FedWire Parser

What is Fedwire?

Fedwire (formally the Fedwire Funds Service) is the real-time gross settlement (RTGS) system operated by the Federal Reserve Banks of the United States. It enables participating financial institutions to send and receive same-day, final, and irrevocable payments in US dollars. Unlike batch-processed ACH payments, each Fedwire transfer is settled individually and immediately in central bank money.

Fedwire is the backbone of the US high-value payment system. It handles time-critical transactions including real estate closings, corporate mergers and acquisitions, securities settlements, interbank lending (federal funds), and urgent commercial payments. With average daily volume exceeding $4 trillion, Fedwire is one of the largest payment systems in the world.

Approximately 6,000 financial institutions participate in Fedwire, including commercial banks, credit unions, and US branches of foreign banks. Each participant maintains a reserve account at the Federal Reserve, and Fedwire transfers move funds directly between these accounts — providing settlement finality backed by the central bank.

Message Structure

Fedwire messages use a tag-based format where each data element is identified by a four-digit tag number enclosed in curly braces. Tags are grouped into functional categories covering transfer details, financial institutions, and party information.

Key Tags

Tag	Name	Required	Description
{1500}	Type/Subtype Code	Yes	Identifies the transfer type: 10 (funds transfer), 30 (basic), 16 (settlement)
{1510}	Input Message Accountability Data	Yes	Date, source, and sequence number for tracking
{1520}	IMAD	Yes	Input Message Accountability Data — unique identifier
{2000}	Amount	Yes	Transfer amount in cents, 12-digit zero-padded
{3100}	Sender Financial Institution	Yes	Originating bank ABA routing number and name
{3400}	Receiver Financial Institution	Yes	Receiving bank ABA routing number and name
{4200}	Beneficiary	Conditional	Account number, name, and address of the ultimate recipient
{6000}	Originator to Beneficiary Info	No	Free-form reference information (4 lines x 35 characters)

RTGS vs Batch Processing

Understanding the difference between Fedwire (RTGS) and ACH (batch) is essential:

Real-Time Gross Settlement (RTGS) means each Fedwire transfer is processed individually the moment it is submitted. The sender’s reserve account at the Federal Reserve is debited and the receiver’s account is credited simultaneously — settlement is final and irrevocable. There is no netting, no batching, and no waiting.

Batch processing (ACH) collects transactions over a period and processes them together. Net positions are calculated (total debits minus total credits for each bank), and only the net amounts are settled. This is more efficient for high-volume, low-value transactions but introduces delay.

Feature	Fedwire (RTGS)	ACH (Batch)
Settlement	Individual, real-time	Net batch, scheduled
Finality	Immediate and irrevocable	Revocable within limits
Speed	Minutes	Same-day to next-day
Cost per transaction	$0.50 - $30+	$0.20 - $1.50
Typical use	High-value, urgent	High-volume, recurring

Common Use Cases

• Real estate closings: Wire transfers for property purchases where same-day settlement finality is legally required
• Securities settlement: Delivery-versus-payment for treasury securities, agency MBS, and corporate bonds
• Federal funds: Overnight interbank lending where banks borrow or lend reserves to meet requirements
• Corporate treasury: Large-value vendor payments, tax remittances, and intercompany transfers
• International correspondent banking: Dollar leg of cross-border payments originating from SWIFT MT103 messages
• Margin calls: Same-day collateral movements for derivatives clearing and securities lending