The world is more connected now than ever. People can buy products from other countries, work from anywhere in the world, and ship things to even the most remote places. Because of these blurred borders, international money transfers are becoming more common. Remittances, which are fund transfers between people usually with accounts that are each in a different currency, are leading the charge as migrant workers move hundreds of billions of dollars across the globe each year. But many people often have questions around how these remittances work. Such as, “do remittance payments carry fees?”, and “how long does it take to transfer money?”. We answer some frequently asked questions below.
What Is A Bank Remittance Payment?
A bank remittance refers to the process of sending money from one account to another. These transactions usually happen abroad between individuals or companies. Remittances involve sending or receiving money to others, often to different banks and in a foreign currency, but they can also be gifts, payments, and even donations.
You can send remittances via an electronic payment system, through a wire transfer, a cash pick-up service, mobile payments, and even through a check.
Some everyday situations that require bank remittances include but aren’t limited to:
- Sending money to relatives abroad
- Paying for bills in your home country
- Providing funds to family members for different purposes, such as those who need your help to save money for a house
- Paying employees, contractors, or service providers from another country for the work they provide
Though most people associate remittances with international transactions, they can also refer to domestic money transfers, particularly those made between accounts in different banks or with other service providers.
The Difference Between Bank Remittance And Bank Transfer
A lot of people interchange the terms “bank remittance” and “bank transfer.” While both refer to money transfers conducted between individuals, there’s a difference, primarily in the source and destination of the money involved.
Remittances are commonly sent between accounts from different banks or financial institutions, but it can even be possible to send them to people without bank accounts at all. If you’re making the transfer through a service provider such as Western Union or MoneyGram, the recipient may only be required to present a valid ID to receive the cash.
On the other hand, bank transfers involve transferring the money between two registered bank accounts, usually in the same bank or network. Still, nowadays, you can send to different banks as long as you and the recipient are both in a serviceable institution.
How Does A Bank Remittance Work?
A bank remittance starts with the sender. The sender needs to have sufficient funds in their account before they can begin the process of sending the remittance payment. The sender will then be required to provide the necessary details and identification to authorize the transfer. Next, the bank or remittance center sends the information to a partner financial institution in the recipient’s country, checking the current exchange rates. They then convert the money, usually using a higher pre-determined exchange rate. The amount is finally made available to the recipient through their chosen method.
What To Consider When Sending A Bank Remittance
Bank remittances are very convenient. But depending on the service, method, and the amount of money you send, they can be slow and costly. Remittance centers rarely follow actual exchange rates, and they often charge transfer or exchange fees. These fees can be quite high depending on your payment method, which may lessen the amount of money to your recipient. Be mindful of these conversions and deductions before sending a remittance. Additionally, check the amount of time it takes to complete the transfer. Wire transfers usually take three to five days, which might be too much time if you need the money to arrive ASAP.
Is Sending Remittance The Best Way To Send Money Abroad?
Bank remittances are a tried-and-tested method to send money abroad. But they’re not always the best option if you need to transfer funds quickly and cheaply. Luckily, thanks to digital money services like Cashero, you can move your money to different countries and currencies almost instantly. Add in the competitive exchange rates and upfront, low-cost fees, and you end up with one of the best options for sending remittance payments currently available.
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