Comparing Money Transfer Methods

The world is getting smaller, and it’s becoming more and more common for people to have the occasional or frequent need to send money to people in other countries.  There are several methods available now for people who wish to send money—the options are more plentiful than ever before.

Some of the most common methods of sending money to other countries include direct bank transfers, sending money through a money transfer company, and prepaid debit or ATM cards.

There are several factors that people sending money consider important when deciding which method is best for their money transfer.  Some of these factors include speed, cost, security, and convenience.

Speed

Speed is an important factor in money transfers when the money needs to arrive prior to a set time and date.  It used to be that sending money quickly meant paying a hefty fee for a speedy delivery.  This is no longer the case, as each of the above methods can have money sent relatively quickly.  The slowest of these methods is the bank transfer, which generally takes a minimum of a day and can take up to several days while banks on either end of the transaction facilitate the transfer.

Prepaid debit cards take a few days the first time you use the method as the card has to be sent to the recipient.  However, once the card has been sent, funds can be loaded onto that card and accessed very fast.  Aside from the first time funds are sent to the recipient, this is generally the fastest method of sending money overseas.

Money transfer companies usually allow people sending money to pay more if they want money sent quickly.  For a larger fee, money can usually arrive within an hour.  As someone sending money, if there is no hurry for the money to arrive, you’ll save money by allowing the transfer to take a few days as opposed to a few hours.

Cost

Sending money can range in price from almost nothing to very expensive, depending on the method you use to send funds.  A few of the factors that can affect the costs include the destination of the money and the speed with which the money needs to arrive.

The greatest variation in money transfer fees comes from banks.  Some banks allow money transfers that are free, offering the service to attract and retain customers.  Other banks charge between $25 and $50 to wire money to a foreign bank.  Your bank will be able to tell you what their fees are, but remember that when sending money through banks, there could be a fee on the receiving end as well.

Money transfer services have become more affordable as viable competitors have threatened to take market share with more convenience and lower prices.  People sending money through a money transfer company will generally pay between $5 and $15, depending on the country money is being sent to and how quickly the money needs to arrive.

Prepaid debit cards are usually the cheapest way to send money, with fees in the neighborhood of $5 per transfer.

Sending Money to India

In 2006, India was the largest recipient of funds being sent overseas, with over $23 billion being sent internationally to India alone.  There are many options available today for transferring money to India.  The money transfer business is growing at a rate of over 10% each year, and India is a country where a large portion of this money is being sent.

Like any country, the cost of sending money to India depends on the method you use and how quickly you need money to arrive.  Generally speaking, you will pay more to get the money there faster with most companies.  For example, the cost of sending $500 fast from the US to India can be as a little as $5 with www.atmcash.com, or as much as $14.99 with other companies.  Some companies have options that allow the person sending money to pay less if they’re willing to have the cash available in 3-4 days instead of the same day.

The internet has given rise to a number of good companies for sending money, each with their own fees, terms and conditions.  Some people have turned to Paypal, for instance, as way to send cash.  Although the money will be received almost instantly by the recipient, it’s not necessarily easy to turn that money into cash, as it can take up to 5 days for funds to be deposited into a bank account.  This is a great example of an “instant” money transfer that is not really instant.

One fast money transfer method that truly does make funds available to the recipient is the prepaid debit card.  This method takes a few days the first time you try it, as the debit card has to be delivered to the recipient.

Once the card is in the possession of the person receiving the funds and you have shared the PIN number with them, the money can be accessed instantly at any network ATM machine, of which there are thousands worldwide.  Once the person receiving funds has the ATM or debit card in their possession, funds can be loaded onto the card online and be available very quickly, all for a lower fee than most competing methods.  There is much more information on this service at www.atmcash.com.

Online money transfers are a great option for sending money to India because there are many competing for their share of this quickly growing business.  Consumers benefit from this competition as companies try to make their service more convenient, more secure, and more affordable than their competitors.

The amount of money being sent to India is sure to continue growing.  It’s a great idea to go online and get familiar with some of the newer methods of sending money to India fast.  You’ll likely find that you will save both time and money in going online for your money transfer needs.

Risks Associated with Debit Cards

Debit cards are becoming one of the most widely used methods of sending money worldwide.  Last year alone, Americans swiped their debit cards over 30 billion times, spending an average of $41 on each transaction.

Considering that about 80% of the rest of the world has used a credit or debit card at one point or another, the number of transactions happening each day with debit cards is astoundingly high, and only getting higher each year.  Debit cards are popular methods of sending money because it’s fast and easy on both ends of the transaction.  But there are some risks that debit card users need to be aware of.

One of the biggest complaints you’ll hear from debit card users regards security hold.  More of a nuisance than anything else, a security hold is essentially a merchant reaching into your checking account and freezing some available funds to make sure you can cover the cost of your transaction.

Hotels, car rental companies, and even gas stations are famous for using security holds.  Many businesses look at debit cards as being more risky than credit cards, so they see holds as a necessity, regardless of how annoying the holds can be to consumers.

With time, the holds are lifted, making available funds truly available again, but the timing for the customer is not always convenient.  One way around this is to use the card to access cash at ATM machines and pay cash instead of swiping your debit card.

Another complaint sometimes heard from debit card holders is that there is a lower level of fraud protection than with credit cards.  With a debit card, if a thief gains access to your checking account, that money is gone, sometimes without a trail.  This can be frustrating on many levels, as many consumers make regular payments out of their checking accounts for things like mortgages and auto payments.

If your account is accessed and emptied by a thief, you could rack up late charges and overdraft charges that banks will not always cover.  Building habits that protect your personal information from being accessed illegally is one way to avoid this potentially damaging problem.

In addition to these risks, some debit cardholders complain that there are some merchants that don’t accept debit cards at all.  Car rental agencies, for one, are notorious for only accepting credit cards.  There are a variety of reasons for this, but it’s always a good idea to carry a credit card while traveling and to have access to a line of credit in case of an emergency.  Debit cards are an outstanding tool for making financial transactions easy, but they shouldn’t be the only card in your wallet.

As long as debit cards are used appropriately, they will continue to be a convenient and easy way to send money worldwide.  Using debit cards to send money can save a great deal of time and money compared to other available methods and will make accessing funds simple for the person receiving your transfer.

Improving the Impact of Remittances

Over the past several years, remittances have had a more significant impact on emerging economies than ever before.  There are over 150 million people worldwide who have left their home country to live and work in a foreign land.  Many of these workers leave a family behind and pursue work outside of their home country to provide financial support form their loved ones.

The money that these migrant workers send home to support loved ones is called a remittance, and over $300 billion in sent worldwide every year by migrant workers.  Remittances are a great stimulant for a growing economy, but they are not having the full impact that they could have with a few important changes that would make the money sent home even more productive for growing economies.

Lower Transaction Costs

There are several factors that can affect the cost of sending and receiving remittances.  The cost of sending money from the US to Mexico, for instance, is very different than the cost of sending money from the US to Viet Nam.  Areas like Latin America, where remittances are common, have done a good job of making the process easy and affordable.

The problem with costly remittance options is that if the costs are prohibitive, workers either won’t send funds, or they will send funds through less traditional, less safe methods.  There are options that are available now such as prepaid debit cards, which in some countries make up nearly 50 % of total remittances.  This is a trend that needs to grow to lower overall transaction costs.

One of the reasons why it is difficult to lower transaction costs is that regulations for tracking funds sent between foreign countries have become more stringent in the wake of a crackdown on the financing of terrorists.  Financial institutions must adhere to a strict reporting system, keeping transaction costs high in many countries.

Better Data Collection

Because many people sending and receiving remittances do so outside of traditional methods, it can be difficult to track to the true amount of money being sent between nations.  This problem is magnified in rural areas, where many remittances are never accounted for.  There are also countries with informal systems of sending money through middle men outside of the financial system.

As data collection has improved over the past decade, the reality about just how much money is being sent in the form of remittances has been eye opening.  As we understand how much money is really being sent, we can better plan ways to make the remittance system run even more efficiently.

Making Every Dollar Matter

While the majority of remittance funds being received around the world go to meeting the daily needs of basic living around the world, we could certainly do a better job of ensuring that educational opportunities are available for families receiving money from overseas each month.  Teaching people how to make wise financial decisions will help to end the perpetual cycle of poverty that so many around the world are born into.

Tips To Avoid Credit And Debit Card Fraud

There are many benefits to swiping a plastic card in order to complete financial transactions, including convenience, the reduced need to carry cash, worldwide acceptance, and direct access to money in bank accounts 24 hours a day. However, carrying a debit or credit card also comes with security risks that are a concern to both cardholders and issuers of bank cards.

Card issuers are taking steps to increase the security of funds that can be accessed by bank cards and major improvements have taken place to make using debit and credit cards a safer option than ever before.

The biggest risk with owning credit cards is the risk of fraud—someone acting as if they’re you in order to access your funds and purchase goods or services with them.  Most people who carry debit or credit cards can relate to the feeling of misplacing a wallet or a credit card and panicking at the thought of your card being used without your knowledge.

It is estimated that credit card fraud costs cardholders and issuers in excess of $500 million every year.  Credit card fraud is increasing as more transactions are carried out electronically over both telephone lines and the Internet.

Fraud can occur in a number of ways when it comes to bank cards.  The most obvious way is that if a card is lost or stolen and ends up in the hands of someone willing to commit fraud.  In addition, identity theft is one of the fastest growing crimes in the United States.

To steal an identity, thieves use various means to gain access to a consumer’s personal information, including full name, date of birth, and social security number.  With this information, they apply for credit cards and are often able to spend thousands of dollars before the fraud is ever detected.

There is also a type of fraud called “no card” fraud, in which transactions are carried out online or by telephone using a credit card number without ever having to show a merchant the actual credit or debit card.

There are several steps that consumers can take in order to prevent becoming a victim of credit fraud.  A few good ideas include:

1. Always sign the back of every bank card as soon as it is received.  Merchants are responsible for ensuring that the signature provided at the point of sale matches the cardholder signature on the back of the card.
2. Review card and banking statements regularly, watching closely for any transactions that are not familiar to you.
3. Choose a PIN number that is completely unpredictable, and never keep that number written in a place where your credit card is stored, such as a wallet or a purse.
4. Call your bank or credit card issuer immediately to report any suspicious activity.  Catching fraud early can be the difference in saving thousands of dollars.

These simple steps can save a great deal of time and money in protecting yourself from becoming a victim of fraud.

Remittances

The world seems to be becoming a smaller place, with more people leaving their homelands seeking a better life or better wages in foreign countries than ever before.  The economy is truly becoming global, with money being sent between the home countries of migrant workers and the countries that they are working and living in all the time.  This money that is sent home from people working abroad is called a remittance, and is a major player in the overall global economy.

Recent statistics show that there are over 150 million migrant workers worldwide.  These workers send home remittances to the tune of about $300 billion each year, mostly in amounts between $100 and $300 each month.  There are over 1.5 billion financial transactions directly related to sending and receiving remittances from abroad every year around the world.

Because sending money to some countries through official financial channels can be challenging, there is a significant amount of remittance money that is saved by workers and carried to their families by other people they trust traveling to their home countries.

Most funds that are sent home in the form of remittances are used to meet the day to day living needs of family members left at home by the migrant workers.  However, not all money that is sent home is immediately spent, leaving opportunities to save and invest in the future for people receiving remittances.

This money is helpful to local economies, but would be even more useful if, globally, we did a better job of tracking remittances, lowered transaction costs, and developed a more organized effort to use remittances from abroad to better overall economies.

If we look at the most recent data available, over 1/3 of all the remittances in the world are going to Asia, with the lion’s share in Asia being sent to Southeast Asia.  Countries like Indonesia and the Philippines send many workers abroad and generate a high level of remittances coming in.  Filipino workers are likely to be found in both North America and the Middle East.

The second highest area of incoming remittances geographically is Latin America and the Caribbean, a region that receives between 20 and 25% of worldwide remittances.  Mexico receives the largest amount of money after seeing many workers move north to the United States, brining in as much as all of South America combined.

One area to look at beyond just which countries are seeing the largest remittance flows is the breakdown of funds being sent to rural areas versus those sent to developed areas.  Transaction costs are generally fairly small in developed areas, but in rural areas they can be much higher, decreasing incentives to send money through traditional channels that are safe and that can be tracked.

The key to harnessing the true economic power of remittances lies in understanding who exactly is sending money, how the money is being sent, and what foreign governments can do to encourage even more money to be sent.  As we make sending money home easier, we’ll see even more economic growth as a result.