With the global banking sector adopting mobile-friendly approaches and with the digitalisation of services, people all over the world are increasingly leveraging the benefits of online money transfer to carry out their day-to-day banking and finance-related activities. Though money transfer services have been around for quite some time, the 21st century, or the digital age, did play a significant role in its evolution. Now, one can skip waiting in long queues in a bank to deposit money to another account; a smartphone and a mobile banking facility will be sufficient. In fact, the use of remittance services or online money transfer services over the years has grown to such an extent that as per the "Remittance Market By Type, Channel, Application and End User: Global Opportunity Analysis and Industry Forecast, 2019-2026" report, the global remittance market size is projected to reach a whopping value of $930.44 billion by 2026.
Electronic funds transfer facilities in the current times offer a host of benefits such as convenience, low cost of funds transfer, reasonable exchange rates, speed, elimination of any related paperwork, and more. These advantages were further validated when the COVID-19 pandemic crippled the world and made way for incessant global lockdowns, and many people, from expatriates to migrants, had to rely on the different types of local or overseas online money transfer facilities for a wide array of transactions. To know more about the different types of money transfer services and how they work, you may want to have a look at the points below.
- PayNow: With the PayNow money transfer service, you can transfer payments to your beneficiaries instantly by using the recipient’s mobile number or National Registration Identity Card/Foreign Identification Number, Unique Entity Number and Virtual Payment Address. This method eliminates the task of remembering bank account numbers and enables you to transfer money almost instantly.
- GIRO: General Interbank Recurring Order (GIRO) is a fast and cashless way to make payments from your Singapore bank account to a billing organization for any outstanding bills. The GIRO money transfer method is ideal for making payments easily without the use of cheques.
- FAST: Fast And Secure Transfers (FAST) is an electronic funds transfer method that you can take advantage of to transfer funds between bank accounts in Singapore. By using this method, you can transfer funds to bank accounts of participating banks and financial organizations.
- Cheques: If you do not wish to do any form of online transfer, you can always visit the bank and deposit a cheque in the recipient’s name. However, considering the ongoing pandemic, most banks in Singapore are encouraging customers to visit the branches only for essential banking services.
- ATM Transfer: Apart from withdrawing money, you can also transfer funds from an ATM machine. You can take advantage of this money transfer type if you are unable to use the online or mobile banking services due to connectivity issue, technical issue or other such reasons.
- Remittance: You can use remittance services to make an international money transfer through various online money transfer services. Receiving money from abroad is known as inward remittance and sending funds abroad is known as outward remittance. This money transfer method is popular as it allows one to transfer funds overseas at low cost and competitive FX rates.
- Bank Transfer: You can transfer money directly to another bank account overseas and locally through your savings, checking and other dedicated account types. You can use your online banking portal or mobile banking app to complete the transaction. We can take the example of Citibank Global Transfer (CGT), which is an online service that allows you to transfer funds between your Citibank accounts globally.
- Credit Card: You can use a credit card to transfer money to merchants online or pay at retail shops to complete a purchase or any such transaction. If you want to transfer money internationally, then you must make sure that your credit card supports international transactions.
The process through which local money transfer works is transparent, straightforward and quick. It starts after the bank receives the instructions from the sender. Once the credentials and inputs entered by the sender are processed, the bank initiates the fund transfer. Depending on the type of money transfer selected, the funds are deposited in the beneficiary’s account within minutes or a few days. The process is completed when the sender’s bank notifies the beneficiary’s bank and acknowledges the receipt of funds.
Unlike local funds transfer, the international fund transfer process is comparatively complex. Upon receiving the instructions from the sender, the bank first ascertains whether the sender has enough money in his/her account after the foreign exchange conversion rates are applied. Once that part is cleared, the bank starts the fund transfer process by sending money to its correspondent bank, which is authorised to transact internationally.
The correspondent bank debits money from the sender bank’s bank account and credit’s it to the receiver bank’s corresponding bank in the foreign country. Once the receiver bank’s intermediary or the corresponding bank in the foreign country receives the amount, it credit’s the amount to the receiver’s bank. After the receiver’s bank gets the amount, it checks the credentials of the receiver and credits the amount to his/her account.
Let us explain with an example.
David wants to send money to Peter who is in a foreign country. David instructs his bank A to transfer an amount X to Peter’s bank B. Once bank A gets the instructions, it starts the transfer process by sending the amount to its correspondent bank AA. The correspondent bank AA now transfers the amount to bank B’s correspondent bank BB. Upon receiving the amount, the correspondent bank BB transfers the amount to Peter’s bank B. After receiving the amount from the correspondent bank BB, bank B deposits the amount to Peter’s account.
Please note that this is only a simplified and brief explanation of the overall process that happens.
Money transfer means transferring funds from one bank account to another locally or overseas. There are different ways through which one may choose to transfer money to other bank accounts.
Money transfers are considered safe as banks apply multiple security steps to combat fraudulent payments and scams. However, one must also exercise caution while making payments on online sites. It is always a safer option to make payments on valid and authentic websites. Also, one should never disclose the credit card PIN or any such confidential bank details on any website to avoid getting scammed.
Online money transfer or electronic funds transfer is a safe and fast option to send money. The mobile banking apps and online banking platforms use layers of encryption to ensure that the funds transfer process is secured and safe. So, you can use valid online banking services to transfer money anytime and anywhere.
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