Banks are usually very complex, and it is impossible to understand their terms and conditions. For many people going to the bank itself is a nightmare. It is apt to say that few services they provide are explained in layman’s terms for the common public to understand. One such very useful but often misinterpreted service is payment and remittance services.
Payment services are the normal bank transfers that are carried out by every individual. It can be also referred to as wire transfers. It is a system wherein you can transfer money from your bank account to another account by giving consent to do so. More often than not the secondary account belongs to the same person. You can use an online banking system or go in person to direct the bank to transfer the money. It can be local, transferring money from a regional account to another, or international as well. The money can be moved to a foreign bank account, by paying the applicable fee as a charge.
Often confused, payment and remittance services differ in many ways. Remittance is the situation when any amount of money is sent bank to a bank account. It is usually done in case of a transfer to another person’s bank account. For a transaction to be remittance, it should involve two bank accounts belonging to separate people. This is applicable especially when the involved parties are from two different countries. Common instances of emittance is when a person working in a foreign country is sending money to his family back home. The account of the person and their family has two different national origins.
Remittance is usually used by foreign employees to send money home. They use an electronic payment system to do so. Using any mode of payment involves a standard charge. Since it is a foreign transfer, there is a need to change the currency to the destination nation’s currency based on the current value of the exchange. It is a quick system of money transmission.
In small and developing countries, remittance plays an important role in the economy. When countries are struck by a disaster and when other nations come together to help out with donations, this method of payment is used.
Remittance is an effective system of transfer since it helps a country receive payments from all over the world, in all types of currencies. It is an extremely beneficial system since money transfer can be between any two countries, without any known exceptions.