Bank Remittance Vs Bank Transfer
Understand the difference between remittance and transfer for easier decision-making.
- Bank remittance and bank transfers are two ways of transferring money between accounts.
- Bank transfers can happen locally as well as internationally.
- EFT is a technology used to transfer money via the internet.
- Providers charge convenience fees when an EFT takes place.
- Timing, volume, and cost are factors to consider while choosing between bank remittance and bank transfers.
Bank Remittance and Bank Transfer are two concepts you may have heard of while making different types of payments. Many people confuse them to be the same, which is incorrect. Although similar, there is a fine line of difference between the two.
Both of them are modes of transferring money. India has been the largest recipient of remittances from 2008 until 2020. Bank transfer is defined as a transaction between accounts (in most cases, two accounts of the same individual). On the other hand, Bank remittance is a type of transaction involving two separate account holders. Such individuals should be residing in two different countries. For instance, if a migrant or foreign worker sends money back home, the fund transfer is a remittance.
What Is Bank Remittance?
The term 'remittance' is derived from 'remit', meaning 'to send back'. A bank remittance refers to the funds sent or transferred to another entity or account as payment for services or a product. Remittances can also be personal money transfers made to family and friends overseas and any sort of business payments.
What Is A Bank Transfer?
A bank transfer (sometimes called a wire transfer) instructs the bank to send money from one account to another via online banking. This can happen either locally or internationally. A local bank transfer is a payment method on a cross-border medium wherein the money is deposited into a foreign bank account.
Local bank transfers are an intermediary organisation that runs between the payer (source of origin) and the payee (the recipient of the transfer). Much like a credit union, these local bank transfers perform the task of a clearing mechanism. They protect and settle the transfer of funds.
Difference Between Remittance And Transfer: Other Key Points
- Wire transfers have always been popular, but a desirable alternative is online transfers. The old concept involved in wire transfers is combined with EFT. Although the transaction is completed within 24 hours, you can pay a little extra to make an instantaneous transfer.
- With an EFT, the transaction can happen using any internet-enabled electronic device. For the same reason, this type of transaction is also known as an internet money transfer.
- While sending money via EFT, you must consider the foreign exchange rates, which may differ each day based on market fluctuations. You may also have to pay a convenience fee, which may vary from bank to bank.
- When it comes to remittance versus bank transfer, many individuals consider timing, volume, and cost factors to steer them in the right direction.
When making international bank transfers, the process may take more time when compared to transactions taking place within India because the transfers happening overseas involve third-party intermediaries and the difference in the time zones.
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*Disclaimer: This article is for information only. We recommend you get in touch with your income tax advisor or CA for expert advice.