Remittance or International Money Transfer: A Complete Guide

What is international money transfer?

The term 'remittance' may be familiar to some but, most might know it in more informal forms such as 'International Money Transfer’. While it is not highly specific that international money transfer occurs between two entities located in two different countries, in today's world, this is usually the case when one speaks of initiating an international money transfer.

International money transfer can be performed by individuals for personal reasons as well as businesses for commercial ones. Within the last few years, the act of sending money internationally has ramped up significantly due to the advances in internet connectivity. Individuals are more familiar and comfortable with purchasing from overseas e-commerce brands and businesses themselves no longer feel the need to limit their purchases from local suppliers.

Types of international money transfer

Understanding the various types of international money transfers can provide clarity on how funds are transferred internationally. International money transfer is categorized into two main types:

• Inward money transfer: Involves funds transferred from one account to another domestically or internationally. Example: A non-resident Indonesian working in Malaysia sends money to his family back home in Indonesia.
• Outward money transfer: Funds transferred from a domestic account to an overseas account. Example: Parents in Indonesia sending money to their child studying in Malaysia.

How international money transfer works

The international money transfer process can vary depending on the service provider and method used, but the basic steps are generally the same

1. Initiation of transfer: The sender can remit funds by visiting their bank or using a money transfer service provider. Leading service providers often have mobile applications for a seamless money transfer process.
2. Transaction processing: Once the transaction is issued, the funds are transferred to the recipient’s account based on the foreign exchange rate and the transfer fee charged by the service provider.
3. Access to funds: Upon completion of the money transfer process, the recipient can access the funds in their local currency, minus any applicable deductions.
4. Recipient details: To transfer money to a bank account, senders need to provide the recipient’s bank name and account number. Alternatively, to safeguard against sharing sensitive bank details, recipients can utilize a virtual account number provided by the money transfer service provider, thereby enhancing transaction security

Reaching milestones: MYR 1 billion transacted globally

Parents of international students

Malaysians are increasingly pursuing studies abroad, whether for their entire tertiary education or short-term exchange programs. However, funding daily expenses while overseas can be challenging. While some parents provide credit cards, the expensive foreign transaction fees and conversion rates can add up quickly. Similarly, frequenting local money changers can also be costly.

As a solution, most educational institutions recommend international students, including Malaysians, to open local bank accounts upon arrival. This allows parents to transfer funds directly into their children's accounts at a significantly lower cost whenever necessary.

Expatriates and immigrants

When individuals move to a new country for work opportunities, whether temporarily or permanently, they often leave behind beloved family members. In such cases, the need to perform money transfers back home arises. Whether they are the sole breadwinner or wish to provide additional financial support, international money transfer is one of the most convenient ways to ensure their hard-earned money reaches their loved ones.

Businesses

In today's globally connected world, borders are no longer a barrier to business. Many Malaysian companies find overseas suppliers to be the most cost-effective option, despite import costs. Additionally, certain skillsets may only be available in foreign workforces, further incentivizing collaboration with international partners.

Once companies have sourced the goods and services they need, the next step is paying for them. Remitting money to foreign partners emerges as the most economical option. This is especially true for companies working with multiple overseas partners frequently, as many international money transfer services offer bulk payment options to streamline the process for businesses.

Advantages of international money transfer

International money transfer offers numerous benefits:

• Speed : money transfer transactions are often completed quickly, allowing recipients to access funds promptly, especially in urgent situations.
• Convenience : money transfer services are convenient, offering various options for sending and receiving money, including online platforms and mobile applications.
• Security :money transfer transactions are typically secure, with robust encryption and authentication measures in place to protect both senders' and recipients' financial information.
• Competitive exchange rates : money transfer providers offer competitive exchange rates, ensuring that recipients receive the maximum value for their money when converting funds into local currency.
• Low fees : Many money transfer services offer low transaction fees, making it costeffective for senders to transfer money internationally, especially when compared to traditional banking methods or other money transfer options.

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