Money, perhaps the most significant invention of mankind, has been a major force behind the development of trade. Before the advent of money people used to rely on barter system, in which people used to exchange goods for goods. The acceptance of money as a source for trade has led to the need to transfer money from one location to another. The quest to create some effective money transfer system always propelled people on digging deep for better solutions. The necessity eventually led to the evolution of various money transfer services. Also the expansion of the global economy and migration of people provided the much needed impetus for money transfer services that led to the advancement of different forms of money transfer services.
Today there are various media through which money can be transferred to different locations, and each method has its own benefits. Services like wire transfer, money order, bank draft, instant money transfer and internet money transfer are the various methods that are now used to transfer money. What medium of money transfer is more effective vary according to the requirements and convenience of individuals.
Wire Transfers: Before the inception of computerised banking systems, the world needed a secure method to transfer money from one location to another. This brought wire transfer into context, which over the years has been the common method of transferring money from one bank account to another and in fact the best way to send money. Though the “wire” involved has developed from old world telegraph wires to modern fiber optic cable, the term “wire transfer” has stuck around because the service provided remains essentially the same since its inception. The wire transfers are considered safe and convenient because bank/financial institution verify both the sender and the receiver’s account details and neither of them can stay anonymous. The sender needs to provide his/her account number and the receiver’s account number to the bank/financial institution to transfer the amount. After bank/financial institution receive the account number it transmits the message through SWIFT which is the acronym for Society for Worldwide Interbank Financial Telecommunication (allows bank/financial institution to exchange financial data i.e. data regarding money transfers, account status etc.) to the receiver’s bank with the payment instructions.
Money Order: A money order is a payment order usually issued and payable at a bank or post office. The sender has to fill a form that includes name, address, amount to be sent along with the recipient’s name and address. The sender can also write a short message as there is a provision for it on the money order form. The advantage of sending a money order is that the receiver or the sender doesn’t require a bank account. In some countries international money order services are also available, which is similar to a regular money order, except that it can be used to make payments abroad.
Bank Draft: A bank draft or Demand Draft is issued by a bank or any other money transfer company and is cashable at any banking institution. This type of money transfer service is generally preferred by large sized business houses and institutions due to additional security and audit trail features. The main feature of the bank draft is that the amount is already paid for in full before the draft is issued, ensuring its clearance and credibility.
Instant Money Transfer: This facility enables the sender to transfer money anywhere in the world within minutes without the use or need of a bank account. The sender needs to produce his/her original identity document to the bank/financial institution from where he will be doing the transaction along with the phone number (but not mandatory) of the receiver; the amount that the sender wants to transfer to the receiver including the location where the amount needed to be transferred.
Internet Money Transfer: Internet has made the money transfer service more convenient and hassle-free. Today sending money anywhere in the world is just a matter of few clicks. With Internet money transfer services anyone can send money to anywhere in the world within a span of a few minutes. To avail the service you need to have an online Login ID and password (provided by the bank/financial institution). You also need to register receiver’s name, bank account number and the branch location to make online transaction.