What is Remittance? A Complete Guide
In recent years, the amount of money being moved across international borders has primarily increased. In some cases, it is a result of businesses working increasingly with customers and clients overseas.
When you want to send money overseas, you might use the term remittance or remittance services. Here, we will give the complete details about it with the services involved in it.
Nowadays, remittances are a big business. Therefore, you have to understand the process if you need to send or receive money from overseas. Here, you will get all the necessary information regarding remittances you need to know.
What is the definition of remittance?
A remittance is the sum of money being sent, primarily to someplace abroad or overseas. In other words, it is a process of moving money by any method.
Methods include online transfer, a wire transfer, by mail or using a credit or debit card to transfer the money. The overseas payment would be to receive funds for an invoice from a supplier. In addition, they are the funds to pay an employee or to support the family back home.
Which companies offer remittance services?
If you need to do international money transfers, many companies offer remittance services. However, you can select to make your payment with your regular bank by wire transfer in most cases.
But, not all banks offer this service if you are sending cash internationally. Instead, services or companies such as Western Union and MoneyGram allow you to transfer money online. You can also send payment by visiting one of their outlets available globally.
The recipient receives the payment into their account or collects it in cash at their nearby location. However, depending on the currencies and countries involved, you can also have the option of using PayPal.
You could use a specialist service provider such as Wise that offers fair exchange rates and the lowest transfer fees.
Methods To Send Money Overseas Through Remittance
While remitting money to someone overseas, you can select different services depending on several factors. However, factors like getting your money sent quickly or minimising fees is more important to you.
Depending on the location of your residence, bank account, and the exact details of the transaction. You find that not all options are available, so it is necessary to do your research in advance.
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Paying for remittances through international wire transfer
A primary way to pay a remittance is by making an international money transfer through your bank. Hence, you can call your bank branch and sort it personally or through your bank’s online banking system or app.
Suppose you are sending money abroad from the US; you might need extra help to make an international wire transfer. Furthermore, these international transfers primarily involve money transferring from one bank account to another through the SWIFT network.
Indeed, this is a network of banks across the world. They work together to make sure your money goes to the right person in the end. However, because various banks can be involved in these transfers, they can add their fees, making the entire process costlier.
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Sending money through cash or cheque
If you want to pay your remittance using cash or a cheque, you can opt for this method. In the case of using a cheque, you can simply send the cheque through snail mail. Then you have to wait for some time to receive the cheque.
However, this method comes with many downsides. First, it is slow, and you may see that the cheque could be lost, damaged or stolen on the way. In addition, it is a fact that cheques are far less frequently accepted, and they are rarely the best choice.
If you want to pay your remittance using cash, you can use a company like Western Union or MoneyGram. In addition, these services offer online transfers to you. But, their business is done by individuals taking cash to one of their outlets, transferring money to their recipient.
If either you or the person you are sending money does not have a bank account. Still, you can use this service to send money overseas. However, this method is costly.
The fees are expensive, and the exchange rates offered are not great. So, there are some processes you can do before using this service. It is a better idea to use an online currency converter to help you calculate the actual cost.
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Transferring money through online transfer
PayPal was one of the first services to offer online transfers overseas when the company was founded. Now, it has two-hundred and ten million active accounts and allows online payments in twenty-five different countries.
While making a transfer using PayPal, both you and your recipient need an account with them. However, you can set your PayPal account up online and link to your bank account or credit card. Hence, the entire service is convenient.
But, you will end up paying for PayPal’s convenience with high fees for sending money overseas and converting between currencies. There is a whole stack of different fees which could be applied, which quickly add up.
These fees add up depending on the currencies and countries involved in the money transfer process. Suppose you want to make an online transfer, you will get a better deal with Wise.
Some of the fees charged by PayPal are because of moving funds across borders. But, Wise avoids these costs due to the large cover of local bank accounts in multiple countries they transfer.
It means that for these currencies, no international money transfers are needed. In addition, it can pass the entire saving on to the customer. Furthermore, Wise uses the real-time exchange rate which you find in the online market. Instead, it takes a small, upfront, affordable fee for the service.
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Sending funds through a debit or credit card
In some cases, you will find extra fees added while sending money overseas. It will cost you if you select to fund your remittance with a debit or credit card.
For example, a PayPal online transfer can cost approximately 4 to 7% more using a credit card. Comparatively, Western Union also adds up their fees if you select to pay with a card.
Primarily, card payments are chargeable, and Wise sometimes charges you a fee when you want to pay by card. But, they show you this fee is affordable. So, in this manner, you can decide if you think it is worth it or not.
Moreover, you can select a bank transfer method instead to avoid those additional fees.
Conclusion
Here, a short guide on the remittance services, their service providers, and methods are described. Indeed, you will get to know different ways to send money overseas with remittance services. Moreover, you will obtain the name of companies or service providers that offer remittance services.
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