When you consider payment methods in cross-border business, the telegraphic transfer may be a choice for you. Some people doing international business don’t know what telegraphic transfer is when they first meet this payment method.

This article will tell you detailed information about it, including basic conceptions, features and so on. We hope it will help you make international transactions better.

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What is the telegraphic transfer?

Generally, telegraphic transfer meaning refers to an electronic payment method to send money or funds transactions, TT payment in short. It is also called “telex transfer”, “electronic funds transfer” or “wire transfer”.

Originally, telegraphic transfer was used by banks to send and receive money internationally in the way of cable messages or telexes, which was a traditional method. But later, telegraphic transfer meaning has been more likely to regard as “electronic funds transfer”, short in “EFT”.

It usually takes two to four days to complete a money transfer, which depends on the source and destination of the money. According to the real demands, banks will charge certain fees.

What’re the functions and features of telegraphic transfer?

From the literal meaning of telegraphic transfer, it can be easily understood that it is used to transfer money by the telex way.

In other words, TT payment uses the settlement of cash in foreign exchange, sending a tested cable or telex, or using SWIFT to the paying bank, which means customers send money to the designated account of foreign exchange bank and ask for payment in a certain period after delivery.

The payment period of telegraphic transfer is divided into three types, including payment in advance, payment at sight and payment after sight. In most cases, 30 percent of payment in advance and 70 percent of payment at sight are used.

Generally speaking, it is safe and fast but also requires certain costs.

Is it safe to use telegraphic transfer?

According to its payment character, the telegraphic transfer can be divided into “payment in advance” and “payment on delivery”. These two types have different benefits and potentials for exporters and importers.

Payment in Advance (Advance T/T)

Payment in advance means that the exporter has received the payment before delivering goods, and ships goods to the importer within the time agreed in the contract. Practically speaking, this kind of payment is beneficial to exporters and bad for importers. The reasons are as follows.

  • The exporter receives payments before delivering goods and gets a free loan from the importer, which means the risk of exporting goods has been controlled by the exporter.
  • Received payments mean that the exporter accepts the purchase guarantee from the importer, and masters the initiative of this deal.
  • For importers, they provide free credit for exporters, paying before receiving goods, which causes interest loss.
  • It is the importer that takes a risk of business. If the exporter does not deliver goods on time, quantity and quality according to the contract or even fails to receive all goods, the importer would be in a passive position.

Payment on Delivery (Post T/T)

Payment on delivery, also called deferred payment, means that after signing the contract, the exporter delivers goods, and the importer makes payment after receiving the goods. Some people call it an “open account transaction” as well.

This kind of payment is beneficial to importers and bad for exporters. It mainly manifests in the occupation of funds and taking a risk.

  • Exporters need to send out goods before receiving payments, which means they afford the payment for goods as well as its interests.
  • Importers take no risks but occupy the funds of exporters.
  • If importers regard the goods received as not conforming to the requirements in the contract, or the market condition has changed after receiving goods, they may defer the payments, make underpayments or even refuse payments.

Normally, both payment terms will be applied in one transaction to balance the risks between importers and exporters.

The mode 30 percent of payment in advance and 70 percent of payment at sight is used widely in today’s international business. It can ensure safety in most cases.

How does the telegraphic transfer work?

The process of telegraphic transfer is not complicated.

The payer applies for telegraphic transfer and fills out an application. Then he makes the transfer to the remitting bank, and the bank sends a telex or telegram to the paying bank.

The paying bank sends a piece of telegraphic transfer advice to the receiver.

After receiving the advice, he goes to the paying bank for cash, and the bank makes the remittance payment.

The paying bank sends the debit advice to the remitting bank.

The remitting bank feedbacks the receipt of telegraphic transfer payment to the payer.

How to make a telegraphic transfer payment?

For your better understanding of telegraphic transfer, this part will list some basic steps on how to make telegraphic transfer payments and tell you how telegraphic transfer works.

Prepare basic and necessary information

Making a telegraphic transfer payment requires your own detailed information, including your name and your bank account.

Detailed information of receivers are required, including their correct names, addresses, contact numbers, bank names as well as account numbers. Their SWIFT code may be needed as well.

Find out where you can make the transfer.

Some banks would provide the service of online telegraphic transfer, and in this way, you can finish it without visiting the bank. You can check it by calling or looking through the official website.

If you want to make the transfer in person, you need to take the necessary documents and talk with the tellers of the bank. They would help you make the transfer procedure.

If you need to make the transfer online, you need to have your own online bank account and log in, and then operate step by step following the instructions.

tt payment process

What’re the fees for telegraphic transfer payment?

Sending money internationally is inevitable to be charged some service fees, and telegraphic transfer is the same. This part lists some items of charge for your reference.

Fees of the remitting bank

The bank will charge some fees according to your remittance, the amount of money and its destination, usually within several percent of your payment.

Fees of the paying bank

The bank will charge certain fees, considering the source and amount of payments. It is also a part of service fees so that the paying bank helps finish the transaction and then gives feedback to the remitting bank.

Fees of the currency exchange rate

The telegraphic transfer is involved in different currencies, so the fees for the exchange rate are necessary.

There are no concrete and standard charges for the telegraphic transfer. The reason is that every bank and service providers have their own charge standards. You should consider different factors and choose a suitable one to make your transactions.

What’re the advantages and disadvantages of telegraphic transfer?

In the past, sending and receiving money would be very complicated, which the methods include cash payments, bills payment, bank cards payments and so on. These methods would be limited within many conditions, like time, speed, countries, regions and currencies.

Nowadays, our lifestyle is more likely to be at a fast pace and online services have satisfied more and more demands. In this way, money transfer has to keep with the same pace, and telegraphic transfer can help it realize.

Advantages of telegraphic transfer

Compared to many traditional methods, the telegraphic transfer can be completed in any place without going to a bank in person. Many service providers like banks and other financial institutions can transfer money to anyone in any place you want but charge certain fees as well. Therefore, it has been widely used with many advantages.

Disadvantages of telegraphic transfer

For many businesses, the telegraphic transfer is a good choice. But every coin has two sides. It also has some disadvantages.

FAQs about Telegraphic Transfer

What’s the difference between telegraphic transfer and wire transfer?

Nowadays, the telegraphic transfer is also called wire transfer. The telegraphic transfer is more likely to use the traditional method of telex to transfer money. While wire transfer is more likely to refer to electronic funds transfer. The range of TT payments is wider than EFT.

How does the telegraphic transfer different from the bank transfer?

Generally speaking, there is no difference between the telegraphic transfer and the bank transfer. Telegraphic transfer payments need through banks to complete, while the scope business of bank transfer is wider. The telegraphic transfer is a part of bank transfers.

How long does a telegraphic transfer take?

The taking time depends on many factors, including the amount of money, the source and destination of the payment and intermediary banks you choose. Usually, it takes several days to finish the process, based on every step completed and the right information.

How about fees of telegraphic transfer?

Usually, the fees of telegraphic transfer mainly depend on the bank you choose. Different banks have different standards to charge fees for a transfer. You can find more information and answer in the FEEs part of this article.

The End

If you want to know more information about international payment methods, you can find other articles on our website, including

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