Changes Coming to Wire Transfers

As fans of TV shows like 24 know, transferring money via wire is secure and instantaneous. That means you can grab it and go – which is critical when the bad guys (or gals) are on your tail. Nonetheless, the system has some shortcomings that have frustrated companies that send or receive money via wire transfers.

Chief among these is the fact that today’s wire transfers lack much remittance information. In fact, the remit info often is limited to just several hundred characters – definitely not enough to let a vendor know, for instance, that your payment covers half a dozen invoices, minus a credit that you’re owed. If your company is like most, you end up sending faxes or emails to accompany your payments and provide directions on applying the money. Your vendor then is left with the task of making sure this information makes its way to the appropriate payments. Perhaps it’s not surprising that 94 percent of respondents to a 2006 study conducted by The Federal Reserve Banks and The Clearing House indicated that they found it valuable to include remittance information with payments. In fact, more than half said they would pay more for wires that included remittance information.

Instead, both sides are stuck with a process that is time-consuming and next to impossible to automate. (more…)