I’m a foreigner but work for a US company. The company gave me some stock (on E*trade) which I sold, so there is some money, and I’d like to wire the money to another account, which is also in US (firstrade)
The wire took several days and charge me 25 US dollars. In my country, wire transfer between different banks is near instant and charge less than 1 US dollars.
So my question is, is it how wire transfer normally works in the USA? Or perhaps it’s because I’m a foreigner? If it’s normal, what’s the difference between US bank and other countries’?
In: Economics
Personal wire transfers in the US have lost ground to much quicker and more modern ways to move money. That’s the simplest answer.
The wire transfer itself is usually same day.
Settlement following the sale of securities takes a few days. I don’t know why it’s not faster — but it is faster than 50 years ago.
Every major brokerage, including ETrade, will ACH money into your US-based bank account for free. I’ve never heard of a bank charging to receive an ACH either. You paid extra for a wire transfer to theoretically get your money slightly faster.
In multiple counties I’ve lived in the last 3 years, money transfers are instantaneous (below a certain threshold) and free. Over the threshold, on the next day in the worst case.
In EU, your banks probably transferred via SEPA payment rail and payment cleared quickly because the payment details were reconciled to your account quickly (ie it was a common transfer between your accounts). Sepa is considered the US’s ACH equivalent and typically sent in batches, used for low-value payments, and clears 1 day. It’s cheaper for banks to send. Payments were also sent with more payment details like your name account number address etc to reconcile to your ownership of funds.
US (Fed)wires are same day and are considered “expensive” payment form because its final and irrevocable. Institutions typically use wires for high value transfers for this reason, and a retail user like yourself can get by with using ACH (typically free and 1-2 day settle). Your wire transfer probably took a few days to reconcile to your bank account because the receiving bank didn’t recognize the funds belonged to you from the payment details (ie it was the first time receiving a transfer from E*Trade for credit to your account).
Most countries have “wire” and “ACH” payment rails for high value and batch transfers, respectively. Most countries also have fast or real-time payment rails, but its adoption with banks is mixed because of implementation costs. The payment rails are also managed by different governing bodies depending on the regions. US Fed (the central bank) handles wire infrastructure vs NACHA handles ACH. In EU, ECB and EU commission handles SEPA infrastructure. Payment communication is done via SWIFT or proprietary batch methods (like ACH).
I’ve had to wire find multiple times in the last six months between law offices, my bank, my financial services company, to other individuals’ banks, etc. All of it has been essentially instant. The banks and financial services companies sometimes have time for the money to “settle” but that’s their internal whatever, not the wire transfer system itself.
Float, The longer the entities hold the transfer the more vig they make on your funds.
Speaking of “float” did you know that Starbucks holds 1.7 Billion in other peoples money in their app like a massive unregulated bank? And they owe no one anything but about 50 cents worth of coffee each time you use it. [https://www.youtube.com/watch?v=Ym7YwFq8ZuM](https://www.youtube.com/watch?v=Ym7YwFq8ZuM)
Like everything else in the US, freedom. But seriously, I would imagine someone makes money off the system being the way it is, so it stays that way.
The US has hundreds of bank, all of which fight tooth and nail against government oversight, hence trying to get them to agree on any form of common electronic interchange of money fails. Tied in with that is that there is money to be made with existing, archaic means of transfer.
So the US is stuck with an archaic, expensive form of money exchange.
It depends on the bank. Old antiquated banks work like you said, but there are a lot that will do wires for free too. They still can only be done during business hours though because humans are often involved; it isn’t fully automated for security.
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