“Unbanked” and “Underbanked” consumers have a variety of options when it comes to wiring money to others or to pay bills quickly. Since unbanked consumers have no checking or savings account available to transfer money, this is an important alternative financial service for millions of households across the country.
Likewise, underbanked consumers have a bank account, but prefer to use money transfer and check cashing services instead. There are some key factors to consider when selecting a money transfer service. Here is a breakdown of the money transfer services available and some differences between providers:
Traditional Money Services
Transfer services, such as Western Union, MoneyGram, PayPal, Google Wallet and RIA allow users to quickly send much-needed funds. With Western Union and MoneyGram, within minutes of visiting one of the thousands of agent locations across the U.S., money can be electronically wired after filling out a little paperwork. Users can also send money through Western Union and MoneyGram online, via phone or by using a mobile app.
Users can send up to $2,999 per day online and fees cost between $5 and $20 from your bank account depending on the sending method and how fast funds must arrive. Fees to send money via debit card or credit card cost more for instant access, and cost $20 and up. The fees also increase with the amount of money they send for both services.
The benefits of these long-standing services, is that they provide many physical locations and alternatives to send and receive money. One drawback, is some sending methods carry significantly higher fees than web and mobile-based wire services.
Wal-Mart also provides store to store money transfers via MoneyGram and Ria, which provides a money transfer service internationally. Wal-Mart customers can send money store to store or to any agent location in about 10 minutes for a fee of about $5.
With PayPal and Google Wallet, unbanked and underbanked users can send funds from the comfort of their homes with a computer or mobile app. Both money services allow users to send up to $10,000 in one day. And both services require users to register using an email address or phone number.
PayPal charges 30 cents and a fee of 2.9 percent of the total transfer amount to the sender. The benefit of PayPal is that it is an acceptable payment option for most online merchants, such as Amazon.com. The biggest drawback is the money can take two to three days to clear.
The biggest benefit of Google Wallet is that it is totally free for money senders and receivers. Drawbacks include it may take up to 24 hours to post and that users cannot use Google Wallet internationally. Another drawback of both services is that users must have a registered account to receive funds.
Ria has about 240,000 agent locations in 130 countries and is a popular money transfer option among immigrants. Ria also offers the ability to send money online with a maximum of $2,999 a day and the ability to send up to $999 from agent locations. One benefit of using Ria is the international reach and the ability to send from Wal-Mart stores and most 7-Elevens. A drawback is Ria transfer fees tend to be a little higher than domestic services, starting at about $7 and up.
Some unbanked and underbanked consumers don’t realize that banks provide online banking transfers and bill pay services for free. But when using alternative money transfer services, it’s important that users research the current exchange rates and fees they’ll have to pay. Some transfer services don’t have fee details readily available. But remember to visit the company website to see if they provide a fee estimator.
Offering Service in Store
In 2012, money transfer technology accounted for 20 percent of all e-commerce transactions and popularity continues to grow. Experts anticipate international access to grow among transfer services.
Providing money transfer services in store may be a popular addition for your store and very helpful for unbanked and underbanked customers. Adding this service may mean forging new partnerships with third-party providers. But may be well worth looking into it.