In the past, sending money abroad was considerably slow. One had to cut a cheque – like a physical, paper cheque – put it in an envelope, seal it, stamp it, and post it. It took at least several days, even weeks, for a check to reach its intended destination.
The recipient then had to deposit the check into their bank account. After that, they’d have to wait at least a few more days for the cheque to clear before they could use the money.
Now, it can take just a few clicks to transfer money overseas and minutes, not days or weeks, for the recipient to receive it.
Modern Methods of Sending Money
There are a variety of ways to send money overseas. Every option caters to different needs and preferences.
Bank Transfers
Bank transfers involve one bank sending money to another bank. To initiate a transfer, the sender must provide the bank with the recipient’s international bank account number (IBAN) and their bank code (typically the bank SWIFT code).
SWIFT is an international messaging network banks and financial institutions use to communicate. It’s where the banks exchange information about bank transfers.
Once the message containing the bank transfer details has been confirmed on the sending and receiving ends, the receiving bank credits the recipient’s bank account, even if that receiving bank has yet to receive the funds. In bank transfers, the actual money transfer from the sending bank to the receiving bank takes place after the credit memo.
Even so, it takes one to five business days for a transfer to be reflected in the recipient’s bank account. This lengthy turnaround is one of the disadvantages of bank transfers.
High international transfer fees are another. These fees can include flat-rate charges and percentage-based commissions on the transfer amount. Banks can also offer less favourable exchange rates than other money transfer options, resulting in higher costs for the sender.
Transfers Via Remittance Companies
Remittance companies provide another way to send money overseas. They operate through a network of agents and physical branches. Think Western Union, one of the most prominent remittance companies in the world.
The process of sending money through a remittance company typically involves:
- Visiting a remittance office
- Providing the recipient’s details and the amount to be sent
- Paying (includes the amount to be sent plus service charges) in a cash, via a bank card or other payment methods
- Receiving a transaction PIN or a reference number, which the sender gives the recipient so the latter can collect the money from the remittance company’s local agent
Remittance companies have many branches, making them highly accessible, especially in urban areas. They are cash-friendly and transfer money reasonably quickly, at least generally quicker than bank transfers.
However, remittance company fees can still be significant, albeit lower than bank transfer fees. Transfers may also require the sender and recipient to visit a physical location, although some remittance companies now offer online money transfer options.
Online Money Transfer Apps
Online money transfer applications are offered by financial technology companies. They are fund-transfer enablers, providing digital platforms for quick and convenient money transfers domestically and across state boundaries.
Money transfer apps are highly flexible, offering various funding and receiving options. They also make almost instantaneous transfers possible.
Why Use Online Money Transfer Apps?
Online money transfer applications represent a significant innovation. They leverage the internet and smartphones to offer alternatives to sending money through banks and remittance companies. They provide the following specific benefits.
Convenience and Speed
Bank transfers can take several days, but online money transfer apps can deliver funds to the recipient within minutes. This rapid transfer is crucial in emergencies or when dealing with time-sensitive payments. Money transfer apps also let senders transfer money overseas without leaving the comfort of their homes to visit a bank or remittance office.
Multiple Funding and Receiving Options
Online money transfer companies are platform providers. They orchestrate various products and services to create convenient money transfer solutions.
The flexibility in both funding and receiving options is a result of their business model. Because they work with different companies and organisations, they can offer their app users the option to fund their transfers using a credit card, debit card, bank account, or digital wallet. Likewise, senders can choose the way their recipients will get the money. Options can include direct bank deposit, cash pickup (from a remittance company or bank branch), or receipt via a mobile money account or a digital wallet.
This flexibility makes online money transfer apps even more convenient for the sender and receiver.
Real-Time Tracking
With online money transfer apps, senders can track their transactions in real time. These apps provide updates at every stage of the transfer, from start to completion. Senders can monitor the progress of their transfers and get notified when the recipient has collected the money.
This transparency is essential, especially when using a money transfer app to pay a business for services rendered halfway across the globe.
Cost-Effectiveness and Transparency
Online money transfer apps can offer more affordable rates than other transfer methods. They may have lower fees and better exchange rates.
In any case, online money transfer apps provide clear information about their service charges and exchange rates upfront. By giving senders complete costing and pricing information, they help users make informed decisions and get the best deal possible.
Enhanced Security
Online money transfer apps use advanced encryption and security protocols to protect the senders’ financial information and transactions. Many use two-factor authentication and biometric logins to secure their users’ money and personal information.
Accessibility and Ease of Use
Online money transfer apps are user-friendly. They are easy to navigate, even for non-tech-savvy users. Most provide step-by-step instructions, clear visual cues and customer support. They are also generally accessible to anyone with a smartphone.
Global Reach
Some online money transfer apps have a global reach. Basically, senders can transfer money from one country to another. For example, an OFW in the UK for can send remittance to Philippines easily and conveniently. Thus, these apps are particularly excellent options for expatriates, migrant workers and international students.
Online Money Transfer Apps: Convenient Tools to Send Money
The proliferation of online money transfer apps marks a new era in international remittances. They are fast, convenient, accessible, affordable, transparent, easy to use, and secure, and their global reach makes them even more attractive as an option for sending money overseas.
