"What is the best way to send money abroad?" This is a question that anyone engaged in any form of cross-border transaction often asks. Understanding some basics about bank-to-bank remittances can help you save time and money when sending money abroad. There are so many methods of remitting money that you may feel spoiled for choice or be confused. For most people who undertake remittances of money, it is something that they need to do regularly. Finding one or two of the best ways to remit money can make way for secure and quick payments for a low fee. A step in this direction is knowing how bank-to-bank remittance works, the difference between remittance and transfers, exchange rate negotiations etc.
It is necessary to identify your reasons for making a remittance and how frequently you need to do it. All too often, an online platform turns out to be the smartest way to undertake remittance. Read on to gain a deeper perspective on bank remittances.
What is Bank Remittance?
Bank remittance is the task of sending money from one account to another for payment or personal reasons. It may be a parent sending money to a child abroad. Bank remittance includes transactions such as the payment of bills and invoices. It can be through electronic payment, wire transfers, checks, drafts, or mail.
Bank remittance is more complex than sending money locally, as it involves the exchange of two currencies with the help of intermediaries that charge for the service. While costs involved in small transactions may not hurt as much, in large or frequent transactions, being efficient can help in saving sizable costs.
How does Bank-to-Bank Remittance Work?
Traditionally, in a bank-to-bank remittance, money is sent from the account of the person who made the payment. The money reaches the local bank of the recipient. The bank converts the amount sent by the payer into the location's currency and, after deducting a fee, makes the payment to the recipient. The process can take several days, and the banks try to maximize their profits in processing fees as well as foreign exchange.
Nowadays, through the use of technology, it is possible to cut short the time it takes to send the payment and also the costs. In this system of bank remittance, money is sent through an online platform at the click of a button. It can be one of the cheapest ways to remit money because technology efficiencies reduce costs and make the service cheaper for the users.
Difference Between a Bank Remittance and a Bank Transfer
The following points illustrate the differences and intersections between bank transfers and bank remittances:
- A bank transfer differs from a remittance because the former can just be a transfer of funds from one account of the same person to another.
- A bank transfer can be local or international. Bank remittances refer predominantly to international payments.
- A bank transfer is also popular for making mass payments, such as paying salaries. When undertaken locally, bank transfers have advantages.
- Bank transfers done internationally can be expensive if done traditionally, through intermediary organisations.
- Both bank remittances and bank transfers can benefit from the use of technology platforms that can make payments cheaper and faster.
Impact of Technology on Bank-to-Bank Remittance
The following points will help you understand how technology makes sending money abroad easier:
- The process of remitting money is smoother, with money reaching accounts almost instantaneously or on the same day for most transactions.
- With traditional methods of remitting money, it takes several days for the money to reach its destination.
- Traditional methods of remitting money are usually more time-consuming, as well as more expensive.
- Technology also helps in tracking money that is sent abroad.
- Technology has created choices for users and is enabling them to get much better exchange rates.
- Technology has also reduced the charges that are paid for remittances.
- Banks are partnering with technology platforms to give their customers a better experience.
Key Ways in Which a Technology Platform Helps You Make a Bank Remittance
There are many reasons why fintech is becoming popular in bank remittances. Here are a few reasons given below:
- No repetitive documentation: International transfers involve documentation and going to an offline bank requires you to compile your documents every time you make a transaction. When making a payment through an online platform, documentation is required to be undertaken only once, before the first transaction.
- Cost-effective: Technology has disrupted cost structures in all walks of life. The same goes for international bank transfers. Making a remittance online is one of the cheapest ways to transfer money internationally.
- Avoids human errors: We have to be careful every time we fill out forms manually. An online platform auto-fills most of our details and saves us time as well as reduces the possibilities of human errors to a bare minimum.
- Saves time: Technology platforms reduce the time taken every step of the way and thus provide transfers faster.
- Acceptance: Whether you are doing business across the border, or transferring money for personal reasons, the recipient likely uses technology-enabled methods to accept the remittance.
Bank-to-bank remittances can be made more efficient in terms of time taken and cost incurred. Understanding the process will enable you to find the methods that are best for your purpose.
Overseas wire transfers cost you money because of the intermediation required for foreign currency exchange and other bank charges. Technology has disrupted the time taken as well as the cost incurred in enabling remittances.
Many of those who need to transfer money overseas have found that the best way to do so is through an online platform. While we informally use bank transfers and remittances interchangeably, it can cause some confusion. The purposes of communication should understand the difference between the two.
Can you transfer money from bank to bank internationally?
Yes, you can transfer money from bank to bank internationally. There may be difficulties in transferring money to some underdeveloped countries. Transferring money internationally is a little different than local transfers as it involves intermediaries who enable the exchange of foreign currency.
How long does it take for money to be transferred from bank to bank for international transfers?
It can be transferred on the same business day or even take up to five days. This depends on the method of transfer.
How much money can you transfer between international accounts (in rupees and dollars)?
There is no limit to how much money you can transfer abroad. A large number of high-value transactions take place across the border every day. There is a threshold above which, if you transfer money, you have to provide specific documentation so that the government is informed as per the income tax rules. This limit is currently $14,000. However, with large investments and higher education being routine, there are adequate provisions to transfer any legitimate amount.
Is it safe to transfer money from bank to bank?
Yes, it is generally safe to transfer money from bank to bank. However, online scams and fraud are common, and one must be careful about how they are transferring their money and with whom they share their details. The use of secured platforms is also a must.
There are various methods of transferring money. Every method has a certain safety level. The reputation of the company enabling your transaction is very important to consider while making the transfer.
Why is my international wire transfer taking so long?
An international wire transfer can take longer for the following reasons:
- Bank holidays in either or both countries
- Money is being transferred through intermediary banks, causing a delay
- Improper or incomplete documentation may also delay a transaction. If you are transferring money beyond a certain threshold, you need to provide income tax details.
- Not using a technology platform to transfer money
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