If you have a business, you will know how important Remittance is for sending as well as receiving payments. But if you are someone that has no idea what Remittance is and are willing to know all how it works, this is the right place. In this article, we are going to take a look at how the Remittance market works, and how to send a Remittance.
Simply speaking, Remittance is the transfer of money from one account to the other for the services that have been given. Money sent from one country to the other has immensely increased these days. The main reason is that more and more companies are working with clients and customers overseas.
How does Remittance work?
For instance, let’s imagine that you are looking for ways to send money from the US to France. The first step is to pre-fund your bank account with the currency of that country. If you didn’t understand what I meant, let me give you an easier explanation. So, if you want to send 2000 USD to France, you should have 2000 USD in your American bank account.
Now that you have the money, you’ll send it to France. After reaching the bank account in France, the recipient of the money will have to contact the local branch of the bank or the treasury department for obtaining the Euro to the USD exchange rate. This rate will be used by the recipient’s bank for converting the Remittance to the local currency.
In some cases when money is in a few thousand dollars, the bank will work its thing automatically and applies a retail exchange rate. The only downside is that the retail rates are designed in order for the recipient’s bank to get the most profit, not the recipient.
How to send a Remittance?
Wire transfer is one of the most used methods for sending a Remittance. Such type of transfer will take about 3 to 5 business days or even longer if it’s a global Remittance market transfer. When you use such methods for transfer, the funds will be transferred through wire networks like Society for Worldwide Interbank Financial Telecommunication.
Wired networks are the mediators between the sending and receiving bank. All of this good, but make sure you do some currency research before sending the money to the wired network. It’s important that you confirm if your bank can send funds in the local currency of the recipient. Making sure of this is really important when you are sending money through exotic currency.
Remember that wire transfers are expensive, the changes can become even high depending on the amount as well as the currency. You should also consider the exchange conversation rate as well. In some cases, the destination bank might not be able to receive the funds because some banks might not have established banking relations with some countries. So the money will be sent back to your account, when this happens, it might charge a recipient and additional fee.