Wires Overview

Overview

A wire payment is an electronic method of sending money between financial institutions. It allows individuals and businesses to move funds securely and quickly, often domestically or internationally. Unlike other payment methods, wire payments are typically irreversible, making them a reliable choice for large transactions such as real estate purchases or international trade.

Common Use Cases

Wire payments play a crucial role in scenarios where speed, security, and reliability are paramount. For example, when purchasing real estate or finalizing a business acquisition, the ability to transfer large sums quickly and securely makes wire payments indispensable. Similarly, in the realm of international trade, businesses rely on wire payments to settle invoices with overseas suppliers or pay contractors in different parts of the world, ensuring smooth cross-border operations. Additionally, wire transfers are often the preferred choice for time-sensitive transactions, such as meeting tight deadlines where delays could lead to significant penalties or lost opportunities. These use cases highlight why wire payments remain a trusted method for handling critical financial transactions.

Wire payments are a reliable and efficient solution for transferring funds, particularly in scenarios that demand security, speed, and precision. They are commonly used in various high-stakes situations where traditional payment methods may fall short. Here are some of the most common use cases for wire payments:

• High-Value Transactions: Real estate purchases, business acquisitions, and other large payments.
• International Trade: Payments to overseas suppliers or contractors.
• Time-Sensitive Transfers: Urgent payments where delays could result in penalties or lost opportunities.

Domestic vs. International Wires

Wire transfers can be categorized based on the destination:

• Domestic Wire Transfers: Sent within the same country, typically processed via systems like Fedwire or CHIPS in the United States.
• International Wire Transfers: Sent across countries, often involving foreign exchange conversions and additional fees, and processed via networks like SWIFT.

Wires vs. ACH

Each method offers distinct advantages depending on factors like speed, cost, security, and geographical reach. Here's a closer look at how they compare:

• Speed: Wire transfers are processed in real time or on the same day, while ACH payments may take 1-3 business days.
• Irreversibility: Wire transfers are final once processed, making them less prone to disputes compared to ACH transactions.
• Cost: Wire transfers typically involve higher fees than ACH payments.
• Global Reach: Wire transfers are ideal for international payments, whereas ACH payments are generally limited to domestic transfers.

Feature	Wires	ACH
Speed	Typically same-day or next-day	1-3 business days
Cost	Higher fees	Low or no fees
Reversibility	Generally non-reversible	Can sometimes be reversed
Use Cases	Large, urgent payments	Regular recurring transactions
Global Reach	Supports international transactions	Primarily domestic

Wire Operational Flows

Wire payments are a fast and secure way to transfer money between accounts. Unit supports originating wires, receiving wires, and handling drawdowns. Each process is built to ensure smooth, safe, and reliable transactions.

Wire Origination

Unit allows you to originate wire payments from an end-customer's account to a counterparty's account.

• Wire Approval Process: Once a wire payment is created, it may be automatically approved (status set to Pending), rejected, or routed for manual review (status set to pendingReview). If routed for manual review, a reviewer must decide whether to approve or reject the payment before it proceeds.
• Settlement Timing: Once a wire is transmitted to the Federal Reserve, it is expected to settle in real-time. This means the funds are credited to the recipient bank's account immediately after successful processing. Wires will settle in real-time as long as they are received by the Federal Reserve during its operating hours, which run from 9:00 PM ET on the preceding calendar day to 6:45 PM ET on the current business day. Note that Unit enforces an earlier cutoff for wire submission at 6:00 PM ET.
• Transmission Schedule: Unit transmits originated wires (with status Pending) to the Federal Reserve every hour between 9:00 PM ET (preceding calendar day) and 6:00 PM ET. For example, if Unit transmits wires to the Federal Reserve at :02 minutes past each hour:
  • A wire created at 9:19 PM ET will be transmitted at 10:02 PM ET.
  • A wire created at 7:00 AM ET will be transmitted at 7:02 AM ET.
  • A wire created at 6:06 PM ET will be transmitted at 9:02 PM ET (when Unit resumes processing after its cutoff).
• Additional Scenarios: Wire payments can also be originated as a result of a wire drawdown request, in which funds are pulled from an account after the drawdown is approved.

Example: Alice has an account with Chase, and Bob has an account with Bank of America. Alice wants to send $1,000 to Bob as payment for freelance work.

Standard Wire Payment Origination:

Party	Role	Description
Alice	Sender (Originator)	The sender provides their bank with Bob’s details (name, bank account number, and routing number or SWIFT/BIC code for international transfers) and specifies the amount to be sent. The funds will be debited from Alice’s account.
Bob	Recipient (Beneficiary)	Once the transfer is processed, the funds are credited to Bob’s account.
Chase	Sending Bank	The sending bank verifies Alice’s information and facilitates the transfer through a secure financial network.
Bank of America	Receiving Bank	The receiving bank verifies the incoming transfer details and credits the funds to Bob’s account. If the information is incorrect, the transfer may be returned or delayed.

Returned Originated Wires

Originated wires may be returned by the receiving financial institution for a variety of reasons, including incorrect recipient details, bank rejections, compliance issues, or insufficient funds. When this happens, a transaction.created event is fired immediately, with transaction type: returnedWireTransaction.

Wire Drawdowns

Wire Drawdowns, also known as reverse wires, are a type of wire payment where funds are pulled from an account to a counterparty's account. This is the opposite of a standard wire payment, where funds are pushed from one account to the counterparty's account. Currently, we only support receiving wire drawdown requests (incoming drawdown), not originating them. This means that you can receive a drawdown request from another party's account, and choose to approve it and send the funds, but you cannot initiate a request to pull funds from another party's account. When a received drawdown request is approved, a transaction.created event is fired immediately, with transaction type: wireTransaction with direction: Debit, and the funds are pulled from the end-customer's account.

Standard Wire Drawdown:

Party	Role	Description
Bob	Requestor (Beneficiary)	The recipient initiates the reverse wire by providing their bank with Alice’s details (name, bank account number, and routing number or SWIFT/BIC code for international transfers) and specifies the amount to be withdrawn from Alice’s account.
Alice	Authorizer (Originator)	The sender provides prior authorization for Bob to withdraw funds from their account. This may involve setting up agreements or instructions with their bank in advance.
Bank of America	Requesting Bank	The requesting bank verifies Bob’s information and sends the request to Alice’s bank for fund withdrawal.
Chase	Authorizing (Sending) Bank	The sender’s bank verifies the reverse wire request, checks for proper authorization from Alice, and facilitates the withdrawal of funds to be credited to Bob’s account.

Incoming Wires

Unit may receive incoming wire payments from financial institutions multiple times during the day and posts them as soon as they arrive. Unit processes those payments immediately, and each Incoming Wire is either successfully processed, returned, or routed for manual review. Note that unlike outgoing wire payments, which are subjected to internal limits, incoming wire transfers are only subjected to limits imposed by the originating financial institution. When an incoming wire payment is successfully processed, a transaction.created event is fired immediately, with transaction type: wireTransaction with direction: Credit, and the funds are deposited into the end-customer's account.

Returning Incoming Wires

When an incoming wire is sent for manual review and the reviewer decides to reject it, the wire will be returned. There are several reasons why Unit may return an incoming wire, either automatically or manually, including:

• Name mismatch: The beneficiary name on the incoming wire does not match the name of the account owner. In such cases, no transactions will be created.
• Compliance concerns: For example, if there is suspicion that the originator is involved in prohibited activities, no transactions will be created.
• Account not found: The specified account number does not exist on the Unit platform. When this occurs, no transactions will be created.