There’s no shortage of ways to send money overseas. Plenty of banks and money service businesses (like PassportPay) are available. But if you’ve been sending money overseas for a while, you may have noticed different types of transfers available. Specifically, wire transfers and money transfers. You might have wondered what sets them apart.
How Are They Different?
Without getting too technical, the biggest difference between wire transfers and money transfers is how they are handled.
- Wire transfers typically move funds directly from one bank to another financial institution, like another bank or a credit union. They can be sent domestically or internationally, and generally, both the sender and the recipient will need accounts with financial institutions.
- Money transfers refer to a broader category of transactions. This includes transfers from third-party entities like payment processors and money service apps–just like PassportPay.
How Do They Compare?
When sending money abroad, you want to make sure you’re using the best method for you and your loved ones. So, when it comes to wire transfers versus money transfers, how do they stack up?
Speed
It’s important that your funds arrive fast. These days, money can be sent in minutes, but some transactions still take longer than others.
- Wire transfers, especially international ones or those involving multiple banks, can sometimes take a few business days to complete due to processing times and regulations. Domestic wires can often be faster.
- Money transfers through services like PassportPay are often quicker. Funds are typically available in a few minutes, though it can sometimes take up to 24 hours.
Security
Both wire transfers and money transfers are designed to be secure, but they are subject to different types of oversight.
- Many banks are members of the FDIC (Federal Deposit Insurance Corporation). FDIC insurance protects your eligible deposits up to certain limits if your bank fails. It’s important to understand that FDIC insurance does not cover losses if you mistakenly send money to the wrong person or errors you make when initiating a transfer. If a bank itself makes an error processing your transfer, they have separate obligations to correct it.
- Money transfer businesses are generally not FDIC-insured (as most do not hold deposits in the same way as banks), but they are still highly regulated. They must be licensed in the U.S. and follow strict federal and state laws designed to protect consumers and ensure secure transactions. In the event of a confirmed error on the part of the money transfer service, apps like PassportPay are committed to making things right by restoring users’ funds back to them. Also, unlike many money transfer services, PassportPay’s Wallet is FDIC-insured, meaning customers enjoy the same FDIC protections for their Wallet balances as they would a bank balance.
Sending Methods
When it comes to where and how you can send your money, money transfers often offer more flexibility.
- Wire transfers generally send funds between established financial accounts. This can be limiting for recipients in countries where a large part of the population may not have traditional bank accounts or primarily use mobile wallets, like in Ghana.
- On the other hand, money transfers can often be made via various methods, including credit cards, debit cards, and direct from bank accounts. They can be received in different ways, too, including mobile wallets or cash pickup, depending on the service.
Amount of Funds
If you need to send a very large amount of money—we’re talking in the tens of thousands or more—a wire transfer may often be the go-to. Why? This is mainly due to strict anti-fraud and anti-money laundering regulations.
- Banks have established processes for handling, verifying, and reporting very large transactions, ensuring transparency and compliance.
- Caps are often placed on non-bank money transfers as part of these regulatory requirements.
- However, most people send funds in amounts small enough to comfortably use as either a money transfer or a wire transfer. For instance, for now, PassportPay allows up to $9,000 in transfers a day, though additional restrictions can sometimes be placed by your specific account or card provider.
Fees
Both wire transfers and money transfers incur costs, as transferring funds is a service. How much providers charge and the types of charges can vary.
- Common costs include service fees (which can be for sending or, in some cases with wires, receiving) and intermediary bank fees for some wire transfers that pass through multiple banks.
- When sending money internationally, there’s also the currency exchange rate. While not a fee itself, the rate you get significantly affects the total cost, as services may include a margin on the exchange rate they offer.
- Typically, banks may have higher overhead, so wire transfers can sometimes cost more than money transfers.
- At PassportPay, we aim for transparency. With features like Choose Your Rate, you have the option to pick and lock in an exchange rate that works for you for 24 hours when you send funds.
Which is Best for Sending Money Abroad?
When deciding which method to use, consider these factors:
- How fast does the money need to get there?
- How much are you sending?
- Where are you sending it to?
- What payment and receiving methods are available and convenient for you and your recipient?
- How much are you willing to pay in total costs (including fees and exchange rate considerations)?
For the average person sending remittance payments back home, money transfers through an app like PassportPay are usually a very competitive option, often offering a great balance of speed, lower cost, and convenience.
After that, it becomes a matter of choosing which provider to use. At PassportPay, we’re dedicated to making remittance payments a seamless part of your financial landscape. On top of our competitive and secure service, we offer other convenient features like Direct Bill Pay and Choose Your Rate to put you in control of your money.