Bank Transfer Vs Bank Remittance: When you transfer money from one country to another, you come across various terms like remittance, bank transfer, wire transfer etc. While all these are modes of money transfer and involve the movement of money, they differ in scope, purpose, and speed based on which they operate.
Bank Transfer is one of the popular and safe modes of international money transfer and is used for all large and small cross-border transactions. On the other hand, when a person transfers money to their family from abroad as a gift or money transferred to an organisation as a donation, then that will be called remittance. Let’s understand how bank transfers and remittances are different from each other.
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What is a Bank Transfer?
A bank transfer, as the name implies, refers to the transfer of funds from one bank account to another internationally or within borders. The transactions in a bank transfer can be made within the same bank or it may involve different banks or financial institutions. Bank transfers are versatile and can allow various transactions, including personal payments, business transactions, and routine banking activities.
- A bank transfer is initiated through banking channels when a request is made by the sender or receiver.
- A bank transfer Involves the direct transfer of funds between two bank accounts at a time.
- This mode is commonly used for domestic transactions but cross-border transfers can also be made easily. A lot of banks in India provide international money transfer services.
- The money transfer through a bank is usually cheaper than other electronic transfer modes.
- Money transfers through banks are safe secure and completely legal as they operate as per the guidelines of the monetary authorities of a country, like the Reserve Bank of India.
What is Remittance?
Remittance, on the other hand, is a broader term that includes the transfer of money from one place to another internationally. It includes various methods such as bank transfers, online wire transfers, and transfers through remittances like Western Union. Remittance is often associated with individuals sending money to their home country or supporting family members abroad. People in countries that are developing and slow-growing economies depend a lot on remittances. Recently, the government announced new rules upon TCS on Foreign Remittance for Educational Purposes which specifies that you need to pay tax as well while transferring money.
- Remittance can be done through a range of methods beyond traditional bank transfers.
- Foreign remittance majorly involves sending money from abroad to the home country.
- Money transfers for purposes like personal, business, and family requirements are called remittances.
- Remittance reflects the global movement of funds, contributing to economic ties between countries.
- In FY 2021-22, India received the highest-ever foreign inward remittances of USD 89,127 million.
While making an international money transfer, you must have heard about SWIFT. Check this blog and know all about SWIFT Wire Transfer
Difference between Bank Transfer and Remittance
Bank transfer and remittance are similar terms as the purpose of both is to transfer the money. Bank transfers are usually made within and outside the country. However, remittance means sending money to your family or friends from another country where you are residing. Check some of the differences between Bank Transfers and Remittances:
| Bank Transfer | Remittance |
| It is an electronic mode of money transfer | Remittance means sending money from a foreign country to the home country as a gift or donations |
| Transfers are made domestically and internationally | International transfer is made, primarily |
| The bank charges some fees | You need to pay the fee as well as the applicable currency exchange rate |
| Usually takes 1-5 business days for a transaction | Depending on the mode of transfer |
| Operates as per Banking Standards | Operates as per Financial Regulations, AML, KYC etc. |
| Used to transact for different purposes | Used to transfer money, especially to family |
FAQs
When you transfer money from abroad to your family or friends in another country, it is called remittance. However, a bank transfer is transferring money within the country or outside that involves two banks or financial institutions.
If your bank provides international money transfer service, you can easily do the same. It is one of the most safe and secure modes of money transfer.
Foreign remittances are the fund transfer from one party to another as a bill, an invoice, or a gift. Mostly, the individuals who are residing abroad transfer money to relatives in their home country which is simply known as remittance.
There are mainly two types of remittance i.e. inward remittance and outward remittance.
This was all about Bank Transfer vs. bank Remittance. Bank transfers are a subset of remittance, the latter term is a broader spectrum of financial transactions. Choosing between them depends on the specific needs, preferences, and circumstances of the individuals or businesses involved in the transfer of funds.
To know more about the remittance, bank transfer, loan application process, the best international bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience.
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