This type of transfer is called a remittance—and at Remitly, it’s what we do. We want to guide you through the best and safest way to send your money, including the finer details of these transactions and the impact they make. Let’s dive in, then, so you can send and receive money with confidence.
Types of remittances
Today, you can send money almost anywhere around the globe, and do it quickly. Just like the different channels available to transfer money, there are different types of transfers as well. Understanding the types of remittances first and foremost can help you choose a provider or institution that best meets your needs.
Personal remittances
This is by far the most common form of remittance, sent by individuals to their families or loved ones. For example, someone working in the United States who’s originally from the Philippines might send money back home to help cover school fees, food costs, or rent.
A good example is retirees who’ve moved abroad. They often use personal remittances, sometimes on a monthly basis; with their social security and pension most likely being paid into an account in the States, they can transfer the money from their US bank account to their local bank to help pay their living expenses.
Business remittances
Businesses also use remittances to manage cross-border transactions. Remote work has allowed employees, freelancers, and independent contractors to move around freely while still meeting their deadlines. While international payments might appear tricky, and may have been in the past, paying someone based in France—in euros—from the United States is easier than ever.
A company can send payments to vendors, contractors, or partners overseas through services like Remitly, letting the third party handle the transaction easily and efficiently.
Social transfers
These are remittances made for charitable or social purposes, such as donations to international aid organizations like the Red Cross or other nonprofits. Remittances can make a big difference to communities recovering from natural disasters, for example. Nonprofits can receive donations transferred to them from almost anywhere to assist the recovery after these events or other humanitarian crises.
The importance of remittances
In some cases, remittances play a significant role in certain regions’ economies and help reduce poverty.
According to the International Fund for Agricultural Development (IFAD), remittances impact one in eight people globally and often serve as a lifeline, especially in some rural communities. These aren’t minor contributions—sending money abroad can even benefit the environment by giving communities the resources to adopt more eco-friendly practices, thanks to having the means to do so.
Remittances to countries like the Philippines help boost the economy. And while each year varies, the contributions of remittances to many countries worldwide make a significant difference in their infrastructure and communities.
How do remittances work?
Firstly, you’ll need to verify the destination you want to send money to allows remittances, as some countries have restrictions on these transactions. While straightforward as a process, with different ways to send money, there’s a fair bit to think about when you’re choosing your provider.
Transfers can be completed digitally through online platforms, in person at the bank, or via cash delivery services. Once the funds are received, they’re converted into the recipient’s local currency at the latest currency exchange rate.
The recipient can then pick up the money at an agent location, or it’ll go straight to their bank account if the transaction was done digitally. Time frames for how long it takes a remittance to go through can vary depending on the provider and transfer method. Wire transfers, for example, can sometimes take up to five business days.
Common methods of sending remittances
- Online platforms like Remitly.
- Cash transfer agents
- Traditional bank transfers
Documents needed
If you’re making a large transfer, the list of required documents might be a bit more complex because of different countries’ anti-money-laundering laws. But generally
- Identification
A valid passport, driver’s license, or national ID of the sender will be required for verification. - Banking information
Bank account number, routing number, and SWIFT codes for both the sender and recipient are required to make the transfer. - Address
Recipient and sender addresses are also necessary to verify the transfer’s legality and safety—no one wants to be the subject of fraud.
Understanding the costs
No matter how or where you choose to send a remittance, it likely won’t be free—but that doesn’t mean it has to break the bank either. Fees can include transfer fees from your bank, the recipient’s bank, or both.
Choosing the right provider
Not all providers are the same, and while we don’t want to keep tooting our own horn too hard, Remitly works hard to offer easy and transparent services. Here’s what you should be looking for:
- Transparency in fees—Clear, up-front costs with no hidden charges.
- Competitive exchange rates—Even small differences can add up over time, and unfavorable currency conversion rates are often where people feel they lose the most money.
- Security—Ensure the provider uses encryption and fraud protection. Researching different providers on forums and through their websites will help ensure your data, and therefore your money, are safe.
- Ease of use—Apps like Remitly offer a simple, user-friendly process with fast delivery options when time is of the essence.
Common remittance challenges and how to get around them
While sending remittances can be simple and easy, they’re not without challenges. Problems can occur due to factors outside of the provider’s control, and also depend on how you send your money. They can still feel frustrating at the time, of course.
Choosing to transfer money through your bank can be costly. For instance, Chase Bank charges $5 USD for international transfers under $5,000 USD. The receiving bank might also impose a fee to accept the converted funds, which can add up quickly—sometimes costing you extra money you hadn’t calculated for.
Something else to be aware of is that banks often don’t offer the most favorable exchange rates.
You can also experience long delivery times. Western Union has countries labeled as “slow-to-pay,” and money can sometimes take up to three weeks to arrive.
While providers like Remitly do their best to circumvent these challenges above, exchange rates are unfortunately not within our control.
Transactions that support families and strengthen communities
Remittances are more than financial transactions—they’re vital connections that support families, strengthen communities, and sustain economies across the globe. Whether to cover school fees, pay medical bills, or simply provide a safety net, remittances help connect us and improve our loved ones’ lives.
My mother sending me money during a time of transition—and a sprained ankle!—not only helped with my rent but also eased the pressure so I could focus on healing. I have no doubt that remittances sent to others around the world have an even greater impact.
Thanks to providers like Remitly, I’ve also been able to keep sending money back to the States to help pay off my student loans. At the end of the day, remittances help in all sorts of ways for all sorts of people.
Still unsure about sending a remittance? Check out what others have to say about Remitly and let us help you and your loved ones securely transfer money when you need to.
FAQ
What documents do I need to send a remittance?
Most providers will require valid identification, such as a passport, driver’s license, or national ID, along with the recipient’s and sender’s details, like their banking information and address.
How long does it take for a remittance to arrive?
Time can vary based on who’s sending the money and how they’re doing it. For example, sending through a provider like Remitly and paying with a debit card might process almost instantly, whereas a wire transfer could take anywhere from one to five business days, and sometimes longer, depending on the country.
Can remittances be sent in any currency?
As long as the country you’re sending to allows remittances, money can be converted to local currency based on the current exchange rate.