1

I am looking at the application form of a bank. One part of the application is like:

BANK TRANSFER ORDER

Sir, Madam,

Please execute the following request of fund transfer

Then there are fields for "Debit Account" to enter my current account number and "Credit Account" which is pre-filled with their account number. So, supposedly, after I send them the application via post, some magic will happen. Money will flow from my current bank to them, and I'll have my new bank account with them.

I wasn't aware such a thing is possible. Could anyone explain in more detail about this? What is this called? Where can I read about it?

4

The money is transferred through an electronic funds transfer, which is an umbrella term that encompasses wire transfers, direct debits, etc. The application form for Key Trade Bank (the only place I can find that uses that exact phrasing) lists a SWIFT number. This usually indicates that the transfer of funds is done through an international wire transfer.

In the most basic sense, the process works like this:

  1. Key Trade Bank uses the SWIFT number to notify your current bank of the transfer.

  2. Your bank instructs the settlement bank, e.g. the central bank of your country, where your bank is located, to transfer funds to Key Trade.

  3. If Key Trade is in another country from your current country, your central bank will send money to the central bank where Key Trade is located, which will in turn send the money to Key Trade. Otherwise, your central bank deposits the money into the account that Key Trade also has with them, and the transfer is complete.

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