How money transfers work
Being able to transfer funds from your account to another person instantly is a convenience that most people enjoy nowadays. With the help of online payment solutions, sending out wire transfers are made even easier.
But how does it work exactly? Here are a few answers to clear things up:
What is a money transfer?
A money transfer is basically the electronic way of sending funds from one account to another. There are several ways to do this such as bank transfers, money transfer services, and using online payment solutions.
Bank transfers and money transfer services
Sending money through your bank or through money transfer services are two of the most common ways to make a money transfer transaction. These are also the most traditional types when it comes to wire transfers.
Traditional method
The way a bank transfer works is that the money that you wish to send gets debited from your account and then goes to a “Central Bank” before it gets put into the account of the person you wish to send it to. This process is when you wish to send money to a person’s account from a different bank. If it is in the same bank, then the money just gets debited from your account then the bank updates their records and reflects the money onto the account you send the money to.
Money is transferred
With money transfer services, once you give the money over to them through their retail store, and the person you are sending the money to will be able to walk into another branch near them to get the money using a tracking number. However, if you send the funds through money transfer services using your credit card or bank account, it may take a few more days.
Electronic funds transfer
When the old-fashioned method of wiring money gets fused with online funds transfers, we have what is known as Electronic Funds Transfer (EFT). In more simple terms, it is the electronic method of moving funds from one bank account to another. The money does not move, but the data gets transferred, to debit the account of the sender and credit the account of the recipient. This is what happens with both of these methods. The money you put in does not physically leave the bank or store but gets moved electronically.
These payment methods have their own set of fees that they may charge you with each transaction that you make. The rates of the charges will depend on your bank or the money transfer service that you will be using.
Online payment solutions
Another way of sending money transfers is through the use of online payment solutions. This process enables you to send the funds needed online through secure transactions and have it done instantly.
The way online payment services work is through an account or digital wallet. You place funds into your online account through your bank or debit/credit card. From there, you can send money to another person’s account instantaneously.
This method is more affordable than the other methods of money transfers since their fees are not made per transaction. Another great thing about using online payment services is that you won’t have to go through the hassle of waiting several days for your money transfer to be sent to the other person unlike using the traditional methods.