If you need to send money to a friend or family member, there’s no shortage of options. One such option is a peer-to-peer (P2P) wire transfer, which can help you send money to most people with a bank account across the globe.
This short guide covers what a P2P wire transfer is, how it works, and how sending money with Western Union could be a faster and simpler way to get money to your loved ones.
What is a P2P wire transfer?
A P2P wire transfer is a quick and convenient way to send money electronically to a person with a bank account. The funds are transferred from the sender’s bank account to the receiver’s bank account.
Since it’s electronic, there’s no exchange of physical cash. Funds transfer electronically from bank to bank through networks that facilitate the transaction. Bank wire transfers can be domestic or international.
You can initiate outgoing wire transfers through banks, credit unions, or other remittance transfer providers that offer them. When you send a wire transfer, you’ll be charged a fee for the transaction. The fee amount and how quickly the funds reach their destination depend on whether it’s a domestic or international wire transfer. International wire transfers have higher fees and longer processing times.
How P2P wire transfers work
Through a P2P wire transfer, funds move electronically between bank accounts. To transfer, the sender must use a qualifying bank, credit union, or remittance provider that offers this service.
To initiate a transfer, senders must provide:
- The receiver’s full name
- The receiver’s address
- The receiver’s phone number
- The receiver’s bank account number
- The receiver’s bank routing number
- The receiver’s bank address
- The amount to send
- The country you’re sending money to
- The receiver’s international code, such as the International Bank Account Number (IBAN), if applicable
The sender pays a fee to complete the transaction—and from there, the funds make their way to the recipient.
The originating bank electronically sends the transfer instructions, including payment details, to the recipient’s bank through a secure system. Domestic US transfers are typically processed through the Fedwire or Clearing House Interbank Payments System (CHIPS) banking networks. In contrast, international transfers move through the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system.
The money moves between accounts once the transaction details are verified and the financial institutions settle the payment.
Domestic wire transfers are typically completed within one to three days. International wire transfers can take longer, up to one to five days.
Most wire transfer providers have a cutoff time for processing on the same business day. If it’s past that time, the transaction is processed the following business day. When the funds arrive, the receiver may also pay a fee for the incoming wire transfer.
Domestic vs. international P2P wire transfers
If you’re sending a P2P wire transfer, it can be domestic or international. A domestic wire transfer means the funds are sent from one bank account to another within the same country. Sending money using a domestic wire transfer is fast and simple. There are fewer steps involved, and there isn’t a foreign exchange. Same country, same currency. That means funds can arrive faster and settle quickly.
International wire transfers typically refer to funds exchanged from a US bank account to a foreign one. When sending money abroad, the process is more involved. For example, senders need the receiver’s SWIFT/BIC code or IBAN. Think of this like an electronic address associated with a specific bank.
Also, funds sent via international wire need to be converted to foreign currency. These extra steps can add more time to the process.
Where can you send P2P wire transfers?
Now you know what a P2P wire transfer is and the key differences between domestic and international transfers.
Here are places you can set up an outgoing P2P wire transfer:
- Your bank. You may be able to facilitate a domestic wire transfer using your own financial institution with funds from your checking or savings accounts.
- SWIFT member banks. SWIFT is used to process international bank wire transfers. The SWIFT network comprises thousands of financial institutions across many countries and is a major player in money transfers.
- Intermediary banks. If a country isn’t affiliated with SWIFT, you may be able to use an intermediary bank for an international wire transfer. An intermediary bank works as a liaison between the sender’s bank and the receiver’s bank.
- Country-specific banking systems. Countries may have their own network to facilitate international wire transfers. Russia has the System for Transfer of Financial Messages (SPFS), China has Cross-Border Interbank Payment System (CIPS), and India has the National Payments Corporation of India (NPCI) network.
Pros and cons of P2P wire transfers
P2P wire transfers are just one way to send money—but as with anything, there are pros and cons.
Pros of P2P wire transfers
- High limits. Wire transfers typically have higher limits than other money transfer methods and enable you to send large sums of money.
- Speed. Domestic wire transfers are a quick way to send money within the same country and are sometimes processed within the same day. While they take longer to complete, international wire transfers are faster and more secure than sending a large check in the mail.
- Flexibility. You can send money to almost anyone with a bank account using a wire transfer. This flexibility makes it easy to send money internationally, with no travel or postage required.
Cons of P2P wire transfers
- Fees. Senders and receivers may have to pay fees as part of the wire transfer Fee amounts can vary by bank or provider.
- Not reversible. In many cases, a wire transfer is final. This means you would not be able to cancel it or receive a refund. According to the Consumer Financial Protection Bureau (CFPB), you may only cancel an international money transfer if you used a remittance provider, the receiver hasn’t gotten the funds, or if it’s within a 30-minute time frame from initiation.
- Requires more information. To complete a wire transfer, you must provide a lot of information about the receiver, which takes some extra work.
- Requires bank accounts: Wire transfers require both senders and receivers to have a bank account.
Sending money with Western Union
If you need to send money to family or friends, conventional P2P wire transfers can help—but Western Union can offer a simpler and more flexible experience.
Think of a wire transfer as a direct bank-to-bank transfer in which you instruct your bank to send money to the recipient’s bank account. Western Union eliminates this bank requirement by acting as an intermediary. This enables you to send money online, through our app, or at one of our many agent locations worldwide.
It also gives your recipient greater control and flexibility, regardless of their banking situation or location. They can pick up the money as cash, have it deposited into their bank account (depending on the country), or even receive it in their mobile wallet (availability varies by country).
FAQs
How does a P2P wire transfer work?
A P2P wire transfer is used to send money from the sender’s bank account to the receiver’s bank account. Using this method, it’s possible to send large sums of money domestically or internationally without the need for physical cash or checks. Both parties may pay fees associated with the transaction.
What is an example of a P2P wire transfer?
Let’s say you want to send $10,000 abroad to your niece to help pay for college. You can use a wire transfer provider to send these funds electronically from your account to your niece’s account. By providing the receiver’s information and paying a fee, you can send money easily and quickly.
What is the difference between a bank transfer and a P2P wire transfer?
A bank transfer is a way to send money electronically between bank accounts using the banking network. A common example is when your employer direct deposits your paycheck. A P2P wire transfer is similar but not the same. These wire transfers also send money electronically between bank accounts, but they are transmitted via different banking systems and typically have faster processing times.
