Fedwire Drawdowns
- Fedwire Drawdown requests and payments are also known as “Reverse Wires”.
- A Fedwire Drawdown or Reverse wire is typically a B2B transaction which involves the corporate bank account holder authorizing another party, such as a vendor, to withdraw funds from their account via a wire transfer. It is called a Reverse wire because it is initiated by the recipient of the funds, rather than the sender.
- The payment for a Drawdown request, called Drawdown payment, is similar to any other Fedwire payment and settled by Fedwire Funds Service in real time and sent to the beneficiary mentioned in the Drawdown request.
- The benefit to the payer of Drawdown payment is that once they have authorized their bank in writing to respond to future draw-down requests, no work is required on the payer’s part to execute a payment.
- Drawdown requests are of particular use where the payment is high-risk (or time critical), on a recurring basis, and for a variable amount. Typical scenarios for initiating Drawdown requests include high-volume, variable amount purchases of perishable inventory, and Payroll services.
- If the inbound Drawdown request matches with the agreement and all the validations are success then the Drawdown request gets automatically processed by booking an outbound Fedwire payment transaction.
This section contains the following sub-sections: