Finance

What does money transfer mean? How does it work? What are its kind?

The transfer of fund by any individual/institution from one place to another within a country or in another country. It assist in the flow of currency value from one different place to different irrespective of boundary. This is called money transfer or in banking language transactions of remittance.

(source of image is internet)

The definition of money transfer in Wikipedia has brought following transactions:

i. Electronic funds transfer, an umbrella term mostly used for bank card-based payments

ii. Wire transfer, an international expedited bank to bank funds transfer

iii. Direct deposit

iv. Money order, transfer by postal cheque, money, etc

The process wise type of money transfer:

a) Fund transfer: It is the transfer of fund from one account to another. Same bank or other bank transfer of individual or institutional transaction to next individual or institutional fund transfer activity is what fund transfer for.

b) Location transfer: It is the transfer of fund from one place to another. Same bank or other bank transfer of individual/institution to next individual/institution fund transfer in new location is what fund transfer for.

The nationwide type of money transfer:

a) National Remittance: If the remittance business limits its service of transferring fund from one account to another or one place to another within the boundary of own nation, it is called national remittance. Here, the banks and financial institution having national network plays significant role.

In today time, this concept is also found supported by Any Branch Banking System (ABBS). Internet facilities have heighten the level of fund transfer within the nation.

Here below are the types of fund transfer playing important role in national remittance:

                                         - Draft transfer

                                         - Mail transfer

                                         - Tele transfer

                                         - Fax transfer

                                         - Internet transfer

                                         - Money transfer

Banks and financial institutions (BFIs) have different rate of charges for availing this service to customer.

b) International Remittance: The transfer of fund to another/foreign country is known as international remittance. This is also known as international money transfer. Banks like, standard chartered bank having international network can carry transfer most properly.

Transaction payment under international remittance

International remittance fully depends upon changed foreign currency. Every country have their own currency so, it is very difficult to do transaction in all. For example: If you want to send money in  South Korea then bank takes fund and calculates in dollar. Same will be sent in South Korea.

These days international remittance is carried out with the help of SWIFT. SWIFT stands for society for worldwide inter bank jointly agreed to form SWIFT. Every bank or financial institutions is provided Bank identifier code (BIC), which is known as SWIFT code. This contains 8 or 11 characters. For example; SWIFT code of standard chartered bank is SCBLNPKAXXX.

                SCBL- Standard Chartered Bank Limited (Bank name)

                NP- Nepal (Country name)

                KA- Kathmandu (City name)

                XXX- Any three digit/character (Bank code)

In context of Nepal, there is no restriction of receiving foreign currency in Nepal. But, NRB has some restrictions while sending currency outside. All BFIs have not authority to send the currency internationally. The allowed bank uses the following tools to send allowed amount.

                                          - Draft transfer

                                          - Mail transfer

                                          - Fax transfer

                                          - Tele transfer

                                          - Internet transfer, etc.

Now, the e remittance have leveled up. The development of IT has simplified the remittance more. Following modern tools are becoming more popular nowadays:

                                         - ATM (Automated Teller Machine)

                                         - Internet 

                                         - Mobile Banking

                                         - E-Banking

                                         - Tele banking, etc

For doing remittance business person, firm, company and body should take approval from NRB, remittance bylaw, 2067.


Happy reading!