When transferring funds to a third party, you have two options: a bank transfer or a bank remittance.
Both methods enable you to perform a wire transfer of the funds, as well as also establish a good payment trail for tax purposes; however, they operate differently, which will ultimately determine the best process for you.
What is the Difference Between a Bank Remittance and a Bank Transfer?
About Bank Remittances
A bank remittance typically refers to the money transferred to one bank account or entity from another as payment for a product or service. However, it can also be a personal money transfer made to family and friends as a gift.
When performing a bank remittance, the sender must first fund their account with their homeland’s currency.
And then, once the funds reach the bank in the other entity, the recipient’s bank will use the foreign exchange rate provided by the receiver to convert the funds into their local currency. In most cases, the recipient’s bank will also charge a retail exchange rate to profit from the transaction.
Remittances are most commonly sent as a wire transfer, which can take up to 5 days or longer if transferred overseas; however, they can also be sent via another electronic payment system, check, draft, or mail.
Wire transfers can be quite costly and also include various non-disclosed fees for this type of service, especially when sending money overseas.
The sender will also have to do some research when performing an international transfer to ensure their bank is able to send currency in the local currency of the receiver and that the international bank is also able to receive the funds directly.
About Bank Transfers
A bank transfer, also called a wire transfer, is when you move money between your accounts via online banking, and it can be done both locally and internationally.
When you perform a local bank transfer, payment is run through an intermediary organization before reaching the receiver or international bank to clear the transaction and confirm the transfer of funds for security purposes.
Bank transfers can be performed quickly and with the use of local currency for lower fees.
Difference Between Remittance And Transfer: Key Points
- When it comes to choosing between a bank transfer or a bank remittance, many senders consider timing, the amount of money being sent, and costs to select one over the other.
- A wire transfer can also be done using EFT technology, which enables the transaction to be completed online and usually within just one day; however, it may come at a higher cost. However, it may cost more and also take longer for international transfers.
Ultimately, to send money online using either method can be overwhelming if you are making the transfer to a foreign country; therefore, experts, such as the ones at Western Union, recommend doing plenty of research first to avoid overinflated fees that are common with international money transfers.