What Is Money Remittances

 

What Is Money Remittance?

Money remittance is simply the movement or transfer of money/funds to another party. A popular example would be the transfer of money to another country by immigrants who need to send money home to their families. Remittances are also used for things like university fees, purchasing property overseas, or making an investment in another country.
 

Remittances are a key source of capital for developing countries, helping families support themselves and contributing to economic growth. According to the World Bank projection for 2021, Nigeria would receive about $17.6 billion in remittances as against $17.2 billion which was recorded in 2020. This represents a 2.5% increase in the annual projections for remittances from the Diaspora. These transfers help recipients meet basic needs such as food, clothing, shelter, and education. 
 

Money remittance can be divided into two categories, They include:
 

1. Inward Remittances: Inward remittances refer to the process of receiving money from one's relatives/friends/employer staying abroad. For example, receiving money from family or relatives in Europe, while you’re living in Ghana.
    
2. Outward Remittances: Outward remittances refer to the process of transferring funds from Ghana to another country through a bank, fintech platform, or an MTO. The purpose could be for anything like education, medical expenses, and travel.

 

Types of Money Remittance

Money remittances come in all shapes and sizes. Below are some of the most common money transfer options for your convenience. They include:

 

Wire Transfers

A wire transfer is an electronic transfer of money from one bank account to another. Wire transfers can be sent domestically or internationally, and can be done in person at a bank branch, or online through your bank's website. Domestic wire transfers usually arrive within two business days; international wire transfers can take up to seven business days to process. 
 

This is still the most popular way to remit money through traditional banks. They come with varying transaction charges and due process, depending on the sending or receiving bank, and the currency, or country of your choice. 

 

Bank Draft

A bank draft, is similar to a bank cheque, except that it can be cashed in another bank other than the issuing bank. You can use a bank draft to send money from your account to a business partner, friends, and family who do not have an account with your bank. 

 

However, bank drafts require more paperwork than wire transfers.  you'll need information about the receiver's identity and address, and generally, they take longer durations than wire transfers do - at least 5 business days - which could also come with higher transfer charges, depending on the paying bank. 

 

Internet Money Transfer

If you're looking for something easier, faster, and cheaper, an internet money transfer offers a convenience that's hard to beat. Internet money transfer services allow you to send money to anyone and anywhere, and at anytime you wish.
 

All you need is a Remittance service provider, an internet-enabled device, and a working internet. You can easily set up a transfer online and the recipient can receive or withdraw the money in minutes, hours, or at most, a day. This type of remittance is mostly obtained with cross-border fintech solutions. Some platforms can even give you access to track your transactions and payments in real-time. Which makes it even better. 

 

Money Orders

A money order is a prepaid document that allows you to send a fixed amount of money from one party to another through the mail. Money orders are used to pay for purchases and other transactions, but unlike bank cheques, they can be purchased with cash at various locations and mailed to the receiving party for payment purposes. 
 

With a fintech solution, traditional banking, or MTOs, money remittance is a fast and efficient way to transfer funds from one country or currency to another. However, if you dread rigorous paperwork, bank queues, high charges, and long protocols, then you should work with a cross-border fintech solution. 

 

So, How Does It Work?

To send money through a money transfer service, you must first register with a service provider. This usually requires proof of identity and address, such as a driver's license or passport.

 

 

You can then initiate a transaction via your mobile or desktop device, or through a mobile money agent. You will need to provide the account number and personal details of your recipient, then pay with cash, debit card, or credit card.
 

With that said, let’s assume you’ve decided to move your money with a fintech platform; say, Transfy - for example. And you want to know how to transfer money from Nigeria to Ghana. So this is how Transfy works.