Payment Methods for Money Transfers

When you want to send money home, there are multiple options around how you want to pay and how your recipient wants to receive money; in a couple of back to back blog posts, we will go through some of these.

In this blog post, we will discuss Payment Methods for remitting money.

Payment Methods

A Payment Method is how you pay your Remit Service Provider (either a bank or a private institution that facilitates money transfers) for the intended money transfer. 

The aggregate amount you pay to your service provider would be the amount you want to send plus any applicable fees or charges that the service provider may charge you to use their money transfer service.

Below we list the most frequently used payment methods, along with a short synopsis of frequency of use, associated fees etc.

Bank Account

Paying with bank account usually entails providing the service provider with your routing and account number, and money is directly debited from your bank account. The setup process entails some sort of validation process whereby you have to confirm a debit/credit pair of transactions posted to your account - hence it may take a few days for this setup to finish. This could be a downside if you want to send money home instantly.

Since the service provider gets the money quickly, and since most banks do not charge for bank to bank money transfers, usually service providers do not charge any fees when using this payment method. As a result, the frequency of this could be high. 

Credit Card

Credit card payments are instantaneous so there is usually no wait time which helps if your need is to send money home instantly. The downside, however, is that most service providers charge some fee when you pay with credit cards. You may also have to pay charges for credit to your credit institution. 

Debit Card

Like Credit Card payments, Debit Card payments are also instantaneous. Also, the associated fees could be lower than credit cards since the service provider does not have to pay credit card processing fees to a credit card company. The minor disadvantage compared to credit cards could be that you will need money available at the time you use your debit card, while credit card allows you to borrow money from your credit card company.

Wire Transfer

Wire Transfer payment method entails wiring money from your bank account to the service provider. Most banks would need you to fill a form with the possibility of even going to the bank branch, so this might be a slower option. Additionally, most banks charge customers to wire funds, although this fee may be waived depending on your relationship with your bank, or of you maintain certain thresholds of funds in your account. 

Cash

The Cash payment method usually works only for service providers that have an agent model whereby you would go to a physical brick and mortar location and use cash to fund your money transfer. Numerous global remittance companies like Western Union, MoneyGram etc follow this business model whereby they have numerous worldwide locations where you can send money paying with cash. There are usually fees associated with this payment method use in a brick and mortar location.

So, which Payment Method should you use?

The answer is, it depends. Based on your needs around urgency of money transfers, fee tolerance and convenience, you may choose different payment methods. 

Obviously, you will want to balance your decisions with the exchange rate you get, which will have a direct relation to yield of your transfer i.e. how much money does your recipient get. Try RemitFinder to see how we can help you save on your next money transfer.

In our next post, we discuss Delivery Methods associated with money transfers. Happy remitting!