Every year, billions of dollars are recorded as remittances worldwide. With the advent of technology, there are several ways to send money home. With so many options available, it is very important to make the right choice to avoid paying an exorbitant fee to transfer money. There are three basic factors to be considered while transferring money. Understanding each of them will help us in sending money in the most optimal method.
1. Mode of Transfer
There are a couple of aspects while choosing a mode of money transfer. They are:
- location of the sender and the receiver
- awareness levels of the technology and the availability of the same
- time availability and affordability
Taking all of the above into consideration, one can select a medium that best suits him/her.
One of the oldest methods of sending money, a cash transfer is a simple process of sending cash through a money transferrer. The receiver can collect the money or have it delivered by the money transferrer.
Today, several money transferrers have tied up with many leading international banks to empower their customers to make a bank transfer. Through this service, one can transfer money to the recipient’s bank account.
Online Money Transfer
One can sit at the comfort of their home or work and send money through an online remittance portal. Most portals have the facility to remit the money to a bank account/ credit card /cash payout.
Mobile Money Transfer
This method of money transfer is ideal for those who have limited access to banks and transfer agents. Through this method, money can be sent to a recipient’s mobile phone or mobile wallet. This is widely used in many countries in the African continent. Some of the other countries that have this facility are Bangladesh, Kenya, India and Philippines.
2. Cost of Transfer
The cost of sending money will depend on the exchange rates, mode of transfer (cash, bank, online), the commission charges levied by the remittance house etc. And they will vary depending on the service provider’s network and the other value added services offered. Simply put, at the end of the transaction, calculating how much of money the recipient receives will give an idea of the cost of transaction. While availing a particular type of money transfer service, one should be well informed about the below:
Exchange Rate: This is the rate at which one currency is exchanged with another. This rate will vary from time to time, depending on the global financial scenario and other economic factors. It is always wise to wait until the receiver’s currency value is lesser than the sender’s currency value, so that more money can be sent. For instance, if someone living in the USA wants to send money to Mexico, they should ideally transfer money when the value of peso is lesser than dollar, so that, for each dollar more pesos can be sent.
Fees: This is the fees charged for transferring the money and will depend on the service provider and the mode of money transfer.
Tax: Some countries also levy a value added tax that is charged on the commission/ service fees. For more information speak to the customer care executive before you make a transaction.
It is always good to weigh all the available options before transferring money. Comparing the exchange rates at various times will help in understanding the pattern. While one service provider might have a wide network, another might boast of having state-of-the-art technology. Hence understanding one’s needs and choosing accordingly is crucial.
Always ensure you ask for a record of the transaction (bill/e-receipt) at the end of the transaction. This will authenticate the transaction and act as a reference for future purposes. Sending money home can be overwhelming with so many avenues, but gets easy once the above factors have been well considered.