Money can be defined as a standard mode of payment given or received in exchange for goods or services. Although money has changed shapes with time, its fundamental use and value in trade and commerce is still considered critical, and so is the objective behind its transfer across the world. Globalisaton initiated a rise in immigration for commerce and livelihood. With it money transfer activity also was on the rise. With time, technology advanced and new ways of transferring money came into vogue and remittance segment prospered further.
Various organisations ventured to offer fund transfer services for individuals as well as corporate companies. These include banks, postal departments and non-banking financial organisations like remittance and exchange houses.
The types of money transfer include:
Money Transfer through Postal Services:
This is perhaps the oldest form of organised money transfer system invented by man. It is popularly known as the Money Order. In this cash is given over the counter in exchange of a receipt. Money is then transferred by the postal department to an individual or institute as the case may be. The receiver gets the amount in hard cash.
Bank to Bank fund Transfer:
This type of transfer is popular as it is considered as one of the safest modes of money transfer. It doesn’t involve hard cash as the sender only gives an instruction to the bank in which he/she has an account to transfer a certain sum of money to another bank account, which could belong to another individual or an organisation. The money transfer then happens between banks, with no threat to the cash. As the details of both parties are known and the transaction does have an audit trail, it is the most acceptable way of money transfer. Advancement in technology and introduction of card and electronic medium has made the money transfer process faster and convenient.
Electronic fund Transfer:
Electronic Funds Transfer (EFT), also known as Wire Transfer, is a faster way of sending money from one bank account to another. And there are different types of electronic fund transfer, which include:
1) Card based fund Transfer
Money is transferred from one credit card to another of the same service provider, generally across countries. Eg: VISA to VISA or MasterCard to MasterCard. The money is transferred within minutes and the receiver can use it for various reasons like paying for purchases, withdrawing cash from ATMs, paying bills etc.
2) Instant Money Transfer
Instant Money Transfer, as the name says, is a form of money transfer where the time taken for the fund transfer is very critical. Money is transferred fast and the receiver can collect cash within minutes of sending from across countries. Money can be instantly credited to bank accounts and also delivered as cash at any agent in another country.
The receiver can then visit the agent and collect the cash sent, immediately. In times of urgent need it is the best way to send money. Some banking and non-banking institutions offer this service. Popular service providers include Xpress Money, Western Union, Moneygram etc.
3) Online fund Transfer
When money is transferred using internet or mobile phone then it is called online fund transfer.
Money transfer through Internet:
Banking and some non-banking financial institutions offer money transfer facility through internet. Money can be transferred easily using internet from anywhere, be it office or home or even a coffee shop. All one needs is a computer and an internet connection. Money can be transferred to bank accounts or can even be delivered as cash through instant money transfer services, which the receiver can then collect from the nearest agent. Online money transfer services follow highly secure and encrypted modes of information transfer, hence it is generally considered safe.
Money transfer through Mobile Phone:
Mobile Money Transfer (MMT) is a service, which enables transfer of money using a mobile phone. Many banks and non-banking financial institutions offer this unique service because of the convenience it brings to their customers. All one needs to have is a smart phone with GPRS facility. Money is loaded into the mobile phone, which then becomes an e-wallet or an m-wallet. The money then is transferred to another bank account easily using mobile phone. Since mobile phone is a necessity today, MMT is catching up fast. With multiple layers of authentication and high-end encryption of messages, it is considered a safe method to transfer funds.