In the context of payment systems, which type of transfer is considered irrevocable?

In payment systems, a wire transfer is classified as irrevocable primarily due to the manner in which it is processed. When a wire transfer is initiated, the funds are immediately transferred from one financial institution to another, and the transfer is settled in real-time. Once the recipient's bank has received the funds, the transfer cannot be reversed or canceled by the sender.

This characteristic of irrevocability is significant because it provides a level of finality and security for the recipient, ensuring that once they have received the funds, the transaction is complete without the risk of future reversal. This contrasts with other payment methods, such as ACH transfers or checks, which may allow for the reversal of transactions under certain conditions or within specific time frames.

The nature of wire transfers as irrevocable transactions makes them a preferred choice for scenarios where prompt and guaranteed payment is required, such as in high-value transfers or urgent situations.