that there is a chance to not get approved. What’s the reason? The agent had no idea, but she was sure it was possible. Also, she said the approval may take up to a few weeks.
In reality, the approval took about 3 business days, and I had no problems of being approved. Nobody asked me a single additional question.
On top of that, I received the wire transfer confirmation papers in one week after they got the signed papers from me. Never believe an agent!
So, what was the paperwork I had to do?
The best thing about BMO Harris is that they care a lot about the security. On the other side, it makes the paperwork quite intensive.
The forms were sent to me by a secure email.
The forms included:
- a generic wire transfer agreement (applicable for both in-person and over the phone transfers);
- a customer information form (the information about the primary contact for all wire transfer activity);
- an account information form (what account(s) to charge);
- an authorized caller (user) schedule (to specify who is authorized to do the transfers and what kind of transfers; also it specifies the limit of money to transfer);
- a secondary authorization waiver agreement (whether the transfer must be confirmed by a separate person);
- a domestic repetitive instruction template (in the case when some transfers are planned to be made to a particular U.S. account more than once);
- an international repetitive instruction template (in the case when some transfers are planned to be made to a particular account outside of the U.S. more than once).
According to the agreement, the wire transfer payment orders by phone have to be received by BMO Harris from 7:30 AM to 4:30 PM (Central Standart Time) on business days. Outside of this time the wire transfers are not accepted. The business days are Monday through Friday, excluding bank holidays. So, a transfer can be sent only during the working week in the mornings and afternoons.
The wire transfer agreement may be terminated by the customer or BMO Harris at any time by giving 30 days’ written notice.
To be able to do transfers, I needed to get two PINs. The first one was an initiating one (to initiate a transfer) and another one for confirmation. The PINs were mailed to my home address once the signed papers were received by the bank.
After I initiate a wire transfer, the bank would call me to get a confirmation (that’s when I need the confirmation PIN) each time the wire transfer amount is higher than the amount I specified in the papers. I could waive the confirmation, but I did not. Security is important!
Since I had to give separate authorizations for domestic and international WT, I decided to allow only domestic ones. For the international wire transfers, I can always use my Canadian accounts + Canadian Forex (read how awesome they are).
Using repetitive instructions with “hard coded” details is great. Instead of spelling the name of the bank and its numbers during each call, I simply give the code of the repetitive instruction, which contains all the necessary credentials. This speeds up the process and leaves a little room for mistakes. Also, it adds an extra level of security because each repetitive instruction number is unique and can serve as an extra PIN.
If I need to change the information in the repetitive instructions or in any other settings, I would have to fill up the papers again and send them by mail.
Initiating a Wire Transfer
So, fast forward, I now know how to do a wire transfer because I did buy a website (I will write about it in a separate post)
Here is how the procedure went.
I called the phone number of the wire transfer department. They made me go through a voice menu and then an agent picked up.
“Domestic or international?”
“Repetitive or not?”
“Give me your name… now the phone number… now give me the ID of the repetitive account you have set up… now give me the initiation PIN… the amount to transfer?”
I gave all the numbers.
“Ok,” the agent said. “Now I read you all the info I have… Give me the initiation ID again…”
And a few seconds later: “Perfect, your wire transfer has been sent”
All was done under 10 min.
Then the second tier of the security came into play. The agent called on my phone number to confirm the transfer, and I confirmed it with the confirmation code.
The other side received the wire transfer in about 1.5 hours, which was a pleasant surprise. I thought it would take 4 hours.
Sending domestic wire transfers in the U.S. is easy, at least with the BMO Harris.
The intensive paperwork I had to do at the beginning paid back later through the convenience and security of the transfer initiation. But if I need to change anything, I would again have to submit a bunch of papers by mail. It is annoying, but at least I know it is secure.
Also, the cost of a domestic transfer in BMO Harris is $25. I thought it would be $15 and that $25 was for international transfers. This was an unpleasant surprise.