Wire Transfer Versus Online Transfer: Which Should You Choose?
You got your grandmother a nifty new smart phone, you even took the time to download some applications to go with this spanking new gadget. You gave her the phone and a couple of minutes later, she comes rushing to you. She doesn’t want the phone and would rather take back that old-school Nokia she had always loved. She’s one of these individuals who would rather be with the old but familiar than with the new but unfamiliar.
On the other hand, your nephew wants to see that new phone. He doesn't have his own phone but he loves tinkering with gadgets all the same. A couple of minutes later and you see him navigating through the phone without any issues at all. He was even able to download a few games that he likes. Yup, your nephew is a part of the newer, techsavvy generation, those who love all things new, digital and complicated, even if they are unfamiliar.
This is the perfect analogy for the two types of people when it comes to money transfer
In the same way, transferring money can be as traditional or as modern. The traditional way lovers would rather go to the bank or at least, negotiate with a bank for their money to be sent on the rightful recipient. The modern way lovers would go and try out as many online transferring options until they find the one most suitable for them. You have the old but familiar way and then you have the new but unfamiliar way.
People choose these ways depending on their preference. That security and familiarity makes one hold on to traditions. So even if there are a number of more modern and cheaper ways of transferring money, that person would still opt for the older way. Some people just don't want to risk things too much, they are the cautious individuals and that’s perfectly acceptable.
Some people are natural risk takers though, always on the lookout for ways to make their lives easier. Some just want to save some money and if they can find cheaper ways to transfer money, why not? They are willing to try various ways, even online, to send money on its way to the rightful recipient. These are the dauntless people, who won't mind the uncertainties of the method and that’s perfectly acceptable too.
Where do you fit in these two types of people?
Don't worry, nothing is wrong with being either. But if you are new to this world of money transferring, wouldn't you want to find out the pros and cons of each? This way, you can decide which one best suits your goals and also your interests. But first, you need to go through this [url=http://compareremitrates.com/uncategorized/how-to-send-money-tothe-philippines/]guide[/url] so that you can be introduced to the various ways of sending money.
What is Wire Transfer in simple terms?
Simply put, wire transfer is the shifting of money from the sender’s bank account to the recipient’s bank account. It is a direct bank-to-bank process, ideal for transferring large amounts of money. It can be done both locally and internationally, but the latter usually has fixed fees. Before, wire transfers were only done personally, the client had to go to the bank and fill up the required forms before the process can begin. Now though, many banks allow for distant communications with clients using internet and phone.
What is Online Transfer in simple terms?
Simply put, online transfer is the online shifting of money from one account to the other. Usually, online money transfer companies require the sender and recipient to register an account and then link their bank account, credit card or debit card. With a few clicks using the website of the company, the sender himself can send the money to the recipient so the transaction fees are generally low. Now, there are even apps that one can find in the Google Store and Apple Store that can let them send money easily to someone distant from them physically.
The Showdown: Wire Transfer Versus Online Transfer
How They Work?
•
Wire Transfer - The client can go to the bank where his sourcing fund is located. An agent would guide him through the process, usually involved of filling up the required form, he or she should know the account number of the recipient as well. Once done, he or she needs to pay the transfer fee, this is different depending on the bank and the transaction. The bank would then initiate the transfer process and send the money directly on the recipient’s bank account. Some banks also have by internet or by phone wire transfer transactions. There is a levied receiving fee as well that the recipient would handle.
•
Online Transfer - There are various ways of transferring money online. You have the online money transfer companies and the peer-to-peer online money transfer companies. Both operate under the same process, the sender and recipient must each have an account. The sender must know the email address or name of the recipient on the company so that he or she can send the money directly. There are usually set fees that the sender must handle.
What are the Transaction Fees?
•
Wire Transfer - There are two main fees if you decide to use wire transfer. First is the transfer fee, usually handled by the sender. Transfer fee varies but it ranges from 25 USD to 60 USD per minimum transactions. Second is the receiving fee, usually handled by the receiver, but can also be handled by the sender. This is usually cheaper, ranging from 15 USD to 25 USD per transaction, but it still depends on the bank. Some banks also have conversion fees, that is, if you decide to convert your money to another currency when sending it.
•
Online Transfer - In comparison, the transaction fees for online money transfers are cheaper. The sender has to pay the transfer fee, which ranges from 1 USD to 12 USD for minimum transactions of 100 USD. Always remember though that if you opt to send money using your debit or credit card, the incurred transfer fees can be higher, even reaching 45 USD for some companies. Many online money transfer companies don’t have a set receiving fee, although banks usually levy a withdrawing fee for the recipient. They also have conversion fees, but they aren’t usually transparent in revealing just how much this fee is to clients.
What About Currency Exchange Rates? •
Wire Transfer - It’s a known fact that banks offer the least competitive currency exchange rates, no matter where you are in the world. That’s why many experts in the industry advice against exchanging your money via banks. You can lose anywhere from 4% to 15% with the exchange rates of banks. The reasoning for this is quite plenty, like there’s no regulation to control these rates or the lack of public knowledge about the real exchange rate in the mid-market sector.
•
Online Transfer - Currency exchange rates in online money transfer companies vary. Some are quite competitive whilst others are deceptive. If you have read this [url=http://compareremitrates.com/uncategorized/cheapest-ways-to-sendmoney-to-the-philippines-from-the-us/]guide[/url], you would understand what I’m talking about. Some companies have such low transaction fees but bad conversion fees. Others have higher transaction fees but good conversion rates. A good example of the former is Western Union and a good example of the latter is TransferWise.
How Fast Can They Transfer Money? •
Wire Transfer - Wire transfer takes around two business days to fully complete, that’s just the sender side of the process. Take note that international money transfers can also be as long as a week as it takes some time to move the money from the sender’s bank account to the recipient’s bank account. The banks process transactions carefully, making sure that each client has reliable records in the company.
•
Online Transfer - Online transfer can be instantaneous, from a few minutes, to hours and three business days at the most. If you want to avail of the normal
rates, transfers can take one to three business days. But there are also rush rates, you need to pay a higher fee so that the transfer can take place within minutes or hours. For some companies, like PayPal or Google Wallet, it can take some time to withdraw the amount from your online account to your bank account or debit/credit card. The transaction itself is quick though, from one user account to the other. What are the Transaction Limits? •
Wire Transfer - Now this is one aspect that wire transfers excel in. Wire transfers are usually used for larger transactions so the limits are not that restrictive. The limit per day or per transaction is quite high. So if you need to pay someone for a property or an investment, no doubt that wire transfer is the way to go. Some types of bank accounts though have a set number of transfers per month that you have to strictly follow.
•
Online Transfer - Online money transfer companies are very restrictive when it comes to transaction limits. For example, Ria, a globally known money transfer company, has a limit of 2,999.99 USD per day. They also impose a strict 7,999 USD limit per month per account. So if you’re a real estate investor or a businessman, you might need to have different accounts in various money transfer companies if you need to send money to various people many times in a month.
Are There Any Security Issues? •
Wire Transfer - Wire transfers are generally secured and safe. The sender needs a proper bank account, the same goes with the recipient. Bank accounts usually require someone to have a valid identification card, proof of address and even salary proof at times. The main risk lies within your engagements, so it’s outside the bank’s capacity. So before transacting with someone, just make sure that the transaction is authentic, the person is trust worthy and that the deal isn’t fake at all.
•
Online Transfer - In dealing with the online world, there are always scams that one needs to be aware of. Online websites can be easily hacked if they aren't encrypted well or secure. The same goes for money transfer companies who operate online. They have that higher risk of being hanging grounds for scammers.
Further, it’s likely that the money can be taken by people who pose as the supposed recipient using fake identity documents.
The Takeaway: Wire Transfer Versus Online Transfer Category
Wire Transfer
Online Transfer
Winner
Ease of Transaction
Complicated and Requires More Information
Easy and Straightforward
Online Transfer
Transaction Fees
High
Low to Medium
Online Transfer
Exchange Rates
Not Competitive
Competitive
Online Transfer
Transfer Speed
Slow
Medium to Fast
Online Transfer
Transaction Limits
Not Restrictive
Very Restrictive
Wire Transfer
Security Issues
Few
Plenty
Wire Transfer
Total
2/6
4/6
Online Transfer
Let this guide you, but don’t let it define you… As always, there is no one size fits all method of sending money. You can use the guide above to help you in deciding which of the two, wire transfer or online transfer, is more suitable for you. While the guide highlighted the pros and cons of each, in the end, it’s still up to you. Online transfer might have won the comparison above, but always take note of your needs before deciding on this method of sending money. Online money transfer is a good way of sending smaller amounts of money to loved ones or remote employees. It is very easy to use, setting up an account won't take much time. Most websites for such companies, like PayPal or TransferWise, are very user friendly as well. In aspects of affordability, currency rates and transfer speed, online money transfer companies win. But if you are a businessman who needs to consistently send huge amounts of money internationally, online money transfer companies can be very restrictive. Often, they im-
pose strict limits to accounts of clients, you can’t exceed those. Further, security issues are still rampant with such online companies, not as thrilling to know when you have to transfer high amounts of money.
When should you choose wire transfer? Ideally, wire transfers are also good for local or domestic bank transfers since there is usually no fee for such. You can also choose wire transfer if you want a more secured way of moving large amounts of money. Unlike online money transfers, wire transfers aren't that restrictive when it comes to the daily or monthly limits. You would also find that you can save more money with wire transfers with large amounts since the fees are more fixed and not calculated based on the money you’re sending. Hopefully, this guide helped you in choosing between these two methods of sending money. You can share your experiences about wire transfer or online money transfer below. This can further help our readers in deciding which is the best method for them.