According to the World Bank, in 2017, individuals living in the U.S sent a total of $68 billion to residents of low and middle-income countries. That puts the U.S at the top of the list when it comes to crucial remittances to these countries. A considerable part of this money came from migrants employed in the U.S to their family members back home.
In 2021, the World Bank anticipates that remittances from the U.S to less developed countries will go up to $550 billion. However, there is a hitch. These crucial transfers attract a transaction cost of about 7%, meaning close to $38.5 billion goes to fees which could be in the form of unfavorable exchange rates and explicit fees.
Let’s say, for instance, you want to send money for your family ($1000). You will incur a transaction fee of $70–an amount that your family could put to better use. Another problem with the money transfer system in the U.S is its slow nature. There have been efforts to create a faster payment system, but the idea is progressing slowly.
Fortunately for you, some companies have made it their goal to develop platforms to help make money transfers quicker and cheaper. You should, however, remember that the platforms may not work for everyone as each of them meets different needs. The type of platform you choose will depend on where you are sending money and the bank accounts you and the recipients have.
Based on accessibility, delivery time, and fees, this article outlines some of the most effective platforms to use for money transfers.
Best for Domestic Transfers: PayPal
If you haven’t already created a PayPal account, it is time to do so. Its accessibility and availability of a wide range of payment methods make it superior to other platforms like Zelle and Venmo.
With PayPal, your recipient will receive money instantly into their PayPal account, and within a day, the funds will go to their bank account. Besides, if the recipient doesn’t wish to link their bank account, they can use their PayPal balance. This is possible because 75% of online merchants accept the platform as a payment method. Also, compared to other platforms, PayPal has more registered users.
Because of the hefty fees associated with PayPal international transfers, it would be best if you restricted your transfers within the U.S. The platform also allows for large transfers with no limits to the amount you can send.
How does the service work? There is a wide range of payment methods that you can use, and the recipient has to have a PayPal account. Once you have created a PayPal account, you can make money transfers to friends or family via the app or web browser.
Best for International Cash Transfers: WorldRemit
When picking international money transfer services, you need to pay attention to the fees and exchange rates charged. The amount varies for each service.
Low cash transfer fees and better exchange rates are the hallmarks of WorldRemit. With this platform, you can now send money to people in over 145 countries.
Best for Domestic Bank Transfers: Zelle
Zelle is the perfect option when it comes to peer-to-peer bank account transfers. While wire transfers from one bank to another can encounter delays, this isn’t the same with Zelle as it allows for fast completion of transfers. With over 5,400 financial institutions registered on the Zelle Network, fast and fee-free bank transfers are now available to a significant number of individuals.
Best for Travelers: Transferwise
If you are an adventurer that doesn’t know which country they will wake up in next, you’ll see that money management across borders could prove difficult. Repeated cash exchange into foreign exchange could cost you a lot in terms of fees. This is where Transferwise comes in.
Transferwise is a company that focuses on borderless banking and makes managing money in different currencies easy. With the platform, you can also do regular money transfers without the hassle of setting up a borderless bank account.
Best for Money Transfers From Developed to Developing Countries: Remitly
If you wish to send money to an overseas bank account and want the money to be in the destination country’s currency, Remitly is your to-go platform. Besides being cost-efficient, the platform promises timely delivery. You can use the platform for personal and business transfers.
Remitly’s significant advantage is its express service that only charges $3.99. In addition, your funds will reach the recipient in a matter of minutes, not to mention home delivery services that take only two days at most.
It is challenging to navigate the mushy waters of money transfers to the developing world as not every country has money transfer services. And even if they were available, some of them charge unbelievably high exchange rates. However, the above platforms make things easier.
What are your thoughts? Please share in the comments below. I really would love to know.
Until next time, shine amongst the stars!
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