How to choose the right method to send money
Quick insights
- Common ways to send money include digital wallets, bank transfers and money transfer services.
- Digital wallets allow for convenient peer-to-peer payments, while transfer services may allow for sending money globally.
- Many online transfer methods utilize encryption and multi-factor authentication to help keep payment information secure.
There are many ways to send and receive money, whether it's for business or personal reasons. There are many reasons a person may need to send money online—for example, paying your share of a dinner bill or transferring a larger sum to a roommate for your portion of the rent. In some circumstances, sending money online may be the quickest and safest option.
Fortunately, there are many ways to send money today that didn't exist even a decade ago. The ease of sending money online coupled with its speed has made it commonplace in modern financial transactions.
Different ways to send money online
The most common ways to send money online are via bank transfers, digital wallets and apps and money transfer services.
Bank transfers
A bank transfer, also known as wire transfer, is a method of electronically moving funds from one bank account to another. You may initiate a transfer through your bank's website, mobile app or in-person at a branch.
To complete a bank transfer, you'll need specific information about the recipient. This usually includes their full name, their bank account number, the bank's routing number and the bank's address. This ensures the money is securely and accurately sent to the intended recipient's account. Transactions are typically final but may be reversed under certain circumstances, like fraud, errors or technical issues.
Banks may charge a fee for wire transfer. Wire transfers can often be completed within the same day, and in some cases, within a few hours.
Digital wallets and apps
Digital wallets and peer-to-peer payment apps can be convenient options for personal money transfers. These platforms allow users to send money almost instantaneously, often with just a few taps on their smartphone.
Generally, transfers between users on the same service are free, though there may be small fees for credit card transactions. Processing times are minimal, with funds usually available within minutes, which is faster than traditional bank transfers.
Digital wallets often employ security measures, including encryption and multi-factor authentication, to protect users' financial information and prevent unauthorized transactions. However, many of these platforms cannot undo transactions once they’re processed, so it may be a good idea to verify the recipient's information before sending money.
Money transfer services
Money transfer services may be a reliable and accessible way to send funds globally. These services may be especially helpful for sending money to regions with less developed banking infrastructures.
To use a money transfer service, individuals can visit a physical branch or use an online platform or a mobile app to initiate a transfer. Users may need to provide identification, the recipient's details and the payment method, which can be cash, bank transfer or credit card.
Fees may vary depending on the transfer amount, destination and urgency, but they are typically presented during the transaction process.
Understanding how to safely send money online
Sending money online has become increasingly common. As such, most methods of sending money often have built-in safety features to keep your accounts safe:
- Bank transfers: Utilizing online banking services from accredited and well-known banks is one of the safest methods to send money. Banks are regulated and offer safety features like encryption, fraud monitoring and two-factor authentication.
- Digital wallets: Digital wallets typically protect your banking information by using data encryption and fraud prevention technologies. They also allow you to send money without sharing your bank account or credit card details with the recipient.
- Money transfer services: Money transfer services typically implement measures such as transaction monitoring and encryption. They also may require the recipient to provide a reference number for the transaction to access the funds.
When sending money online, you may want to consider how to protect your personal information. You may want to avoid sending money while using public Wi-Fi. A safe network—like your home’s internet—may offer more protection than public Wi-Fi.
Deciding which type of money transfer is best for you
To help you decide which type of online money transfer may work best for you, you may want to consider:
- Fees
- Processing times
- Exchange rates
- The amount being sent
- The recipient's access to banking services
The method that works best may also depend in large part on the circumstances. Sending a peer $40 for a shared dinner may not warrant the same level of protection as sending $1,000 to your roommate for your rent.
No matter how you choose to send money, you may want to double check that all information is accurate to ensure the money reaches its intended recipient.
In summary
However you choose to send money, you may want to confirm with the person or institution receiving the money is on board with your method. For example, if the receiving party doesn’t have access to a digital wallet, that method may not work. Similarly, if you’re sending a large amount of money, you may find the receiving party will only accept a bank transfer. You have options for sending money online, but not every option may be available to you in every scenario.