What Is a Bank Giro Transfer?

Definition and Examples of a Bank Giro Transfer

A bank giro transfer is a popular check alternative that lets you conveniently and securely move money from your bank account to another party’s bank account. You as the payer have to originate this transfer. These bank-to-bank transfers can be domestic or international. Therefore, giro transfers can offer flexibility both for conducting everyday transactions with companies and individuals in your own country as well as conveniently conducting business overseas.

Alternate name: Giro credit

It’s common to use a bank giro transfer to pay recurring bills automatically every month. For example, you might set up a giro arrangement for your credit card, phone, water, electricity, or telephone bill.

You could also use a bank giro transfer to move funds between your own checking and savings accounts at different participating banks. Businesses might give your customer the option to use a bank giro transfer to pay for your products or services.

How a Bank Giro Transfer Works

In the countries that use the giro system, requesting a transfer usually involves filling out an electronic form (paper forms are less common). You might fill it out on your bank’s website or mobile app, but other options include visiting a branch, using an ATM, or arranging an order by phone. The form has you specify the source and destination bank accounts. It also requests other important payment terms like the frequency, order type, payment amount, and expiration date for any recurring transfer.

Bank giro transfers occur either through a one-time arrangement (single order) or a recurring arrangement (standing order). Single orders work best for infrequent transactions since you need additional orders to send the third-party money again. Standing orders work well for frequent transactions. They stay in effect until you have the arrangement terminated or it expires. It can take multiple weeks for the initial giro arrangement setup, so you may want to seek other options for urgent payments.

While the giro service often operates every day of the week, banks can set specific hours during which the giro transfer option is available. Some banks support these transfers 24 hours a day, while others have daily restricted hours. In addition, there’s usually a cut-off time for payment origination that will affect when the recipient gets the funds. During business days, the recipient can often get the funds the same or next business day but holidays and weekends can delay the process.

On the day the giro deduction is set to occur, the request goes to a giro center that handles the details of the transaction and acts as an intermediary between the source and destination banks. The center will have to check that you have enough funds in your bank account for the transfer and that the account numbers exist before it removes the money from your account and sends it to the destination account.  

If all details check out, the bank giro transfer completes successfully with your bank account debited and the destination account credited. The bank giro transfer will fail if your account doesn’t have sufficient funds or is inaccessible for some reason. In addition, it can fail if the amount is above the payment limit you specified in the original order. Your bank may provide a way for you to track the transfer’s progress to spot issues.

Giro Transfer Process

To see how the giro transfer process works in a real situation, let’s say that you want to set up a bank giro transfer arrangement to automatically pay your telephone bill every month. The following might happen:

• You log in to your online banking portal and choose the option to create the giro arrangement. 
• Your bank asks you to select the bank account to use for payments, specify the telephone company to pay, and enter other identifying details like your telephone service account number, maximum payment amount, and name. 
• You confirm all the details and submit, and your bank begins to process your giro arrangement request. 
• On your first payment date, the giro center successfully verifies the information, removes the specified amount from your bank account, and deposits it in your phone company’s bank account. 
• You continue to have your telephone bill automatically paid every month until you cancel the arrangement or it expires.

Pros and Cons of Bank Giro Transfer

Pros Explained

• Convenient for payers and payees: Bank giro transfers have wide acceptance in the countries that use them, and you get a lot of flexibility with the kinds of bill payments and bank account transfers you can make. The ability to set up recurring payment arrangements saves time and makes it less likely to forget a bill payment. Payees benefit when they receive fast and reliable payments.
• Secure payments: Bank giro transfers have much more security than paper checks that can get lost in the mail or stolen. Since they’re often set up through your online banking app or portal, the information you provide for the payment stays secure. You can also easily track giro transfers on your bank statement to spot potential issues.
• Fast processing time: As long as you initiate the giro transfer during business hours, the recipient often gets the funds the same day, sometimes in just a few hours. Weekend and holiday payments still usually arrive the next business day. This means this payment option can be much faster than waiting for a check to arrive in the mail for cashing.

Cons Explained

• Limited to participants: Both the sending and receiving banks will need to participate in the giro system for this payment method to work. In addition, not all  bank accounts are eligible for the service.
• Transaction limits: If you need to send a payment for a high amount, you may find your bank limits giro transfers either on a daily or per-transfer basis. The limit might depend on how you requested the transfer as well. You may sometimes end up needing to break up larger payments or use a different method altogether. 
• Possible fees: While some banks don’t charge fees for domestic giro transfers, others charge a small fee that can depend on how you made the request. Banks may also charge fees for international giro payments.  

Bank Giro Transfer vs. Regular Check

A regular paper check serves as a common alternative to a giro transfer, and the payer initiates both types of payments. But while a giro payment can sometimes have a transaction fee and payment limit, you usually don’t pay to write out a check and can specify an amount up to your available funds. 

Unlike a giro transfer that involves a direct transfer between accounts, a paper check requires the payee to present and cash the check before getting the funds. Therefore, this payment option can be slower than a giro credit. Not only may the check take a few days in the mail to get to the payee, but it takes additional time for the bank to process and clear. The use of a paper check also presents a higher security risk since the check could get lost or stolen before the payee can cash it.