Sending Money without a Bank Account

With today’s families spanning across the globe and family members depending more and more on each other for financial help, many are faced with how to send money securely, quickly, and inexpensive. In today’s economy with everything on the rise from gas prices to airfare, sending money can be quite costly if you do it on a regular basis.

Another dilemma may arise if the person you are sending money to does not have a bank account. It may be hard to believe, but a national government study conducted revealed that 13% of people do not have bank accounts. For some that is unheard of, but the truth of the matter is that many people function perfectly fine without bank accounts and surprisingly, it is being done everyday.

If you send money on a regular basis and you are faced with the dilemma of the recipient not having a bank account, you do have options:

Gift Cards

This is perfect for the infrequent need to send money to someone. You simply purchase a gift card from a store or online for a specified amount. The card is then sent to the recipient. When they have used upon the dollar amount, the card is void. The downside to this is that you have to either pay extra for expedited delivery or they have to wait for delivery.

Bank Checks (Drafts)

These are checks made out by the bank specifically to the person you would like it to go to. There is usually a small fee for this service ($5.00 or so). When the person receives it, they may be able to take it to a check cashing service or have someone else cash it at their bank.

Money Wiring Services

These are often located various places throughout the community – convenience stores, drug stores, grocery stores, or stand alone locations. Probably the fastest and most convenient way to send money, same day, it is also the most expensive, often charging “x” of dollars per $100 being sent. In addition, the recipient has to find specific locations to retrieve the money.

Pre-Paid Debit Cards

This is the most convenient option if you send money to someone at regular intervals. Let’s say, your elderly aunt in another country, or even a college student in another state. These cards are re-loadable, which makes it easy to add money.

There are several different cards available. Before obtaining a pre-paid debit card, check the fees involved as they vary significantly from card to card. What makes these cards so great is that the recipient can go to an ATM and withdraw funds. They can make purchases online, or even pay bills. You, as the sender, can usually load funds from your credit card or bank account. Many times, you can do it from the comfort of your own home.

Cash Transfer Options

There are four major ways to transfer money from the United States to someone in another country.

1. Cash Transfers – Money wiring services.
2. Money Orders – U.S. Postal Services, Banks, Various Retail Stores.
3. Banking Transfers – Checks, Foreign Drafts, Wire Transfers.
4. Pre-Paid Debit Cards – Gift Cards, Reloadable Cards

Cash Transfers

Money wiring services are commonly used because of their ability to rapidly send money to anyone worldwide, including the ability to transfer money online or by phone using a credit card or debit card.  You will need to locate a sending agent and a receiving agent.

Each transaction has a specific control number, which makes it easier to collect funds for the recipient.  Funds are normally available within the hour (depending on the business hours of the agent), and proper identification is required.

Money Orders

Money orders are one of the cheapest ways to send money.  They can be purchased at Banks, United States Post Office (issues international money orders), and local retail stores.

They cost anywhere from $1.00 to $8.50 and you must fill out the recipient’s name before mailing.  You will have a carbon copy for your records.  Money orders are traceable by a unique number located on the bottom of the money order.  U.S. money orders can be cashed in banks or post offices in most countries.

Although this is a cost-effective method or transferring funds, there is a maximum of $700 (U.S. Postal Service) and other retailers set limits on the amount of a money order.  Most banks have a limit of $1,000 and the fee can be as much as $10.00.  There is a delay in the recipient receiving the funds due to mailing, although you can pay extra to have delivery expedited.

Banking Transfers

Not all banks operate in the manner so you should check with your local bank for details.

Sending a Check Abroad

Sending a check to a recipient is quick and easy, but check clearing, especially in other countries may takes 4-6 weeks.  The recipient can be charged a fee of up to $50 for check processing.  Some countries do not honor foreign-drawn checks.

Foreign Drafts

Depending on your location, it can sometimes take a few days to a week for a bank to prepare a draft.  The money comes out of your account when the draft is prepared.  There is a fee of up to $25 for this service.  The recipient must wait until the draft is delivered via mail and they must have access to a corresponding bank.

Wire Transfers

Wire Transfers are quicker than Foreign Drafts since they are usually done immediately.  You are charged a fee of up to $40 and if you are not a customer, it could be as much as $60.  The recipient again, must have access to a corresponding bank.

Pre-Paid Cards

Pre-paid debits cards and gift cards can be purchased online or at most retail stores.  Most of them have either the MasterCard VISA Maestro or Cirrus logo.  You load the card with funds – some gifts cards can be purchased in different denominations.

You then mail the card to the recipient and notify them of the PIN number.  (It is important to do this separately since anyone who retrieves the card and has access to the PIN can then use the card).  The recipient can then use the card to withdraw cash at an ATM, or use it anywhere VISA MasterCard Maestro or Cirrus are accepted.  Some cards are reloadable (for a small fee), so you can add funds when needed.

Remittances to Zimbabwe

In a recent article, it is reported that the cost of living in Zimbabwe continues its climb but the importance of money sent home by relatives abroad is still drastically needed.

Fifty percent of the households investigated across all of the income groups in the main cities of Harare and Bulawayo are regular recipients of money and goods from relatives living outside of the country. This is according to “Remittances, Poverty Reduction and Informalisation.”

It is noted that parents are normally supported by their children through funds sent via transfer networks, according to the Global Poverty Research Group. The networks take advantage of the market in which US $1 is worth $500,000 Zim, compared to the official rate of $100,000 Zim.

An interview with an engineering student states that he manages to stay in school thanks to relatives in South Africa. He goes on to say that since January, many of his classmates have dropped out due to financial problems, “I do not even think we would be accessing the food we eat if it was not for the groceries they send.”

The average salary in Zimbabwe is Zim $20 million, but the monthly cost of a basic food basket for a family of has risen to Zim $60 million, up from Zim $49 million. In US dollars this would be an increase from US $490 to US $600. Economist James Johwa recently stated during an interview, “Remittances played a key role in stabilizing household food security and access to essential services like education and hospital care.”

This dependency is not just for the lower income or poverty level – a government registry clerk states that she is equally dependent on money sent by her husband in Botswana. “My own salary cannot even buy half of what he sends. He sends money every month and that is basically how the family has managed to survive the crisis.”

For six straight years, Zimbabwe’s economy has been in recession. Unemployment is over 80 percent and inflation has far exceeded 1,200 percent. The informal sector that supported the livelihoods of the urban poor was demolished by the government in a 3-month span.

Johwa states, “Those receiving money and goods from the diaspora can afford such luxuries as cars; they can buy houses that are seen as prohibitively expensive in the local context. This is a small but financially sound class that has emerged alongside a growing poor class that can hardly put one day’s meal together.”

He further goes on to state, “There are stark differences in terms of access to food, goods and services,” said Johwa. “And the reality is that the majority of Zimbabweans are sliding deeper and deeper into hunger and poverty every day.”

Sending Money to Mexico part 2

Sending funds to Mexico by bank wire transfer:  This process may take 1 to 3 days. You must tell the bank that you want to wire the desired amount plus $32 to:

NationsBank, Department of State Branch, 2201 C St. NW, Washington, D.C. 20520, at 202-624-4750, via ABA number: 114000653; account number: 7476363838; account name: Pupid State Department; Special Instructions: OCS/Trust for Benefit of (Recipient’s Name), U.S. Embassy/Consulate (City, Country); and include the sender’s name and telephone number.

The wire instructions must include the recipient’s full name and overseas location. NationsBank notifies the State Department when funds are received. The $32 fee includes the $20 Department of State fee and NationsBank’s $12 wire fee.

Sending funds to Mexico by overnight or regular mail:  The sender obtains a cashier’s check or money order for the desired amount, plus the $20, made payable to the Department of State. A letter must be attached with the sender’s name, address, and telephone number, as well as the name and location of the overseas recipient.

Mail to:
Overseas Citizens Services, CA/OCS, Rm. 4811, Department of State, 2201 C St. NW, Washington, D.C. 20520.

Important notice to those who receive funds at the consulate: To request funds from a trust account, office hours are between 8 and 11 a.m. The person collecting the money must present a government-issued form of identification.

If the person collecting the money is other than the recipient, a written request specifying the name of the person authorized to receive the funds from the recipient to disburse the funds will be required.

Wells Fargo has a deal with Banamex whereby someone in the United States opens an account for an annual $10 fee and then pays $10 for each wire transfer. Banamex automatically opens an account for the recipient. The transfer can take from a day, which is unlikely, to five days at the outside.

A simple bank-to-bank transfer can vary in cost from $25 to $45 and take between one and three days.
There are many methods in which you can transfer money to Mexico. While money transfer services appear to be the quickest, they are often the most expensive.

Debit/ATM cards appear to be the most inexpensive with the added benefit of being able to reload funds from the convenience of your home or office at anytime.

Sending Money to Mexico

Whether you need to send money to a friend or family member for an emergency or if you send money to Mexico on a regular basis to support your family, there are different ways you can accomplish this. Wells Fargo, Citibank and Bank of America all have branches in Mexico. You can still pick up money at the U.S. Consulate.

Alternate Ways to Send Money

Debit/Cash Cards – There are numerous companies that offer cash cards or debit cards. Cards such as ATMCASH will send the recipient a debit card and you will have the capability to load funds on the card either online or via telephone. The recipient can retrieve the funds at most ATM machines. This card is reusable and you can add funds to it when necessary.

The sender would sign up for the service (ATMCASH.com) either online or by telephone. They would load or fund the account with the desired amount of money via credit card or bank account. The sender is provided with a security PIN number.

ATMCASH would then FedEx the debit card to the recipient. The sender provides the recipient with the PIN number and when the card arrives, they can retrieve the funds at an ATM location.
It is important before choosing one that you read the fine print disclosing the fees as they differ with each card company.

Money Transfer Services – This is still a popular way to transfer funds

If you send money through a money transfer service, it usually can be picked up in a matter of minutes. Some of these services charge rates of up to $10 to send $300 or a flat fee of $30 to send up to $30. The recipient is also charged a fee at the receiving end of about 10 percent.

Bank Transfers

Bank of America and Wells Fargo have relationships with Mexican banks and transfer billions of dollars to Mexico annually.

If transferring money to arrive through a bank or to a different destination other than the consulate, it is important that you know what wire transfer companies exist and the cost of their services. There are several wire transfer businesses or bank services to send money to people in Mexico.

Many of these places are reducing their fees, which vary considerably, so it is best to do some comparison shopping. The money is normally available from 15 minutes to one day, depending on the type of service requested.

Sending Money through the Consulate

In emergency situations only, money may be sent through the consulate. The most protected way is by establishing a Department of State trust fund. This service is available only to U.S. citizens and on an emergency basis. Depositors must establish a trust account in a recipient’s name.

The department, upon receipt of these funds, authorizes payout to the recipient from the appropriate U.S. embassy or consulate. Overseas Citizens Services Trust (OCS) takes approximately one working day and funds are disbursed in local currency. The State Department has a $20 processing fee for this service.

Sending Money To Mexico – Now And the Future

Remittances from the U.S. to Mexico have become a ritual among migrant workers. The modest wire transfers of cash assist in paying for food, school supplies, or even a new home for family members left behind in Mexico.  It is not only expected of the migrants to send money home, but the Mexican economy also relies heavily on the flow of remittances.

Mexico’s Central Bank reports that it received nearly $24 billion in 2007 and nearly $23.7 billion in 2006.  It is estimated that in 2004, $16.6 billion was sent to families in Mexico from the United States.

Who Benefits

Remittances serve as a sort of pension fund, a community development fund, and educational fund for many of Mexico’s elderly and young, but studies have shown that families only receive a portion of the money intended for them.

A study by an official in the Social Development Ministry, and two professors at the College of the Northern Border, a research institute outside Tijuana, concluded that families receive only about half of that amount.

The remittances have become so large that economists and business leaders here say the Mexican government has become excessively reliant on them, relying on this money to increase the balance of payments, disguise the decline in foreign investment, and use it as a substitute for broader anti-poverty programs.

Tougher Regulations

In a report back in January, the World Bank said that Mexico leads the world in the number of migrants with 11.5 million, but opposition toward illegal immigrants in the U.S. – many who are Mexican – has caused Federal law enforcement to crack down on entrance into the United States and deportation and/or imprisonment has resulted in a decrease in the amount of remittances sent.

In the last year, state and local governments have passed a number of ordinances and bills tightening employment regulations and providing more thorough investigations of Social Security numbers.

Sluggish Economy

The lethargic economy in the United States is affecting everyone and the decline in remittances has wounded Mexico’s families as well as their financial system. Virtually all money Mexico receives is derived from remittances coming from the United States.

A combination of the declining economy and tougher employment regulations are making it more difficult for migrants to find employment, therefore, decreasing the number of remittances sent home.  One of the giant’s in money-transfers – reports a 5 percent decrease in revenue in 2007.

The Mexican central bank said the final quarter of 2007 was nearly flat, at 0.2 percent, in remittances, showing how migrant money moves with the health of the U.S. economy.

Rise and Fall

From 2000 to 2006, the amount of remittances grew significantly until 2007, when
The number began to decline.  January through May of 2008 has seen a decline of $668.28 million.  Just in the month of May, a decline of $171.3 million less than the year before.

This is not a good sign – not just for the migrants and their families, but Mexico as a whole suffers significantly from this drastic decline as well since remittances from the United States equal 2.8 percent of its gross domestic product.

Comparing Money Transfer Methods (Part 2)

The final two factors we will look at when comparing money transfer options are safety and convenience.

Safety

As technology has become more advanced, one of the benefits involving money transfers has been that security has increased in every available method.  Most companies that facilitate money transfers who hope to be competitive take every possible measure to ensure the safety and security of each dollar than is transferred.

Banks handle security with thoroughly protected computer systems that encrypt customer data and require government issued identification to send and receive money.  Banks are responsible to account for every dollar entrusted to their care, and they do a great job with security.

Both money transfer companies and online companies that offer prepaid debit cards provide adequate safety for their customers.  Over the course of the past decade, internet security has advanced to the point that it’s very difficult for hackers or others with malicious intentions to access protected information.

A security breach for a money transfer company is a serious problem, not just because of the loss of money, but also because of the damaged reputation that will result.  Today, with so many companies competing for a piece of the money transfer market, security is a top priority for successful companies.

Prepaid debit cards send money with the added security measure of a PIN number, ensuring that a card that is lost or stolen will remain protected until a new card can be issued.

Convenience

Technology has also provided more convenient money transfer methods today than ever before.  Banks have made money transfers more convenient by providing customers with the ability to initiate transfers over the telephone or the internet.  Customers don’t necessarily have to walk into a bank branch anymore.  For the recipient of the funds, each foreign bank has its own set of rules for accessing the money that is sent, so it’s important to make sure that the bank receiving the funds will be a convenient option for your recipient.

Money transfer services can also be very convenient, depending once again on the destination of the cash.  The biggest complaint about sending money through money transfer companies is the person receiving the funds has to find an agent of the money transfer company to access the funds.  In developed areas, this can be simple.  However, when sending money to people in more rural areas, this can become a major hassle as they attempt to access the funds.

By far the most convenient money transfer method is the prepaid debit or ATM card.  An internet connection and valid social security number is really all that is required to get started.  The person sending funds initiates the transfer online, and a prepaid debit card is sent via Fed Ex to the recipient.

The person sending funds then provides a PIN number to the recipient, who can access the funds at any ATM machine.  This prepaid debit card can be reloaded with funds by phone or online anytime once the recipient is holding the prepaid card, the ultimate in money transfer convenience.