Telegraphic Transfer: Definition, How It Works, Fees & Alternatives

There’s no dearth of payment methods when it comes to transferring international funds. One such payment method is telegraphic transfer. Having roots in the traditional way of communication using telegraph lines, this payment method has since evolved a lot to offer you a modern and secure way of fund transfer. 

Still, not everything is as smooth as it seems. Transfers can take several days, fees stack up, and fluctuating currency rates make it hard to predict how much will land in your account. 

This article explains what telegraphic transfers are, how they work, and their pros and cons.

Telegraphic transfer is a way of transferring money across the borders between bank accounts using electronic means. Also referred to as TT payments or telex transfers, these fund transfers are generally processed through the SWIFT network in case of international payments. 

The term is related to the older system of communication using telegraphs. Earlier, in the mid-19th century to be precise, banks used telegraph networks to send payment instructions between banks, which were converted to Morse-coded messages that authorized the release of funds at some distant location. 

Now, the telegraph lines are obviously replaced by modern electronic networks like SWIFT, which are more secure and faster. The more common term for telegraph transfers that you would be familiar with is wire transfers or electronic funds transfer (EFT). All of these terms are actually referring to the same thing. 

The basic process of telegraphic transfers involves several steps. Let’s assume your client is sending you payment from the USA using telegraphic transfers. This is how the process will look like:

1. Initiation: The process begins when your client provides your banking details to their bank. This would include your name, bank information, account number, SWIFT code, and the transfer amount, along with whatever fees are required.

2. Authentication: The next step is a verification procedure. Your client’s bank will verify your identity and account balance of your client to make sure that enough funds are there.  

3. Transmission: And now comes the main step. Your client’s bank will transmit the transfer instructions through secure networks. Originally, this was done through telegraph lines, but now electronic banking networks like SWIFT for international transfers, Fedwire in the US, or CHIPS in the UK banking system are used.

4. Processing: Your bank will process the incoming transfer request and credit your account with the amount sent by your client, minus the fees charged by the corresponding banks for the transfer and for currency conversion, of course.

5. Confirmation: Lastly, both you and your client will receive a confirmation of the completed transfer. 

The process of transferring funds using telegraphic transfers involves multiple intermediary and correspondent banks, essentially when banks don’t have direct financial relationships. Each bank has its own operating or cut-off time, and each may operate in different time zones, which means payments can take anywhere between 1-5 business days. 

But that’s not the only thing TT transfers depend on. The country and currency involved, and how accurate the payment details are also matter. If you are using a major currency and when the transfer is between well-connected banks, the process is much faster. Conversely, less common currencies or regions can experience longer delays.

Just like with time, the more number of intermediaries involved means more fees. First, you’ll be charged by the sending bank, then the intermediary or correspondent banks will charge their own fee. 

On top of that, a currency spread or markup will also be added to the exchange rate. This is typically 1.5-2.5% above mid-market rates. Finally, the receiving bank will also charge its own fee. 

After combining all of these charges, you can expect to pay around ₹1,500 to ₹4,000 or $10-$50 per transaction, just for transferring your money. 

While telegraphic transfers remain one of the go-to methods for sending money across borders, they come with both strengths and weaknesses. Here’s a quick breakdown of each:

Pros of telegraphic transfers

• High security & regulation: Since TT transfers are routed through secure, regulated banking networks (like SWIFT), they’re a reliable option for formal, high-value payments.

• High transfer limits: Banks allow much larger transfer amounts compared to many online methods, making TTs perfect for B2B transactions, real estate deals, or other big-ticket payments.

• Works almost anywhere: The SWIFT network connects banks across the globe, so your money can reach pretty much any country.

• Easy to track: Every transfer comes with a tracking code (MT103), so there’s a clear trail of where your money is.

• Speed: For domestic transfers, TTs are often same-day. For international ones, they usually complete in 1-5 business days, which is still relatively quick for large transfers.

Cons of telegraphic transfers

• High costs: Multiple fees pile up, including sending, receiving, and intermediary bank fees, and foreign exchange rate markup.

• Slow international speed: Compared to modern money transfer apps that work instantly, TTs can feel slow (still 1-5 business days).

• High documentation required: You’ll need to provide full details – recipient’s name, bank, account number, SWIFT/BIC code, maybe even an IBAN – leaving more room for error.

• Not cost-effective for small amounts: Since fees are fixed, sending small or medium amounts isn’t really cost-effective.

As discussed above, telegraphic transfer is an old term. There have been several variations of the term over time. For instance, in the UK, Australia, and New Zealand, telegraphic transfer would mean both international SWIFT payments and, sometimes, domestic transfers like CHAPS (UK).

In the case of the USA and continental Europe, the preferred term is "wire transfer," but it's referring to telegraphic transfers only. 

Now, in Japan, when people say ‘telegraphic transfer,’ they’re not always talking about the payment itself. Sometimes, it’s just shorthand for the retail exchange rate banks quote, reflecting the local banking lingo.

Like any form of money transfer, telegraphic transfers come with their share of risks. Payments can be vulnerable to fraud, errors, or even unnecessary delays, and once the money’s gone, getting it back isn’t always easy. That’s why taking a few extra steps to send your transfer securely can make all the difference.

1. Always start your transfer with a regulated provider you know you can rely on. If they offer online banking, even better. This way, you’ll get real-time visibility. 

2. Double-check recipient details, like name, address, account number/IBAN, bank name, branch, and SWIFT code. One tiny typo here can send your money to the wrong destination.

3. Don’t share passwords or banking details with anyone, and avoid doing transfers on public WiFi.

4. Be upfront about why you’re sending the money. Banks sometimes ask for documentation, and it’s way easier if your transfer purpose is clear and legit from the start.

5. Keep records of all transfer receipts, reference numbers, or emails. You never know when you’ll need it. They come in handy during dispute resolution or any other such reference. 

6. Watch out for impostors. Phishing emails and scammy texts pretending to be your bank are quite common. Remember: real banks rarely ask for sensitive info over email or SMS.

7. Track your transfer carefully using your bank’s dashboard or helpdesk to monitor progress. Reputable providers will update you at every stage, so you’re never left guessing.

Alternatives to telegraphic transfers can be domestic transfers, like RTGS and NEFT in India. Other than that, fintech platforms are also positioned as a solid alternative. Here’s how they differ with TT payments. 

While domestic transfers are good for transferring money locally, you’ll need a reliable solution for international payments. 

You can either go through the whole process of telegraphic transfers, which involves multiple intermediaries, increasing your time and costs. Or you can choose fintech platforms like Xflow that offer virtual receiving accounts in multiple currencies. 

These virtual accounts work as if they are local bank accounts, which means you get to receive payments using local transfers. The biggest advantage for you is that you can avoid the slow processing and high fees that are associated with the SWIFT network in telegraphic transfers.

What’s more, Xflow does not charge any markup on mid-market exchange rates, so you get your funds converted based on real exchange rates, rather than paying conversion fees that your receiving banks will usually charge. 

Plus, you get free FIRA automatically after every transaction, which is again a source of income for banks as they charge additional fees to issue it. Not to mention that you’ll have to worry about constant follow-up with your bank to receive it. 

Telegraphic transfers are a safe and convenient way to transfer money across different countries. But there’s a catch. You have to wait a lot for the transfers to get completed, there are high processing charges, uncertainty due to currency rate fluctuations, and high forex markups. 

Xflow, on the other hand, is a cutting-edge platform that’s designed to simplify and streamline international business transactions by addressing those problems. 

You can expect your payments in the receiving account within just 1 business day. The FX AI analyst offers insights that help you predict exchange rate trends and keep track of global triggers, so you can convert at smarter rates. The best part is that Xflow charges no hidden forex markup. You get exactly what you see. And you also get to track your payments in real-time from a single dashboard. 

The transparent pricing, free eFIRA, seamless integrations, limitless transactions, and so much more make Xflow a truly reliable partner. Sign up today and discover how Xflow simplifies cross-border payments.