September 24, 2024

What is a Remittance Payment? Definition & How to Send One

Remittance payments are cash workers send back home to loved ones while working abroad. And for many people across the globe, they’re a lifeline.

Even if the individual payments are relatively small, they can add up to a lot. In fact, they can be life-changing, especially for folks in small and developing nations.

Here, we’ll explain how remittance payments work and show you how to send one yourself.

What is a remittance payment?

Picture this: You move abroad to work hard and earn a living in a new country.

You want to help your loved ones back home, so you plan to send them some of your hard-earned pay at the end of each pay period. But how? Remittance payments.

You can use a remittance service, like a digital platform or local bank, to transfer the money to your family. These services ensure the cash gets from your hands to your family’s pockets safely and quickly. Once the transfer is done, the recipient can withdraw the money from a local bank or pick it up at a remittance services center.

It’s a great way to share the financial love across borders, allowing people to support their families and loved ones no matter where they are in the world. Whether the money is used for school, healthcare, or simply making ends meet, remittance transfers keep monetary support flowing between countries and help strengthen economies worldwide.

How to send a remittance payment

Sending a remittance payment may sound complex, but it’s actually pretty straightforward. Here’s a simplified rundown of the process:

1. Choose a provider

First, you need to select a reliable remittance service provider. This could be a bank, a dedicated remittance company, or an online payment platform.

2. Provide details

You’ll need to give essential information about the recipient, including their name, contact details, and destination country. This ensures the money goes to the right place.

3. Submit funds

Depending on the provider, you can fund the remittance payment through various methods, like bank transfers, credit or debit cards, or cash deposits at specific locations.

4. Confirm exchange rate and fees

Before finalizing the transaction, make sure you’re aware of the exchange rate being applied and any associated fees. This transparency helps you understand the total cost of sending the remittance.

5. Track the transfer

Many remittance providers offer tracking services so you can monitor the progress of your payment. Knowing when your money reaches its destination provides peace of mind.

6. Notify the recipient

Once the payment has been successfully transferred, it’s time to let the recipient know money is on the way. They’ll need to follow the instructions provided by the remittance service to collect the funds.

Bank remittances vs. bank transfers: What’s the difference?

Bank remittances and bank transfers might seem like two peas in a pod, but a subtle difference sets them apart.

A bank remittance is specifically geared toward international money transfers, usually involving people sending funds across borders to their families or loved ones. These remittance services are tailored to make the process smooth and hassle-free, making sure the money reaches its destination swiftly and securely. It’s like the international cousin of a bank transfer, designed to cater to the unique needs of international transactions.

On the other hand, a bank transfer is a broader term that refers to various money-moving scenarios. It can include local transfers between accounts within the same bank or transferring money between accounts at different financial institutions. Bank transfers cover many transactions beyond international remittances, making them an option for a variety of financial needs.

So, in short, they both involve moving money, but a bank remittance is a specialized version of a bank transfer that makes sending funds abroad easier.

5 common payment methods for making a remittance

There’s a range of convenient options for transferring money across borders. When selecting a payment method, consider factors like the speed of transfer, exchange rates, fees, and the convenience of the recipient accessing the funds. Also, choose a reputable provider to ensure the security and successful delivery of your remittance payment.

Here are some standard payment methods to consider:

Bank transfer

Using your bank to transfer funds is a time-tested and secure approach. You provide the recipient’s bank details, and the money is electronically transferred to their account. It’s a reliable choice, but fees and exchange rates vary.

Online remittance platforms

Specific online platforms are designed for sending remittances. These platforms often boast competitive exchange rates and lower fees compared to banks. They’re user-friendly and offer a streamlined process.

Mobile wallets

Mobile wallets have recently become more popular, especially in regions with limited traditional banking infrastructure. You can transfer funds directly to the recipient’s mobile wallet, which they can access through their smartphone. All the remittance information is exchanged electronically.

Money transfer operators (MTOs)

MTOs are physical locations where you can send money internationally. Examples include Western Union and MoneyGram. They’re widely available and offer options for both online and in-person transactions.

Cryptocurrencies

Some remittance services now allow transfers using cryptocurrencies like Bitcoin. This option offers potential benefits, like faster transactions and lower fees, but you should consider the recipient’s familiarity with cryptocurrencies before sending.

Prepaid debit cards

Certain services let you load funds onto a prepaid debit card the recipient can use. This provides them with the flexibility to withdraw cash or make purchases at their pace.

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Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.

Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.

1. Subject to your available earnings, Daily Max and Pay Period Max. EarnIn does not charge interest on Cash Outs. EarnIn does not charge hidden fees for use of its services. Restrictions and/or third-party fees may apply. For more info visit earnIn.com/TOS.