Here in the digital age, there are a lot of things about life that are so much easier and more convenient, and transferring money from place to place happens to be one of them thanks to the many ways we can move money around digitally. However, you shouldn’t make the mistake of thinking one money transfer method is automatically as good as another. A lot depends on where you’re looking to send the money, as well as how fast you need it to get there, how the recipient needs to receive it, and so forth.
You’ll especially want to be aware of your options when sending money overseas to friends, family, employees who live abroad, and so forth. The term “money remittance” refers to a specific type of money transfer, usually (but not always) sent by a foreigner back to family or friends in their home country. However, since bank-to-bank remittance is no longer the only way to send money internationally, it’s a good idea to know how it differs from the alternatives. Here are the basics as to what you should keep in mind.
How Does Money Remittance Work?
Although there are some differences as to how the remittance process works from method to method, the basic concept remains relatively simple. It involves the transfer of money from one account to another, usually internationally. With the digital age making it easier than ever for businesses to connect with employees, clients, and customers all over the world, money remittance has become increasingly popular in recent years.
In 2016, money remittances facilitated by expat workers alone were responsible for the international transfer of over $600 billion American dollars. (If you factor in overseas transfer related to various business transactions, the numbers increase exponentially.) By 2018, entirely new record highs were being reached.
So how does remittance actually work? The sender must have the money ready and accounted for in a bank account or other account of their choosing based in the country of origin. The transfer to another account in the target country is then facilitated.
Once the funds reach their destination, they’re converted into the proper currency according to what the current exchange rate is so that the receiver can use them. There are various ways the money can be received, including paperless wire transfer and transfer to designated pickup locations.
Bank-Based Money Remittance vs Other Methods
Naturally, quite a lot of international money transfers involve moving money from an account at one bank to an account at another overseas. While this is certainly a reliable way to do things, there are some drawbacks that might make it impractical under certain circumstances. To begin with, it can take several days for the entire process to be completed from beginning to end — sometimes up to five business days. (The receiver also needs to have an account at which to receive the funds in the first place.) This makes such transfers impractical when sending emergency funds that need to be accessed as soon as possible.
Online methods such as PayPal and Venmo can be a lot faster. However, they also come attached to various restrictions, not to mention high fees that can take a big bite out of the actual amounts received. That said, it’s worth knowing that you can send money to Colombia, Mexico, Vietnam, Nigeria, and a wealth of other possibilities via a money sharing system designed specifically for international money transfers.
Such methods are fast, safe, reliable, easy, and automatically streamlined to deliver the best possible exchange rates. The recipient of the funds will have more different options as to how they can receive them as well.
In other words, there’s never been a better time to be alive if you frequently send money overseas for any reason. However, every dollar counts, so it pays to make sure the method you’re using is really the best option.