MONEY TRANSFER SYSTEMS NOTES

What is a money transfer?

A money transfer is when you transfer money from your credit card and pay it into your bank or building society account. It will form part of your credit card balance and is subject to repayments as part of your monthly statement balance.

This service is available on some credit cards and is usually quite simple to arrange. Once the money has reached your account you can use it to pay for goods or services, pay off higher interest credit where appropriate, or unexpected bills (for instance, a broken boiler). You’ll usually be charged a money transfer fee on any transfers you make (usually a percentage of the transfer value).

What is remittance?

The term ‘remittance’ derives from the word ‘remit’, which means ‘to send back’. Remittance refers to an amount of money transferred or sent from one party to another, usually overseas.

Remittances can be personal money transfers made to family and friends, as well as business payments.

Today, more remittances are being sent than ever before, and there are two key factors driving this increase:

  • Migration – More people are now choosing to live and work Therefore, many remittances are made by people working and living abroad to family back home.
  • Globally connected businesses – The internet makes it easier than ever for businesses to connect and collaborate with suppliers, clients and employees all around the This has resulted in a sharp increase in overseas remittances paying for business invoices.

How to send a remittance

If you need to pay a remittance, there are several different methods for doing so, including:

·         Wire transfer

  • Cash pick up

·         Mobile money

  • Electronic payment

·         Bank draft

  • Cheque

·         Post

 The cost you need to pay depends on the provider and service that you choose. Generally, banks charge high fees and provide poor exchange rates on remittances.

Offline companies like Western Union or MoneyGram used to be the big player in the past. Recently, people shifted towards online providers like as they offer the best value for money.

At World Remit we make sending remittances online simple, secure and convenient. Our low fees and fair exchange rates are shown upfront; we promise, no hidden fees.

Remittance jargon buster

Ready to send a remittance? Use our handy jargon buster to demystify remittance jargon and simplify the process.

3D Authentication

If your card uses 3D secure, a window will appear on the screen when you are making an online payment asking you to enter an additional security code before the payment can be put through. This extra layer of security is designed by your card provider and helps to protect you from credit and debit card fraud.

ABA Number

Also known as a bank routing number, an ABA number is a nine-digit code used to identify banks in the USA.

ACH

ACH (automated clearing house) payments are made through the USA’s ACH network. It’s a network that provides bank transfers between bank accounts in the USA.

AML

AML (anti-money laundering) processes are used by financial institutions to detect and

prevent illegal money laundering activities used by criminals to disguise money they have gained illegally as lawful income.

Card fraud

When goods are purchased, or funds are taken from an individual’s credit or debit card without their permission. Credit and debit card fraud can happen when an individual’s card is lost or stolen, if their card is cloned or copied, or if their card details fall into the wrong hands.

Cash advance

A short-term loan offered by banks and other financial institutions. Cash advances often come with high fees and interest rates.

Cashier’s cheque

A cheque written and guaranteed by a financial institution, usually a bank. Cashier’s cheques are popularly used to make large payments where extra security and protection may be required as they guarantee that the funds will be available when the cheque is cashed.

Chargeback

A chargeback is a way of disputing a card transaction. If a chargeback is successful it will void the card transaction and the bank will remove the funds from the merchant’s account and credit them back onto the cardholder’s account.

Clearing

Clearing refers to the processes and procedures that take place between requesting to wire money and the point when the transaction is complete.

Electronic wallet

An electronic wallet (sometimes referred to as a digital wallet, mobile wallet, or eWallet) is a virtual system that stores payment cards or money on a mobile device. An electronic wallet can be used to make payments to participating merchants quickly and easily using a mobile device.

Exchange rate

The amount that one currency is worth when compared to another currency. Failed transaction

A transaction that has been declined by your bank or card issuer. FCA

The United Kingdom’s financial regulatory body. The FCA (Financial Conduct Authority) is an independent body that protects consumers and promotes healthy competition between the UK’s financial service providers.

Financial Institution

A company that provides financial services. Examples of financial institutions include banks, building societies, mortgage companies, credit unions, investment banks, insurance companies, pension funds, and money transfer services.

Forex

Forex (Foreign exchange market) is an electronic network of banks, brokers, institutions and traders exchanging foreign currencies.

IBAN

IBAN stands for International Bank Account Number. It is an internationally recognized way for banks around the world to identify an individual’s country, bank, and account when money is being sent overseas. An IBAN comprises up to 34 letters and numbers and can usually be found on your online banking or by contacting your bank.

Interchange fee

Every time a merchant takes a credit or debit card payment from a customer, they are charged an interchange fee by the card network.

KYC

A KYC (Know Your Customer) process is carried out by financial companies to verify the identity of their customers to prevent their services being used for money laundering and other illegal activities.

Limit

Most banks and money transfer services have rules in place that limit the amount of money that you can send in a single transfer or in a certain time period. Limits are usually in place to comply with the laws and regulations of the countries you are sending money from and to.

Local agent

A small, local business that has partnered with a money transfer provider like World Remit to offer international money transfer services in-store.

Money order

A paper document that can be used as a form of guaranteed payment. A money order can be bought or cashed at a variety of locations including banks, post offices, credit unions and some retail stores.

Proof of deposit

A verification or an official confirmation proving that funds were credited do a bank account or received by a recipient.

Peer to Peer service

A platform, like a website or money transfer app, that allows individuals to send money online to each other directly without a bank or foreign exchange provider being involved. World Remit is a peer to peer service.

Pre-authorization

Preauthorization is a temporary hold of funds on a debit or credit card for a vendor to capture it. Funds are not taken out of the bank account.

Prepaid card

A card that you deposit funds onto and then use in-store or online to make purchases as you would with a debit or credit card. Prepaid cards are a safer alternative to carrying cash and you do not need a bank account to get one. With World Remit, you can pay with a prepaid card as long as it’s issued by Visa, MasterCard or Maestro.

Real-time payments

Real-time payments are electronic payments that can be made 24/7 and are available to the payee immediately, or within seconds.

Recall

Trying to recall money is trying to reverse a completed transaction back to the sender. Funds have to be retrieved back via the same channels. This process is lengthy and not always guaranteed.

Recipient

The individual or business to whom the money is being sent.

Sender

The individual or business who is sending the money. Wire transfer

An electronic money transfer sent through a network of banks and money transfer providers around the world.

How can I transfer money overseas from my bank account?

 There are several ways you can use your bank account to fund an overseas money transfer, including:

  • Bank Visit your bank or use its online or mobile banking portal to send an international transfer. You need your recipient’s name and bank account details.
  • Online money transfers Send money overseas using an online money transfer company like Transfer Wise or OFX that let your fund transactions through your bank account.
  • Use your PayPal account to fund your transfer to more than 100 destinations around the world.

Which transfer option could I choose?

The right transfer option for you will depend on your circumstances and other factors, including where you’re sending the money and the urgency of the transfer.

  • Bank transfers. Convenience is its main benefit. You don’t have to register for any new accounts and you can send from your mobile banking However, banks charge higher fees and offer lower exchange rates.
  • International bank An alternative for sending a check, a bank draft converts your money to the currency you want, and sends it to the recipient. However, you’ll pay a transfer fee. And since this is done through the mail, it can take four to six weeks to complete the transaction.
  • Online money transfers You’ll find competitive exchange rates and lower fees than banks and quicker transfer times. However, some companies impose minimum and maximum transfer amounts. And some limit the countries they send to.
  • MoneyGram’s online bank-to-bank transfer service offers fast and secure transfers to overseas bank accounts. The downside is that its exchange rates are not as good as online transfer companies.
  • This online transfer service provides access to more than 100 destinations worldwide. However, the more money you send, the more you’ll pay.

How do I send an international transfer straight from my bank account?

To send money straight from your bank account to an overseas bank account is easy through online banking. The exact process varies depending on the financial institution you are sending the money from, but generally you’ll complete the following steps:

Step by step guide

  1. Log in to your Internet banking
  2. Click on the link to make a
  3. Click the relevant link to create a new payee/recipient.
  4. Enter the country where you want to send the
  5. Enter the details of your recipient’s Depending on the country you are transferring money to, you may have to enter an IBAN (International Bank Account Number) or SWIFT/BIC number.
  6. Enter your beneficiary’s account name and
  7. Select the account you will be transferring the funds
  8. Provide full details of your transaction, including the amount and currency you’re You can also specify whether this is a one-off transfer or whether you are scheduling a recurring transfer.
  9. Review the transfer details and submit your transaction

Once you’ve submitted your transfer request, it usually takes between two and five business days for the transaction to be completed.

What is the cheapest way to send money overseas from my bank account?

Sending money online is usually cheapest with an online transfer specialist. These foreign exchange providers trade in large volumes of foreign currency, and because they’re online businesses they have fewer overhead costs than banks and other bricks- and-mortar businesses. As a result, online transfer companies can offer better exchange rates than banks and other transfer providers. Compare providers to see just how much more value for money you can get.

How do I compare international money transfer providers?

There are several factors to consider when choosing a company to handle your next international money transfer, including:

  • Compare exchange The better the exchange rate, the better value for money you can get on a transfer. Search for the company that offers consistently competitive exchange rates, but remember that there may also be higher transfer fees attached.
  • Check transaction Fees can range from $0 up to $60, so it pays to compare fees across providers. Some online transfer companies also waive their fees when you send large amounts, sometime as high as $10,000.
  • A range of transfer destinations. Check to see whether the country you want to transfer your money to is supported by the transfer provider you select, as well as whether you can send money in the currency you
  • Processing Cash transfers are usually quicker than transferring with a bank account.
  • Transfer Some providers offer one-off transfers only, others allow you to place forward contracts and limit orders to lock in the exchange rate you want and get better value for money.
  • Reliable customer If you ever have a problem with a transfer or need help with your transfer, look for a service that offers customer support that works for you — either through its FAQs, phone, email or online chat.

Main instruments used in making remittances

  1. Foreign Bills of Exchange:

 A foreign bill of exchange is customary form of making international payments.

It is a written request or an order from the drawer to the drawee to pay a certain sum of money either to himself or to the payee as ordered by the drawer on demand or some time hence. A foreign bill of exchange is generally used with the added formality of a letter of credit.

Its working is very simple. The creditors (exporters) of one country draw bills on their debtors (importers) in other countries and have them duly accepted by them. These bills they then sell to the debtors of their own country who desire to send money abroad.

The debtors (importers) send these bills to their creditors in other countries who collect them from the debtors of their own country (who had originally accepted the bills). The following illustration will clarify the point.

Suppose trader A in Bombay imports machinery from trader В in New York and that another businessman С in New York owes the same amount of money to merchant D in Bombay for tea imported by him. In this case, B, the American creditor, will draw a bill for the amount due to him, which A, the Indian debtor, will have to accept. В has, therefore, the right to receive money in India in the form of a bill drawn.

This right he can sell to C, the American debtor, who has to pay money in India. С will send his bill to D his creditor, who through this bank will collect the money from A. However, the mechanism of the bills of exchange makes it necessary that every payment in external exchange in one direction is matched by an equal payment in the other.

2.   Bank Drafts and Telegraphic Transfers:

 A bank draft is an order of a bank to its branch or another bank to pay the bearer on demand a specified amount out of its deposit account. The debtor in an international transaction can get such a bank draft from his bank and send it to his creditor who will collect the sum from the branch or bank of his own country.

3.   Telegraphic Transfer:

It is a telegraphic order by a bank to its correspondent bank abroad to pay a certain sum to a certain person on account out of its deposit account. It is a quicker mode of payment.

4.   Letter of Credit:

A letter of credit is an instrument authorizing a person to draw a bill or a cheque for a specified sum on the issuing bank at a stipulated time. The letter of credit makes the exporter willing to ship the goods to the importer, for the liability for payment is assumed by the bank issuing the letter of credit.

Such letters of credit are also issued to travelers going abroad. Likewise, travelers’ cheques are also issued by the bank, which can be cashed at a branch or correspondent of the bank in a foreign country.

In addition to these means, international payments may also be effected by the use of gold, home currency, personal cheques or international money orders.

Collection of Local and Out Station Cheques

 1. Collection of Local Cheques:

All cheques and other negotiable instruments payable locally are presented through the clearing system prevailing at the center. Cheques deposited at the counters and in collection boxes within the branch premises before the specified cut-off time are normally presented for clearing on the same day.

All the customers’ accounts are credited on the day of clearing settlement (normally next day) but withdrawals are allowed after reckoning the cheque return schedule of the clearing house. Where no clearing house exists local cheques are presented on drawee banks across the counter and proceeds thereof are credited, on realization.

2.       Collection of Out Station Cheques:

 Cheques drawn on other Banks at outstation centers in India are normally collected through local bank’s branches at these centers. Where the bank does not have a branch of its own the cheques are directly sent for collection to the drawee bank or collected through a correspondent bank

National Clearing Center:

In case center of National Clearing Services of Reserve Bank of India exist at the same center, most of the banks collect outstation cheques through National Clearing.

Outstation Cheques Drawn On Banks Own Branches:

Outstation cheques drawn on Banks own branches are collected using inter-branch arrangements in vogue. The branches, which are connected through a centralized processing arrangement and are offering ANYWHERE BANKING services to its customers, provide credit to the accounts of its customer on the same day through the centralized banking system.

Instant Credit of Outstation Cheques:

Branches will, of their own, afford immediate credit of outstation cheques upto and inclusive of Rs.15000 /-tendered for collection by customers for satisfactorily conducted accounts. (The amount of Rs. 15000/- may differ from bank to bank).

For the purpose of this policy, a satisfactorily conducted account shall be the one:

  1. Opened at least six months earlier and complying with KYC
  2. Account is neither dormant nor
  3. Where bank has not noticed any irregular dealings/suspicious transactions in the last 6
  4. Where the bank has not experienced any difficulty in recovery of any amount advanced in the past including cheques returned after giving
  5. Where no adverse features attached to the account/account holders has been brought to the notice of the  facility will be available to all individual deposit account holders without making a distinction about their accounts i.e., Savings Bank/Current Account etc. It will be available at all branches /extension
  6. Normal collection and out of pocket charges are to be recovered for outstation However, no “exchange” will be charged.
  7. In case of outstation cheques, the facility will be restricted to one or more cheques

for aggregate amount not exceeding Rs.15000/ at a time ensuring inter-alia that the liability on account of outstanding of cheques purchased does not exceed Rs. 15000/ at any time. The limit of Rs. 15000/- may differ from bank to bank. Please contact your bank to know this limit.

Bank manager may allow instant Credit for local cheques also subject to charging of some

Cheques Payable in Foreign Countries:

Cheques payable in foreign country where the bank has branch operations/banking operations through a representative, subsidiary etc., are collected through that office. Sometime services of corresponding banks are also utilized at these centers where the bank has no presence.

In case bank has neither a corresponding bank nor its own presence, in such cases the cheques are sent directly to the drawee bank with instructions to credit proceeds to the respective NASTRO ACCOUNT of the bank maintained with one of the corresponding banks.

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