Most of the time, a wire transfer is used to move money from one bank or other financial institution to another. When a wire transfer is made between banks or other financial institutions, no physical money is moved. Instead, information is sent between banks about the person who is getting the money, the bank account number of the bank receiving the money, and the amount being sent.
The sender pays up front at their bank for the transaction. Through a secure system, like Fedwire or SWIFT, the sending bank sends payment instructions to the receiving bank. The bank of the recipient gets all the information it needs from the bank that started the transaction. The recipient’s bank then puts its own reserve funds into the right account.
The payment is then settled between the two banks on the back end (after the money has already been deposited).