In today’s world, an increasing number of people send money across borders on a daily basis. Expats, businesses, freelancers, and individuals send money across several currencies, and countries through diverse electronic means for payment of goods, services, or even to friends and family.
Speaking of friends and family, remittances have become a vital source of income for many individuals and families with immigrant relatives around the world. Most overseas workers often send money back home to provide additional financial support for their families. But there's more to money remittances than just sending money to friends and families, Right?
This article will explore the different types of remittances and money remittance services available. Including benefits of money remittances, and how it works. So, let's get started.
What Is Money Remittance?
Money remittance is simply the movement or transfer of money/funds to another party. A popular example would be the transfer of money to another country by immigrants who need to send money home to their families. Remittances are also used for things like university fees, purchasing property overseas, or making an investment in another country.
Remittances are a key source of capital for developing countries, helping families support themselves and contributing to economic growth. According to the World Bank projection for 2021, Nigeria would receive about $17.6 billion in remittances as against $17.2 billion which was recorded in 2020. This represents a 2.5% increase in the annual projections for remittances from the Diaspora. These transfers help recipients meet basic needs such as food, clothing, shelter, and education.
Money remittance can be divided into two categories, They include:
- Inward Remittances: Inward remittances refer to the process of receiving money from one's relatives/friends/employer staying abroad. For example, receiving money from family or relatives in Europe, while you’re living in Ghana.
- Outward Remittances: Outward remittances refer to the process of transferring funds from Ghana to another country through a bank, fintech platform, or an MTO. The purpose could be for anything like education, medical expenses, and travel.
Types of Money Remittance
Money remittances come in all shapes and sizes. Below are some of the most common money transfer options for your convenience. They include:
A wire transfer is an electronic transfer of money from one bank account to another. Wire transfers can be sent domestically or internationally, and can be done in person at a bank branch, or online through your bank's website. Domestic wire transfers usually arrive within two business days; international wire transfers can take up to seven business days to process.
This is still the most popular way to remit money through traditional banks. They come with varying transaction charges and due process, depending on the sending or receiving bank, and the currency, or country of your choice.
A bank draft, is similar to a bank cheque, except that it can be cashed in another bank other than the issuing bank. You can use a bank draft to send money from your account to a business partner, friends, and family who do not have an account with your bank.
However, bank drafts require more paperwork than wire transfers. you'll need information about the receiver's identity and address, and generally, they take longer durations than wire transfers do - at least 5 business days - which could also come with higher transfer charges, depending on the paying bank.
Internet Money Transfer
If you're looking for something easier, faster, and cheaper, an internet money transfer offers a convenience that's hard to beat. Internet money transfer services allow you to send money to anyone and anywhere, and at anytime you wish.
All you need is a Remittance service provider, an internet-enabled device, and a working internet. You can easily set up a transfer online and the recipient can receive or withdraw the money in minutes, hours, or at most, a day. This type of remittance is mostly obtained with cross-border fintech solutions. Some platforms can even give you access to track your transactions and payments in real-time. Which makes it even better.
A money order is a prepaid document that allows you to send a fixed amount of money from one party to another through the mail. Money orders are used to pay for purchases and other transactions, but unlike bank cheques, they can be purchased with cash at various locations and mailed to the receiving party for payment purposes.
With a fintech solution, traditional banking, or MTOs, money remittance is a fast and efficient way to transfer funds from one country or currency to another. However, if you dread rigorous paperwork, bank queues, high charges, and long protocols, then you should work with a cross-border fintech solution.
So, How Does It Work?
To send money through a money transfer service, you must first register with a service provider. This usually requires proof of identity and address, such as a driver's license or passport.
You can then initiate a transaction via your mobile or desktop device, or through a mobile money agent. You will need to provide the account number and personal details of your recipient, then pay with cash, debit card, or credit card.
With that said, let’s assume you’ve decided to move your money with a fintech platform; say, Transfy - for example. And you want to know how to transfer money from Nigeria to Ghana. So this is how Transfy works.
How To Send Money Abroad With Transfy
Securely and freely create an account with us in minutes.
2. Fund Your Wallet
Fund your account securely through bank transfer or using a mobile money transfer.
3. Input The Receiver Details
Provide the details of the recipient. Select the payment channel - mobile wallet or local bank account. Click on SEND and wait for us to do our magic.
The recipient receives the money instantly or within minutes or hours, depending on the service provider used. They can also withdraw the money through their bank account, mobile wallets, or a mobile money agent in their locality
Benefits of Using Fintech Solutions for Your Remittance Services
Transfer Money Anywhere
Skip unnecessary queues and paperwork by completing all transactions from your computer or mobile device. Send money to any part of the country or the world quickly and easily. You don’t need to visit a bank branch or deal with long transfer protocols. Fintech solutions help you transfer money to your friends and family without hassles.
No Hidden Charges
Fintech solutions help you transfer money at competitive rates and they are usually cheaper because you get to avoid bank fees and exchange rate margins, although it's best you always check for hidden charges. This helps you avoid additional charges that would have been inevitable with traditional modes of payment like cheques and wire transfers.
Thanks to bank-level encryptions and multi-factor authentications, fintech platforms offer additional security to help you safeguard your data and funds. All your personal information is kept safe and secure with the provider and is not shared with anyone else in any manner which ensures that you don’t have to worry about any fraud or theft of your details or money.
Most cross-border fintech solutions are very user-friendly with (DIY) intuitive dashboards that point you to any of the features or services you would love to use. With a stable internet connection, you can access these services even from remote areas, unlike traditional banks. All you need is a computer and an internet connection and you're good to go.
We know how it can be - dreading banking queues, long paper works, and exorbitant charges whenever you want to send money home. Nobody wants that. And that’s why you have Transfy - the perfect and secure Pan-African payment option for you. Whether you’re sending money to friends and family, paying business partners and employers, traveling across Africa, or shopping online - our multicurrency wallet lets you send, receive, hold and withdraw your monies in any of our supported Local African currencies.
You no longer have to deal with the stress of currency exchanges and high transaction charges. Get access to 7 African currencies KES, GHC, NGN, RWF, XAF, ZAR, and UGX at your disposal, with Transfy.