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What are the Different Types of Money Transfer Services?
There are four different types of money transfer services available: wire transfer, bank draft, Internet money transfer, and money orders. All these methods can be used both domestically and internationally. A money transfer service is used to quickly provide funds to both businesses and individuals. They are typically used in situations where a check would take too long, may not be accepted or where the recipient does not have a bank account.
Wire transfers are one of the more popular money transfer services that are used to move funds from one bank account either to another bank account or to a cash office. The person who is sending the money can create a wire transfer from his or her own bank or from a cash office. In order to complete a wire transfer, you need to have the details of the recipient’s bank or their wire transfer code and location code for the cash office where they will pick up the funds.
A bank draft is a type of money transfer service most commonly used for payments to companies in foreign countries. A bank draft is issued by a bank or money transfer company and is cashable at any banking institution. This method of payment is more expensive than other methods, but is preferred by companies and large institutions due to additional security and audit trail features.
Internet money transfer services have increased in popularity as security has improved. Several large companies specialize in this type of service. Funds can be transferred to anyone with an email account in the world and is available in all recognized foreign currencies. Transfers can be created through a third party, or directly from the sender’s bank account.
Third party companies usually provide a free basic account set up, but charge a transaction fee for every transfer of funds to your bank account. In addition, there is a processing delay of between five to seven days to receive the funds in your bank account. If you are going to use this type of service, check the reputation and conflict resolution steps first.
Several specialized firms offer money orders as one of their money transfer services. The sender goes to the cash office and creates a money order for a specific cash office and person to pick up. The recipient is notified by the sender and is responsible for going to the cash office and picking up the funds. A secret password is often used to validate that the correct person is receiving the money order.
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![A money transfer can be done electronically.]()
By: AlterfalterA money transfer can be done electronically. -
![Various types of currency, including US dollars, pounds sterling, and euros.]()
By: Joop HoekVarious types of currency, including US dollars, pounds sterling, and euros. -
![Some credit unions offer reasonable rates for wire transfers of small amounts of money.]()
By: JackFSome credit unions offer reasonable rates for wire transfers of small amounts of money. -
![A mobile phone app might let someone know that money has been transferred into their account.]()
By: Denys PrykhodovA mobile phone app might let someone know that money has been transferred into their account.
Discussion Comments
@KaBoom - I think a lot of people are using online money transfer services these days. Although I do know a few holdouts who refuse to do any financial transaction over the Internet (my grandmother, for one.)
Anyway, I think the fees are the most annoying part of using money transfer services. Sometimes they can get ridiculous! I know my bank charges something like $8 for a money order, while you can get one at the grocery store for $.99! Also, wire transfers can be pricey, and even Internet money transfer companies charge you.
@starrynight - Money orders are a pretty convenient way to handle your money if you make cash. You can get them at most grocery stores and a lot of convenience stores too.
Anyway, I think I use online money transfer services the most frequently out of all the different money transfer services. I pay a lot of my bills online. Usually I go to the website of the company I'm paying and link up my checking account to my account there. Then, when it comes time to pay my bill, I transfer money from my checking account to the company I'm paying.
I used to use money orders to pay my bills pretty frequently. I was waitressing, and it was just easier to take my cash and get the money orders, rather than going to the bank, then writing a check. Plus, you can't overdraft your bank account that way, because you can only buy money orders with the cash you have.
Anyway, I've used money order a lot, but I've never heard of using a secret password to leave someone a money order. Why wouldn't you just mail it to them or give it to them, rather than having them go to an office and get it?
I like the convenience of doing this and also like having a completely separate account. For some reason, it is easier for me to save money this way.
I can also transfer money from the online savings account back into my regular bank account since they are linked together. I don't like to do this very often, as it defeats the whole purpose of setting up a savings account in the first place.
It is easy to see how internet money transfers have become so popular. I think people worried about security for a long time, but now it is a very common practice, and I have never had any problems.
When my son was living in Chicago, he was robbed and all of his identification and money was stolen.
I had to overnight papers to him so he could prove who he was and get identification. I also wired some money from my bank account to his bank account.
The nice thing about using a wire transfer to send money is how quick it is. It would have taken 2-3 days if I had sent him a check in the mail, and he needed money before this.
I also had to send money overseas through a wire transfer when another one of my kids ran out of money. Even though she had her return ticket to fly back, she needed some extra money before it was time for her to return.
@dfoster85 - That is good advice, and it is always good to be reminded of all the different fraudulent ways people have of stealing your money.
I have known more than one person who fell for this type of scheme, and it was a big hassle trying to get their money back.
When I purchase something on the internet, and need to send money online, I will always use a service like Paypal if it is available.
Since my credit card information is never revealed, I feel much safer about completing online transactions this way.
I have also transferred money from my bank account to help out my kids from time to time this way. Although it usually takes 2-3 days, it is very easy to do, and easy to track if you need to.
@seag47 - You can also get a money order at many places of business. Many grocery stores will be able to issue money orders at their customer service department. I have even seen a sign at Wal-Mart for this service.
As long as you have the cash, there are many places that are set up to make out a money order.
There have been many times when I have purchased something from someone I don't know, and they request payment in the form of cash or a money remittance such as a money order.
A money order is basically the same thing as cash, and the recipient knows they are getting good funds.
This is more secure than writing out a personal check. It is much easier for something like this to be fraudulent than a money order.
Something that people need to be aware of is the potential for fraud with money transfer - even if it begins as a money transfer from someone else to *you.*
It can work a few different ways. Maybe someone asks for your account number so that they can transfer you money for something you are selling, but all they really want is your bank account number for their own nefarious purposes.
Other possibilities: You are sent a check, which later turns out to be fraudulent, and asked to wire the money somewhere else. Or you are sent too much money and asked to refund the difference. Never, never, never, conduct a sale or purchase transaction using transfer from someone you don't know. One major money transfer company actually got in big trouble because so many of its transactions were fraudulent, the government thought they should have been more suspicious of their own customers!
I do a lot of freelance work online, and I get paid through an online money transfer service. I have an account with the service, and I can easily transfer my money to my actual bank account.
When I started doing freelance work, I gave my employer my email address. This is what the service uses to identify me and to transfer funds to my account.
The service has all my bank account information, so all I have to do once I receive funds online is click on a button to move the money to my bank account. It shows up in one to three days, so I always check my account summary online to be sure I have the money before I spend any of it!
@shell4life – I didn't know that you could get a money order from the post office! I always thought you had to go to an actual money transfer agency that wires money all the time to get one, or at least to a bank.
I've never had to wire money to anyone, because I've always been able to use checks. I do have a friend who regularly sends a few bucks when he can to his financially troubled sister who lives out of state. The people at the money transfer agency know him very well by now.
It seems like a fairly safe setup. I would think it would be hard to steal wired money, because you have to have a password to get it.
I used money wire transfer services to send funds to a friend in prison once. Before he went to jail, I had no idea that prisoners could have money, but apparently, they can keep funds in accounts and use the money to buy snacks and stamps.
Of course, I wasn't allowed to send cash to him in a letter. The prisoners never see the money. They just have it as a sort of credit in their account, and as long as its in there, they can buy things.
I went to the post office to get a money order. I had it made out to my friend in care of the prison, and I let him know that he would soon have funds.
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