Whether you want to pay your employees abroad or manage a money transfer to another country, a remittance is one of the methods available to fulfill your needs. Usually, this option is common among people working overseas when they send payments to help their families. It doesn’t require a bank account, which is one of the reasons for the popularity of remittances when it comes to sending money to friends or family.
This article will cover the basics of a remittance, how it works and how to send one if you want to try it. So to learn more about the option, keep on reading!
What is a remittance?
If international money transfers are part of your daily life — as an entrepreneur or a traveler — you might be familiar with the term. However, maybe the concept and how it works are still uncharted territory. So let’s start exploring!
‘Remit’ from ‘remittance’ means ‘to send back. This kind of transaction is common among migrant workers whenever they want to transfer a percentage of their payments to friends and family. According to the Migration Data Portal, it represents the money or goods they send back to families and friends in their home countries.
So a remittance is a way of sending money with a destination in mind, usually overseas, for business or personal purposes. In a few words, it’s a monetary transfer from one country to another between two sides. It can be money to provide financial support to your family while you work abroad, a wedding gift to a friend, or a payment to an employee that contributes to your company remotely.
Despite the popularity among migrants, anyone can send a remittance. There are different ways to manage — from checks to wire transfers. The choice depends on circumstances, such as payment preferences, costs (taxes according to each country’s rules), and time to complete a transaction.
Remittance vs Bank transfer
What is the difference between a remittance and a bank transfer? Both look the same, but each one has some particularities. While a bank transfer requires two bank accounts to make a transfer possible, a remittance involves many sources. You can use a bank account, checks, prepaid cards, or wire transfers to manage an international transaction.
How to send a remittance?
As a method available through many possibilities, it’s up to your personal preferences. Wire transfers and money transfer services are the most common ways, to use a digital platform as a middleman. Some prefer the Electronic Funds Transfer (EFT) instead of sending a remittance. The best option is the one that brings the best cost-effectiveness to your wallet, after all. Here we will cover the main alternatives to sending a remittance.
The most traditional way is related to a bank transfer. It’s possible when you and your beneficiary have access to a bank account. Sometimes, the process requires a third party or partner bank to work as an intermediate between two countries. It can lead to an additional fee to complete the transaction.
Another possibility enables the use of checks. However, the process can be slow, depending upon currency exchange rates and fees. You can send a check without the assistance of an agent as long as the beneficiary has access to a bank account to cash it. This alternative is not so common for B2C transactions but works for B2B sales.
Prepaid cards can also be used to send a remittance to another country. The most common use involves assigning money to family and friends. You need to load the amount you want to transfer on a card. The person, who will receive the money, can use it as a debit card until the funds are gone.
Similar to checks, money orders rely on paper. You can only get it in person in the post office, retail stores, banks, and some financial services. After paying for it, fill out the document, giving details about the transaction (name, address, bank, and account number). It can be used as a deposit or exchanged for cash at a post office.
Wire transfers are made from one bank to another. However, unlike a traditional bank transfer, both accounts don’t need to be linked. This method uses the beneficiary’s account number and the ABA routing number to identify the financial institution from where the money comes. It’s faster for overseas transfers, while bank transfers work better for domestic operations.
Money transfer services
Due to the facilities, digital platforms are gaining popularity when it comes to sending and receiving money abroad. Money transfer services offer a multi-currency account where you can add funds using multiple currencies. For instance, you send a payment to your employees in Brazil in USD, while they receive it in BRL.
Many are reasons to send an international remittance. Whether you want to offer financial support to your family or pay your employees overseas, multiple options make it easy. Money transfer services like Husky provide a convenient alternative to reach other countries. In addition, no hidden fees, no delays, and no bureaucracy.
Do you want to send a remittance? Check out all the benefits of relying on Husky before scheduling your next transfer.