Telegraphic Transfer vs Wire Transfer: What's the Difference?

As globalization and ecommerce continue to grow, moving money electronically and making international money transfers are becoming increasingly common in both personal and business transactions.

You may have heard a few terms thrown around when it comes to overseas transfers. Telegraphic transfer (TT), wire transfer, or even SWIFT transfer might come to mind. 

This article explains telegraphic transfer and wire transfer, detailing what they are, how they work, how they are related to SWIFT transfers, and their similarities and differences to help you understand how they apply to your transactions.

Telegraphic transfers (TT) were the earliest form of an electronic money transfer (EFT) method to transfer funds between banks using cable or telegraph lines. 

As technology evolved, banks established their own dedicated networks specifically for financial transactions to replace telegraph lines. One of those is the SWIFT network (the Society for Worldwide Interbank Financial Telecommunication), which is a member-owned network of banks and financial institutions that facilitate international transfers globally.

Despite advances in technology, the term "telegraphic transfer" remains in use today. It is mostly used to broadly refer to electronic money transfers. 

Telegraphic transfer, also known as "telex transfer," is often abbreviated as "T/T," "TT," or "TT payment.” 

A wire transfer is an electronic funds transfer conducted through a messaging network and advanced telecommunication technologies, either domestically or internationally. This could be between individuals or entities and across either a network of banks or by using money transfer service providers. 

There are two types of wire transfers, a domestic wire transfer and an international wire transfer. In many instances, the SWIFT network is used for international wire transfer, but there are also many older and newer wire transfer services that use their own network to facilitate the transfers.

For domestic wire transfers, many countries have their own local network, which makes moving money between local banks faster and cheaper.

For example, domestic wire transfers in Hong Kong are settled using the HK Clearing House Automated Transfers System or HK CHATS. Similarly, in the United States, the ACH network plays a dominant role in electronic funds transfers.

In a nutshell, "telegraphic transfer" and "wire transfer" are mostly interchangeable terms today. Both refer to electronically sending money between accounts.

A telegraphic transfer was used back when telegrams were initially used for transfer instructions. As technology advanced, both terms came to include any electronic transfer of funds using digital networks.

Regional preferences influence the choice between the two terms. Here’s a summary of their similarities and differences. 

In today's banking and finance, the differences between telegraphic transfer and wire transfer are mostly about the words used rather than practical distinctions. 

Here are some points where you might still notice these differences:

The main difference between telegraphic transfer and wire transfer is mostly in their names and which names various regions or banks prefer to use.

• Telegraphic Transfer (TT): Commonly used in regions such as Hong Kong, Singapore, the United Kingdom, Australia, and various Southeast Asian countries. Although the use of the terms telegraphic transfer or telex transfer was more common around the world in the mid to late 1900s, they continue to be favored locally among banks in the mentioned regions.
• Wire Transfer: Predominantly used worldwide, especially in the United States and Europe.

Although both types of electronic payments can be used for domestic and international payments, telegraphic transfer is perceived to be specifically associated with international fund transfers in some regions and contexts. Wire transfer, however, is generally understood to refer to both domestic and international transfers.

Consequently, some institutions may use telegraphic transfer (TT) to highlight international transactions, while wire transfer might be used as a term for both domestic and international transfers. Therefore, you might see different associated fees, with TT being higher because of its international nature. However, transfer fees are typically determined by the banks involved rather than the specific terminology used, whether TT or wire transfer.

Normally, international transactions can involve 2-3 intermediary banks and take 1-5 business days, depending on currencies and complexity. Each bank charges its own fees as the money moves. The transfer amount and exchange rate also impact the total costs of sending money cross-border. 

Here are the top three similarities between telegraphic transfers and wire transfers.

for the transfer of funds electronically. EFTS can be moved domestically, internationally, for making online purchases, ATM transfers and withdrawals, bank transfers, or telephone instructed transfers. This leads to the second similarity. 

A telegraphic transfer or a wire transfer in action is a set of instructions or a message about the details of a transaction sent through the corresponding network (whether it be SWIFT network, Fedwire, Western Union, etc). The actual transfer of cash will usually happen soon after the message has been received, processed, and cleared at the receiving bank. The time it takes for this to happen wholly depends on how many banks or institutions are involved in moving a transfer. 

When you send money internationally, whether through a telegraphic transfer (TT) or wire transfer, your bank usually uses SWIFT to send instructions and recipient details to the recipient’s bank.

This is because SWIFT has over 11,000 member banks and financial institutions in 200 countries, making it the largest interconnected global bank network. 

However, if you use a third party, such as Western Union who also facilitates international wire transfers using their network, you will only use the SWIFT network if your money needs to be received into a particular bank account. If the money is to be received via a WU agent for example, your wire transfer will not use the SWIFT network. 

Telegraphic transfer and wire transfer are largely synonymous and work in similar ways.

When you, the sender, instruct your bank to transfer money, you provide details such as the recipient's bank account information and the transfer amount. Your bank then verifies the information and transmits it through a secure network, typically an internal network for domestic transfers or SWIFT for international transfers, especially for large or business transactions.

For international transfers, the instructions may pass through several local or international banks to reach the recipient's bank, with each bank deducting a handling fee. The recipient's bank receives the transfer instructions and credits the funds to the recipient's account. The SWIFT transfer time varies depending on the countries and currencies involved, but it’s usually 1-5 business days.

For domestic transfers, the process is more straightforward. Communication between your bank and the recipient's bank does not involve intermediary banks, resulting in lower fees and faster processing times, typically within the same business day.

The details you need to make a telegraphic transfer or wire transfer depend on whether it is domestic or international. It also depends on whether you need to send your international transfer to a specific bank account or will be solely using a third-party agent's network to get your money to its final destination. 

You’ll need the recipient's name and address, the recipient’s account details, local bank details, bank account number, amount of money being sent, and pick-up location in case of cash pick-ups. 

Different countries have various domestic networks for internal money transfers, each requiring specific details, often referred to by different names. For example, in the US, you need a routing number; in the UK, you need a sort code; and in Hong Kong, you need a bank code.

For an international transfer, you will most likely be utilizing the SWIFT network. This means you’ll require the BIC or SWIFT code of the SWIFT member bank you want to transfer funds to. 

You will also need the beneficiary's name, bank account details, IBAN for a European account, receiving bank address, and choose who will be responsible for the fees incurred for the transfer. 

When deciding between telegraphic transfer (TT) and wire transfer, the choice often hinges on regional banking practices and the specific networks each institution uses. Terms and fees can vary widely between banks, making it crucial to consult directly with your bank to clarify what each term means and to review their fee schedule.

In most cases, distinguishing between the two isn't necessary—they both accomplish the task. However, if you encounter both:

• For international transfers, either option will likely suffice. Compare the fees for your specific transaction.
• For domestic transfers, a wire transfer is typically the more common and potentially cost-effective choice.
• Both options are typically faster than traditional methods like checks, but there might be slight variations in processing times if your banks or financial institutions use different networks.

If you’re looking for a fast, convenient, and cost-effective way to accept and make international payments, consider Statrys.

Statrys is not a bank but a payment service provider that offers a multi-currency business account tailored for SMEs in Hong Kong, Singapore, and the BVI. The business account provides efficient payment solutions using local systems and competitive FX fees for 11 major currencies to help save costs, along with SWIFT payments.

Here’s a summary of Statrys services.