How do wire transfers work? What makes them so irreversible?
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It’s an electronic transfer of funds that is more official than say Venmo because the transaction ends up going from your bank to the recipients bank. In most cases Financial transactions are reversed by a company you bought something from like say returning a shirt the company gives you your money back not the banks so remove any third party companies it leaves you with no reversibility options but it’s very secure because of this.
A wire payment is a way of directly transferring money into another account. Nothing really makes it irreversible except for the fact that you need permission from the account holder you’re taking the money out of, it doesn’t matter that you made a mistake and transferred it to the wrong account, that was up to you to make sure all the information is correct.
You can’t reverse it because there’s no “middle man” who can stop/reverse the transaction.
With things like Paypal, Venmo, or credit cards you’ve got the transaction company in the middle where the money sits for minutes/hours/days before it settles out. They can pretty easily undo it.
A wire goes from one bank to another. You *need* the account holder’s permission to remove money from an account, except under very specific circumstances (otherwise you wouldn’t trust your bank). Once you make the transfer, the money is in the other person’s account. Your bank can’t take it out because it’s not in your bank anymore. Their bank won’t take it out because they don’t have the account owner’s permission. “I screwed up” isn’t a good enough reason for the other bank to pull money from somebody else’s account…they have no idea if that’s true, nor do they care…you deposited money into an account there and they’re paid to protect *their* clients’ money, not yours.
This is why it’s absolutely essential to make sure the information is correct *before* you wire money.
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