Money Transfer: Banks versus Online Remittance Companies

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As the world is advancing towards cashless ideology, money transfer is becoming more prominent. When an individual considers about money transfer, a bank seems an ideal option. But due to development in financial technology, there is an emergence of online remittance companies. As a result, nowadays, there is a stiff competition between banks and online remittance companies for money transfer processes.

Remittance service provider’s aim at solving the issues associated with money transfer via banks. While at the same time, the bank remains the most trustworthy operator in the process of money transfer. Here, we list the factors that affect an individual’s preference while making money transfer.

Transactions Costs & Exchange Rates

Whenever you opt for money transfer, the transaction fee is liable. This is mandatory for both the banks and remittance companies. However, the banks charge more than the remittance companies. Some of the banks have fixed transaction charge while some of them charge according to the amount that needs to be transferred. Remittance companies, generally, charge as the percentage of the amount. In terms of transaction costs, remittance companies triumph over the banks.

When transferring overseas, the bank will charge the transaction charge as well as deduct the amount according to the exchange rate. In this case, remittance companies can be considered because they will provide lower exchange rates for international money transfer. So, considering an example of a family in Australia, if they were to transfer money to Philippines, the best option would be to consider a remittance company that provides low exchange rates for the transfer.

Money Transfer

Transfer Time

Transfer time is almost similar in both the cases. But if you consider banks for money transfer, it may take longer for NEFT transactions and for transactions via bank counters. Otherwise, instant transfer provision is available for other money transfer facilities.

Online remittance companies also provide facilities for instant online money transfer. All the payment options facilitate instant money transfer. Talking about international money transfer, online remittance companies provide faster services than banks. Some of the service providers, claim to facilitate international transactions within four hours.

Formalities

The government rules and regulations are different for banks and online remittance companies. Hence, the transaction proceedings vary considerably. In most of the cases, if you want to transfer money via banks, you need to have an account in the bank. Without this, you cannot do the transactions.

In the case of remittance service providers, it is not necessary to create an account. However, you need to provide valid documents required for money transfer operations.

International Operations

International transactions are increasing every worker/student. From the example mentioned above, workers living in Australia transfer money to Philippines wherein the Filipino student living in Australia receives money from his/her parents living in Philippines. Certain banks provide exceptional services for international money transfer. This is because they have well-established international operations. At the same time, most of the banks have restricted operations regarding international money transfer.

Online remittance companies are a pioneer in international money transfer. They have a well-established network all over the world. Moreover, their international transaction costs are lower than the banks. These factors instigate users to opt for online remittance entities.

Client Satisfaction and Support

When it comes to redressing customer grievances, remittance companies score better than the banks. The remittance companies nominate professionals to look into the matters of regular clients or the ones who transfer large amounts of money. The company representatives are always available for solving any queries or problems.

The banks, generally, don’t provide customer support up to the expectations of the clients. They follow a systematic approach while accomplishing the money transfer task. They also have professionals for customer support. But, they are not easily accessible. When compared to online remittance companies, banks lag behind in terms of client satisfaction.

The in-depth analysis between banks and online remittance companies clearly indicates that the latter are a better option for money transfer operations. With the development in financial technology and better business prospects in money transfer operations, customers can avail services of online remittance companies. This does not mean that banks are a bad alternative. All you need to do is some research before finalizing your money transfer agent.

 

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