Before we start for “How does money transfer work?”, lets understand basics
What is money transfer?
Money Transfers is an electronic transfer of money from one bank account to another account or e-wallets, either within a single financial organization or across numerous institutions, via computer-based systems, without the direct intervention of bank staff.
Every hour, millions of people around the world have to figure out how to pay for the things they need. Factors like cost, international capabilities and transfer speed all come into high when choosing the best method for transferring digital cash.
Whether you’re an independent contractor filing an invoice, friends splitting the check or a family looking to divide up household expenses, electronic payments have become the norm for paying for almost anything in a fast, secure way simply by picking up your smartphone.
The modern money transfer apps make it easy and simple to send money to family or friends, or pay for excellent services through your smartphone or other device. This opportunity allows the retail user to inaugurate a funds transfer transaction. The types of funds transfer transactions include: Third party transfer and Self transfer.
Domestic VS International
Domestic Money Transfer- A domestic transfer is a type of electronically based money transfer that makes it possible to send money from one location to another location within a specific country to a different location in that same country. This is in comparison to an international transfer in which money is moved between two points that are based in opposed nations. Domestic money transfers are typically simple to use and make it possible for the money to be available to the recipient almost instantly.
International/Cross Border Money Transfer- International/Cross-border payments are currency activities between people or businesses that are in different countries. The money sender typically will choose a front-end provider, such as a bank or a money transfer operator to make such payments. Usually international money transfers are not straight forward and involve compliances.
How does money transfer work?
The Sender and Beneficiary “talk to each other” through the Financial Organization or Money Transfer Operator (MTO) which means that the posting bank has to send the funds to the Financial Organization and the clearing bank (mostly the central bank in each and every country) then draft the money into the recipient bank which then credits to the beneficiary account.
Sender- The sender transfers for the transaction in advance at their bank. The recipient’s address, contact number, name, along with any second personal information mandatory to facilitate the transaction. The recipient’s checking account, including their account number and branch number.
Beneficiary– The person to whom the payment is to be made needs to be attached as a ‘beneficiary’ and their bank account details are involved in order to transfer the cash. These incorporate the name of the beneficiary account holder, account number, IBAN, SWIFT, bank name or the IFSC code of the beneficiary bank branch depending on the receiving bank requirements for specific country.
Money Transfer Operator i.e. MTO – Money transfer operators are financial companies (but generally not banks) that are unavailable in cross-limits transfer of funds using either their internal system or access to another cross-border banking network.
Money Transfer Operators generally use Online Systems, Mobile Apps to serve this purpose. They might have their own software system as well or may be using their party systems.
Most MTO offers an online website which is basically a self service portal where customers can sign up to make transactions. Some MTO also offer their own Android and iOS mobile apps for easy transaction submission on the go.
The software, apps should be easy to use and secure. They must allow the owner to manage, control every aspect of the money transfer business.
Have you got any questions in your mind? or want to get your own money transfer software, feel free to contact us.