Money makes the world go round—specifically, the movement of money from place to place, person to person. Whether you’re paying a friend back for lunch or sending money to a contract worker abroad, the transaction is almost always digital.
These days, it’s simpler, safer and more convenient to transfer money online. But not all modes of funds transfer are the same—and, every situation is different. Thankfully, there exist many different ways to transfer money online.
Here’s a rundown of the many forms of digital funds transfer, including when and how they’re best-used to get money from one place to another.
- Bank Transfer. Money that moves from bank account to bank account usually does so through the Automated Clearing House (ACH) network. Through this method, banks process all transfers submitted to them in batches, executing funds transfer from one account to another. It’s free, takes just a few days and goes directly from bank to bank. ACH transfers are the most popular mode of funds transfer.
- Wire Transfer. When the money needs to get from one destination to another extremely quickly, nothing beats a wire transfer. Wires aren’t only fast: they’re safe, too—which makes them ideal for transferring large sums of money online. The downfall? They’re expensive, with costs on both sides of the transaction. While commonly executed through banks, there are also wire transfer services that may offer cheaper solutions.
- Mobile transfers. There’s a plethora of mobile transfer providers out there—the biggest being PayPal and Venmo. These solutions offer a convenient way to transfer money online, but are primarily used for personal finance—not business transfers. In using these services, you adhere to their terms and conditions, which may include restrictions how much money or how often you can transfer. There are also fees.
- Digital transfers. Digital transfers make use of digital wallets to facilitate peer-to-peer funds transfers. These transfers exist outside of traditional banking networks, which makes it quicker, easier and more convenient to send funds online. They’re also great for international transfers, since they can handle currency exchange and offer funds tracking. Of course, they also integrate with traditional banking systems if needed.
At some point, you’re likely to use each of these payment methods. And while they might all function the same on the surface, what happens behind the scenes is what makes them unique. It’s important to understand how to transfer money online based on the rules of each transfer method, so you can send or receive money without any interruptions.
Transfers are different from payments
In understanding how money moves around the world, it’s also important to distinguish between a transfer and a payment. While there are several ways to transfer money, there are just as many ways to send funds via payment rails.
For example, if you need to pay a contractor living in Canada, you can use mobile transfers to send money to them. When it comes to paying an invoice, you might opt to use your credit card, which facilitates a payment through the card network. In both cases, money moves from one place to another—the mode of movement simply changes. Transfers are more direct; payments tend to travel through a third party.
Hybrid solutions offer maximum convenience
While payments and transfers are different, there are hybrid options that satisfy the need for both—namely, digital payments. Digital payments operate in tandem with the traditional banking ecosystem, yet outside of it, to offer maximum mobility for funds. You can just as easily transfer money to a contractor across the country as you can pay an invoice to a vendor halfway around the world.
The beauty of a digital payment solution like Veem is that it also comes with features and functionalities that make transferring money simpler. Built-in exchange rate factoring simplifies funds transfer across borders. Payment tracking allows senders and recipients to see where money is after a transaction is initiated. The ability to hold money in a digital wallet gives users the freedom to transact money however makes the most sense to them.
As the infrastructure for moving money becomes increasingly dependent on digital systems, digital payments continue to be the smartest route.
Going beyond traditional transfers
It wasn’t long ago that transferring money online was a cumbersome and convoluted process. Mobile transfer platforms opened the door for simple funds-transfer solutions, and quickly became the norm. Today, digital banking infrastructure is better than ever, and the availability of digital transfers is seamless. Whether you’re paying someone back for lunch or paying a vendor in another country, it’s never been easier to transfer money online.