Pros and Cons of Traditional Money Transfer Options

For decades, the need to send money overseas or to faraway places has existed for millions of people.  There are a variety of reasons that people need to send money, including migrant workers sending remittances to home countries, children pursuing educational opportunities around the world, or just the simple buying and selling of goods and services from other countries, which is becoming increasingly common in today’s global market.

Traditionally, people who needed to send money have turned to options such as money orders, money transfer organizations, and bank transfers to facilitate the flow of funds, each with advantages and disadvantages.

Money Orders

A money order is a document that orders a sum of money to be paid to the recipient of the money order.  One advantage of a money order is that because it is prepaid by the person sending the money, many foreign financial institutions feel safer honoring a money order than they would a foreign check, since it’s impossible for a money order to bounce.  Money orders are also easy to find, with almost any bank or Post Office in the US willing to issue a money order.

The biggest downside to using money orders is that it can take a great deal of time for the money to arrive at its destination, especially if the funds are being sent overseas.  Consumers can choose to pay extra for the mail to arrive within a specified time, but this can be very costly.  In other words, if you need money to arrive in Europe within the next 24 hours, a money order simply won’t get the job done.  Also, there are limits to how much money can be sent in one money order, so it’s possible that multiple money orders would need to be purchased to send large sums of money.

Money Transfer Organizations

If the only thing that matters is speed in completing your money transfers, these can be a viable option.  Transfers can be initiated in person, online, or over the phone, making these organizations convenient and easy to use.  The money generally can be picked up within about 30 minutes through an agent at its final destination.

The downsides to money transfer organizations are the costs and the limited delivery areas.  While you’re getting speed with these companies, you will pay for it, and there are now other methods just as fast that cost significantly less.  Also, if your recipient isn’t near an agent on the receiving end, accessing the cash will be difficult.

Bank Transfers

Through banks, consumers can draw personal checks or wire funds internationally.  Wiring funds is certainly faster, but the fees can be much higher than comparable methods.  Personal checks often get placed on hold for weeks before they clear, making your recipient wait too long to receive their money.

These traditional methods still work for sending money, but there are also new options that are faster, safer, and more cost effective.  As a consumer, it’s worth taking the time to learn about new methods of sending money that are very likely a better fit than these traditional methods.

Technology’s Impact on Money Transfers

Although it’s not an everyday occurrence for most people, many of us have had the need to send money overseas as quickly as possible at one time or another.  Maybe a friend or family member lost their credit or debit card and needs access to cash.

Perhaps a son or a daughter studying abroad was not as careful as they should have been about maintaining a healthy account balance.  Whatever the case, it’s much easier to send money fast to faraway places than it used to be.

Technology has not only provided more efficient ways to send money, it’s also provided a more competitive landscape for money transfer services, making sending money more affordable for the customer than ever before.

The Internet is the element that makes money transfers much easier than ever before.  Regardless of where you are in the world, you can access numerous methods that will allow you to send money 24 hours a day to hundreds of countries around the globe.

Accessing bank accounts is easy, and if you’re trying to transfer funds to a customer within the same financial institution, it can usually be done almost instantly even at little to no cost.  Sending money to a bank other than your own usually takes about 24 hours and may have a slightly higher fee, but it still easy to do if you have all of the required information.

Making the transfer is easy if moving money between banks, and will be effective as long as the recipient has access to the funds once the transfer has been made.  An ATM or debit card is the easiest way to access the funds 24 hours a day.

Banks often impose daily limits that restrict the amount that can be accessed via an ATM machine each day, but it’s generally a high enough amount that the recipient will have enough cash to meet their needs.  ATM fees are usually minimal but should be considered if an exact amount needs to be received.

If the recipient is in a country where they have no banking relationships, the best way to send money is either through a wire transfer or by sending a prepaid debit card.  Wire transfers can be costly, but they are generally an effective option.

An even better option, however, is to send a prepaid debit card that is received within a couple of days and can be used over and over again.  This is just as easy to set up as a wire transfer and it will make future money transfers possible with just a few clicks of the mouse.  This is a secure way to send money, as the only person who receives the PIN number is the person sending the money.

There are limits to the amounts that can be sent through these online services, but the costs are generally low and they are easy to use, even for someone that hasn’t sent money anywhere before.  Thanks to technology, sending money is easier and faster today than ever before.