Wire Transfers vs. RTP: What’s the Difference?

It’s time for your client to close on a dream home, but such transactions can take a large amount of money. Moving money always comes with risk, and earnest money, closing costs, and other real estate-related payments can represent large amounts. That increases risk for you and your client. Find out more about wire transfer vs. RTP options and whether either is a good choice for real estate transactions.

What Is a Wire Transfer?

Wire transfers are a specific type of electronic payment sent from one account to another. Typically, wire transfers are completed between accounts at U.S.-based banks and credit unions.

It’s also possible to send an electronic payment from a U.S. bank to an international bank, and many people refer to these as wire transfers too. Technically, however, these are called remittance transfers, and they’re governed by some different laws than regular wire transfers are.

Pros of Wire Transfers

The biggest benefit of a wire transfer, particularly with regard to real estate transactions, is speed. They can often clear the same day, which makes it easier to meet a tight escrow deadline and can alleviate nervousness on the part of the seller.

Cons of Wire Transfers

Banks charge fees to send wire transfers, and some even charge fees to receive them. The total cost can be $50 or more depending on the details related to the transfer. While that might not seem like a large amount compared with how much you might be transferring for a real estate transaction, wire transfers tend to be the most expensive option for sending money for this purpose.

Relying on wire transfers can also open the door for scammers. The Federal Trade Commission points out that it’s important to be sure you have the right information when sending money via a wire transfer. These types of transactions work like cash in that once the money is sent, it can be difficult to get it back. If you send money to a scammer account, it may be gone before you realize the mistake.

What Is a Real-Time Payment?

Real-Time Payments® are another type of electronic transfer. RTP payments are processed through The Clearing House, which is a network that is working with banks across America to make instant transfers possible without going through the credit card networks.

Real-Time Payments can be conducted 24 hours a day, seven days a week, and the recipient account is credited with the funds within seconds of the transfer. Owners of accounts that have been set up on the RTP network can initiate transfers from their own accounts for convenience, though exact functionality does depend on the individual’s bank.

Pros of Real-Time Payment

Real-time payments are instant. They’re even faster than many wire transfers, making them a good choice for real estate transactions where time is of the essence. Whether you want to get earnest money in to seal the deal before the seller chooses another buyer or it’s down to the wire with an escrow deadline, if you have access to RTP options, you can worry less about the timeline.

Real-Time Payments aren’t as susceptible to scams as wire transfers are, either. They tend to come with similar security measures as ACH transfers.

When compared to wire transfers, Real-Time Payments may also be less expensive. The network only charges banks a few dollars to make the transfer, so it depends on how much your bank adds to the price to cover administrative costs and make money on the service.

Cons of Real-Time Payments

The network that RTP works on isn’t available to everyone, though. In some states, less than 20 percent of deposit accounts are covered by the network. To understand whether this is an option for your real estate funds transfer, you need to ask whether both your account and the receiving account are covered by the network.

Wire Transfer vs. RTP: The Biggest Differences

The biggest difference when it comes to wire transfer vs. RTP is that each operates on a different type of network. That changes how these transfer types are encrypted, monitored, and managed.

Both, however, are hard or even impossible to recall once a transaction is sent. Because real-time payments are instantaneous, once the transaction is initiated, it can’t be reversed. This can be good for real estate professionals and sellers, as there’s no opportunity for nervous takesies backsies on the part of buyers.

However, RTP transfers do come with options for correction if money is sent to the wrong account in error. The Clearing House notes that the network supports an FI-to-FI (financial institution) process for returning funds that were sent in error.

Wire transfers are also difficult to recall once sent. Depending on the policies of the banks involved, individuals may be able to have transactions canceled or reversed in cases of fraud if they act very quickly. But this isn’t always the case.

As far as fraud goes, wire transfer processes are still more susceptible than RTP processes. That’s due in part to how well-known wire transfer technology is and how easy it is for hackers to imitate seemingly legitimate emails to send false wire transfer instructions. But real-time payments are not without fraud risks, so it’s important to remain vigilant and double-check information directly with the source whenever you’re sending money.

What’s the Best Way to Send Money for Real Estate Transactions?

While wire transfer and RTP both offer some benefits for sending money during real estate transactions, secure ACH transfers remain the top choice for many. They are encrypted, can be managed via technology that substantially reduces fraud risks, and are cheap. The ACH network is also available for any U.S.-based deposit account, so you don’t have to worry about whether your account or the recipient account are compatible with ACH technology.

Real estate agents, brokers, and title companies can rely on paymints.io for convenient, secure money transfers that make it simple for clients to send money confidently. Our technology facilitates ACH transactions for escrow and other real estate funding purposes. Almost anyone can initiate a transfer of funds within a minute or two using paymints.io.

Schedule a Demo

Ready to learn more about how paymints.io takes the work out of money transfers for real estate transactions? We can provide a free, comprehensive demo of the technology and answer all your questions. Check out our schedule and grab a time that works for you today.

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