T/T (Telegraphic Transfer) is a method of remittance where the remitting bank, upon the remitter's application, sends a telegraphic or telex message (Tested Cable/Telex) or uses SWIFT to instruct a foreign receiving bank to make a specified payment to the beneficiary.
Telegraphic transfer employs telegraphic or telex means as a settlement tool. It is secure and fast but entails relatively high costs. As the transmission direction of telegraphs or telex aligns with the flow of funds, telegraphic transfers fall under remittance. It is currently one of the most widely used remittance methods. The transaction process involves the remitter submitting a telegraphic transfer application and paying the remittance fee to the remitting bank. The remitting bank then sends a telegraphic or telex message to the receiving bank, notifying the beneficiary. Upon receiving the notification, the beneficiary visits the bank to collect the payment. The bank makes the payment, notifies the remitting bank, and simultaneously issues a telegraphic transfer receipt to the remitter.
During a telegraphic transfer, the remitter completes a remittance application, specifying the use of T/T, and submits the remittance amount and required fees to the remitting bank. Upon receiving the remittance application, to prevent delays or unexpected losses of remitted funds due to errors in the application, the remitting bank meticulously verifies the applicant's details and promptly contacts the remitter regarding any unclear information.
When processing a telegraphic transfer, the remitting bank sends a payment instruction message via telegraph or telex to the receiving bank based on the remittance application's contents. The key contents include remittance amount and currency, beneficiary's name, address or account number, remitter's name, address, remarks, payment allocation method, remitting bank's name or SWIFT address, etc. To ensure the receiving bank confirms the authenticity of the message being sent by the remitting bank, the remitting bank includes a jointly agreed-upon cipher (Testkey) before the main text.
Upon receiving the telegraph or telex, the receiving bank verifies the cipher's authenticity. If it doesn't match, the receiving bank immediately drafts a message to query the remitting bank. If it matches, the receiving bank prepares a telegraphic transfer notification, which the beneficiary uses to withdraw the payment. If the beneficiary has an account with the receiving bank, the bank often doesn't create a transfer notification but directly deposits the funds into the beneficiary's account based on the telegraphic message. Then, the bank issues an account notice to the beneficiary without requiring a receipt signature.
Finally, the receiving bank sends a piece of debit advice to the remitting bank to indicate the completion of payment. The telegraph fees for the transfer are typically borne by the remitter. Banks usually process telegraphic transfers on the same day, not utilizing the postal process for fund transfers. Therefore, for larger amounts or transfers through SWIFT or interbank transfers, telegraphic transfers are frequently used.
In international trade exports, the primary payment methods include three types: Letter of Credit (L/C), Telegraphic Transfer (T/T), and Document against Payment (D/P). Among these, L/C is the most widely used, followed by T/T, and D/P is less common.
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