What is a telegraphic transfer (TT) and how does it work?

Telegraphic transfers allow businesses to send funds to nearly any country worldwide. Available at all major banks in the US, they offer a dependable way to transfer large sums across borders, making them a versatile solution for companies with regular payments to international contractors or suppliers.

For US businesses working with overseas suppliers, having access to quick and reliable international transfer methods is essential to ensure timely payments and maintain strong supplier relationships. Choosing the right payment method can also save your business on fees and avoid unfavorable exchange rates over time.

Read on to discover how telegraphic transfers work, their associated costs and processing times, and how to use them effectively to handle payments to overseas vendors and suppliers.

Understanding telegraphic transfers

Telegraphic transfers, also known as TT payments or TT transfers, are an electronic method of sending funds from one bank account to another, commonly used for international payments. This transfer type involves securely moving funds from the sender’s bank to the recipient’s bank via a network of intermediary banks, ensuring security and reliability across borders.

TTs are often chosen for international business transactions due to their speed, security, and global accessibility. In the US, you can initiate TTs online or at a bank branch, making them a flexible choice for businesses that need to pay international vendors or suppliers.

Electronic Funds Transfer (EFT) vs. Telegraphic Transfer (TT)

Electronic Funds Transfer (EFT) is an umbrella term covering multiple methods for electronically moving funds in the US. This includes wire transfers, telegraphic transfers, Automated Clearing House (ACH) transfers, and credit/debit card payments. Here’s a comparison of TT and ACH transfers to illustrate their distinct advantages:

Depending on the currency used and the country of the receiving account, Airwallex supports TT and ACH transfers to help businesses make domestic or international payments easily. With partnerships with local payment rails around the world, Airwallex can support cross-border ACH transfers without incurring any SWIFT fees. Read on to learn more about SWIFT as a messaging system for international money transfers.

How telegraphic transfers work and how they’re processed

The current process of making a telegraphic transfer is entirely digital, leveraging a secure network of banks and a messaging system called SWIFT. Here’s a breakdown of the key players involved in an international telegraphic transfer and how they make your cross-border payment work:

Sending bank

Your bank initiates the TT transfer. It verifies your information, deducts the transfer amount from your account, and transmits the transfer instructions.

Receiving bank

Your recipient’s bank plays a crucial role in verifying the transfer details and crediting the cross-border payment to your recipient's account.

Intermediary banks

In some cases, additional banks might be involved, particularly if the sending and receiving banks lack a direct relationship. These intermediary banks act as relays, passing on ‌transfer instructions and funds like a baton in a relay race.

Step-by-step guide to how a telegraphic transfer is processed

1. Gather the necessary information

Before performing the TT payment via your bank’s online platform, ensure you have all the necessary details to avoid any delays in the transfer process.

These details include your full name, bank account information, and the recipient’s full name and bank account number. Additionally, you’ll need their bank name and the bank's unique identifier for international transactions, also known as the SWIFT code.

2. Verification and fees

Your bank will verify your information, ensuring your funds go to the intended recipient and that the transfer amount matches your instructions.

It will also inform you of any applicable fees associated with the TT transfer, including the:

• SWIFT transfer fee: A flat fee your bank charges for processing the transfer via SWIFT to cover its administrative costs.

• Commission: A fee based on a percentage of the transfer amount. This can vary depending on the bank and the transfer amount.

• Intermediary bank charges: If intermediary banks are involved, they may charge fees that are added to the overall cost.

3. Transferring the money

Once you've reviewed and approved the foreign telegraphic transfer, your bank will deduct the full amount from your account. Ensure you have sufficient funds in your account to cover the entire amount.

4. Your money gets sent over by SWIFT

Your bank then utilizes the secure SWIFT network to transmit an electronic message containing all the necessary bank wire details. This message acts like a digital envelope carrying important instructions, including:

• Your recipient's name and bank information

• The transfer amount and currency

• Any special instructions you may have included, such as the purpose of the telegraphic transfer

Your bank may send the message directly to your recipient’s bank if they have a direct relationship. Otherwise, it will be routed through intermediary banks until it reaches your recipient.

5. Recipient receives money

As mentioned above, international telegraphic transfers typically take 1-5 business days to complete. This depends on several factors, such as the countries involved, intermediary banks (if any), currency exchange processes, the weekends, and bank holidays.

Now that you know how a telegraphic transfer works and is processed, make sure you factor in the various bank transfer fees and currency exchange rates in the total transfer sum submitted to your bank the next time you make a TT payment. When all these fees are combined, you may have to pay more than what was originally listed on your recipient’s invoice.

What is the difference between a telegraphic transfer (TT) and wire transfer?

Telegraphic transfers and wire transfers are now essentially synonymous, meaning they're terms that can be used interchangeably. For the most part, it’s only a minor technical difference that separates the two terms.

A wire transfer is an EFT method businesses can use for domestic or international transfers. It may or may not use the SWIFT network and can be processed through different networks, including bank networks or specialist money transfer services. Conversely, a TT transfer is solely used by organizations for international transfers.

To that point, here are the pros and cons of TT payments for your business when it comes to transferring funds overseas:

Pros

• Security. Telegraphic transfers are safe. After all, their purpose is to make large cross-border payments.

• Accountability. Your payments can be easily tracked, especially as banks and financial service providers update their IT infrastructure.

• Convenience. TT transfers can be made anytime. You can initiate a funds transfer as long as you have an internet connection.

• Flexibility. TT payments have higher transaction limits. Even a personal bank account can set a telegraphic transfer limit that’s up to six figures large.

Cons

• Speed. Telegraphic transfers are relatively slow, usually taking one to five business days to complete an international transaction.

• Fees. An international telegraphic transfer usually sports higher fees. These include bank commissions and SWIFT fees, among other potential charges.

• Intermediary banks' involvement. When intermediary banks get involved, extra fees are levied, and your transfer tends to be slowed down.

With all that said, Airwallex may just be the remedy your business needs, especially if you’re aiming to expand overseas aggressively. Airwallex’s all-in-one business account lets you accept customer payments in their preferred currency. You can then hold these currencies to pay your vendors and other clients directly. No currency conversions are needed; more importantly, you’ll have to pay no extra fees. Your international money transfer can also arrive in your vendor’s account as quickly as within the same day to ensure timely payments.

International transfer fees: How much does it cost?

Telegraphic transfers (or international wire transfers) often incur various fees. Here’s a comparison of what traditional US banks typically charge for international wire transfers versus Airwallex.

How long does a TT transfer take: Timeframe and urgency

As stated earlier, a TT transfer can take one to five business days. Unfortunately, there’s potential for your international money transfer to be further delayed by more factors, including:

1. Bank holidays and cut-off times

If you submit a telegraphic transfer request after the bank closes for the day or during public holidays, it will be processed the next day. Also, keep in mind the bank holidays for your recipient’s nation.

2. Incorrect details or missing information

This is a common way for your transfer to be delayed. The payment will get sent back to you or delayed when the bank seeks clarification. It’s crucial to always double-check your transfer before authorizing it.

3. Time zone differences

If you’re making a secure money transfer to someone in a time zone that differs greatly from yours, expect the processing time to increase. This delay occurs due to differences in when the payment is sent and the recipient’s bank hours for processing incoming funds.

Airwallex enables faster international transfers through its partnerships with local payment networks, supporting payouts to 150+ countries. This approach allows certain international transfers to be processed as domestic transactions, bypassing SWIFT and‌ reducing transfer times.

Security measures and compliance: How safe is your TT?

Because financial institutions use the SWIFT network to facilitate telegraphic transfers, they’re backed by its robust security infrastructure and protocols.

Perhaps the two most important safety measures SWIFT has in place are:

1. An annual security audit by an external company. The firm ensures that SWIFT complies with the ISAE 3000 international standard and is up to par in Governance, Confidentiality, Integrity, Availability, and Change Management.

2. SWIFT ensures that the data in messages can only be controlled by the sending and receiving financial institutions. Additionally, both institutions can check if the message has been tampered with.

Airwallex has equally robust compliance and security practices, ensuring we meet the standards of every country we operate in. Additionally, we work only with trusted firms in the financial services world, like Visa and Mastercard.

Why choose Airwallex for international money transfers?

Now that you know how telegraphic transfers function and their benefits and downsides, here’s why Airwallex may have the edge for international money transfers.

Quicker and more affordable transfers

Remember, with your all-in-one Airwallex business account, you can transact like a local enterprise. You won’t need to convert currencies multiple times just to pay your vendors and suppliers.

With both the Airwallex Global Account and multi-currency payment gateway, you can simply collect or deposit the currency you need before holding and making payments with it as is.

This is all thanks to Airwallex’s partnership with local payment rails across more than 120 countries worldwide. What’s more, you’re never subject to any account opening fees or other hidden charges.

Built-in expense management with borderless cards

When you run a business, your employees regularly make financial transactions with the company’s card. Whether it’s a bill for an overseas-based advertising service or flight tickets for business travel, your Airwallex account boasts built-in expense management on one handy dashboard.

With the Airwallex international business debit card, your employees can make purchases across multiple currencies without international transaction fees, helping bolster your company’s bottom line even more.

Enjoy full peace of mind while transacting

Airwallex is fully compliant with global standards. These include the PCI-DSS for payment cards, General Data Protection Regulation for information privacy, and much more. As an Airwallex client, you’ll never have to worry about your company’s funds and information being at risk.

If you’re wondering where you can send money while you’re using Airwallex in the US, check out this handy table:

Australia, China, and the other countries showcased above are just the tip of the iceberg! Airwallex supports transfers to 150+ countries and regions. View the full list of countries you can send money to with Airwallex by signing up for an account at no cost today.

The global impact and practical applications of Airwallex

If you’re a fan of outdoor sports, you may have heard of CROSSNET — a game blending Four Square and volleyball that's become a backyard staple in the US and beyond. Launched in 2019 by childhood friends Chris Meade, Gregory Meade, and Mike Delpapa, CROSSNET quickly grew into a $25 million business.

As CROSSNET expanded globally, it faced a costly hurdle: high fees and unfavorable exchange rates on international payments. “We were losing money every time we paid our international manufacturers and logistics partners,” said Meade. The costs were adding up fast, with frequent payments necessary to keep operations running.

Switching to an Airwallex Global Account allowed CROSSNET to consolidate payments and avoid expensive auto-conversions from services like PayPal and Amazon, which often come with fees of up to 3%. Now, CROSSNET expects to save over $2,000 each month — an annual savings of $24,000 that directly boosts the bottom line. “Airwallex has been a game changer as we expand internationally,” Meade shared, emphasizing how essential these savings are for their continued growth.

Conclusion

With high transaction limits and secure transaction systems, telegraphic transfer remains a trusted way to make large overseas payments. This is crucial for businesses that frequently process four to seven-digit sums.

Although a telegraphic transfer has its merits, its downsides are hard to ignore, especially regarding speed and cost. With modern solutions from companies like Airwallex, there’s no need to get bogged down by slow fund transfers and high fees. You can also say goodbye to hefty commissions and other fees when you make an international money transfer through Airwallex.

Frequently asked questions

1. Is a telegraphic transfer the same as a bank transfer?

Today, a telegraphic transfer is the same as a bank transfer or wire transfer. All three terms are interchangeable because they handle the movement of money electronically. However, a telegraphic transfer referred specifically to sending money via a telegraph network until the 1940s and the telex service until as recently as the 1990s.

2. Are there any limitations on the amount that can be transferred via telegraphic transfer?

No law limits the amount of money you can send via telegraphic transfer. After all, large cross-border payments are the de facto purpose of telegraphic transfers. As a result, Airwallex does not impose a limit on the amount of money you can deposit or collect. This is because businesses transact in relatively large amounts every day, too.

However, other banks or service providers may have their own transfer limits that you need to adhere to. Check their fee schedule for more information.

3. How do exchange rates affect telegraphic transfers, and how can I get the best rate?

Exchange rates affect telegraphic transfers because your payee may receive less than the amount you’re required to pay them. This is worse if your business already has to convert currencies once when collecting payments. A second conversion is now needed to make the foreign telegraphic transfer and pay your vendor or supplier.

With Airwallex, you’ll always have market-leading telegraphic transfer rates, no matter how large your payment is. What’s more, Airwallex does not levy any hidden fees to grant you market-leading FX rates.

4. What information is required from both the sender and receiver to complete a telegraphic transfer?

You need these five pieces of information for both the sender (i.e., you) and receiver (i.e., your recipient) to complete a telegraphic transfer:

1. Your full name and bank account details

2. Your recipient’s full name and bank account details, including their account’s IBAN or SWIFT code

3. Your recipient’s address and contact information

4. The amount and currency your transfer will be in

5. Your reason for making the transfer

5. What are the common mistakes to avoid when sending a telegraphic transfer?

To save yourself time and money when making a telegraphic transfer, avoid these four common errors:

1. Providing inaccurate information. These include spelling errors, wrong bank numbers, and an inaccurate SWIFT code. Even seasoned businesses can get this wrong, so make sure to check your remittance details before submitting it.

2. Not paying attention to the exchange rate. If the exchange rate for you and your payee’s currency is poor, they may receive less than they should.

3. Forgetting about the fees you need to pay. TT payments usually come with several fees, including commission fees and FX conversion markups. You must factor them in when calculating the final amount to pay your client.

4. Not double-checking your transfer details. Before you authorize your TT transfer, ensure every single detail is accurate. For example, your recipient’s bank account information and the transfer amount.

6. What is the history of the telegraphic transfer?

In 1871, Western Union pioneered this international money transfer method using a broad telegraph network. Since then, the telegraphic transfer has undergone several significant milestones — from the advent of telex in the 1930s to the introduction of SWIFT in 1973 to shorten the fund processing time with computers and the rise of real-time gross settlement (RTGS) systems in the 1980s, which further expedited telegraphic transfers.

Today, financial transactions have predominantly moved to digital platforms. Aided by financial technology companies like Airwallex, international wire transfers are now faster and more cost-effective than ever before due to proprietary platforms and payment gateways.

***Note: This publication does not constitute legal, tax, or professional advice from Airwallex nor substitute seeking such advice, and makes no express or implied representations/warranties/guarantees regarding content accuracy, completeness, or currency.

Sources

1. https://www.chase.com/business/banking/services/collect-and-deposit/wire-transfers

2. https://www.chase.com/personal/banking/education/basics/how-to-wire-money

3. https://www.bankofamerica.com/salesservices/smallbusiness/resources/business-schedule-fees/

4. https://www.bankofamerica.com/foreign-exchange/foreign-exchange-rates-faq/

5. https://www.bankofamerica.com/deposits/wire-transfers-faqs/

6. https://www.wellsfargo.com/online-banking/schedule/

7. https://www.wellsfargo.com/assets/pdf/small-business/information-schedule.pdf

8. https://www.wellsfargo.com/online-banking/transfer-pay/comparison-chart/