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  • Feb 10, 2020

    What is a Money Transfer Business: How it works?

With the growing remittances industry, the option to begin a money transfer business has been growing – after all by record, a good amount of money was sent abroad last year. Following is the information on how a money transfer business works, how the money is sent, is it safe, how online payments are made and others.

To begin with, it is important to know a bit about the history of money transfer business. A money transfer business dates back all the way to 1800s when people used to communicate through telegrams. A person sitting thousands of miles away would send a message on a telegram, and hence communicate the message through. The money transfer businesses, then, used telegrams to communicate about the money being sent. For example, a person would go to a money transferor with an amount, the money transferor would send a message on the telegram with the amount figures, and hence the person on the other side of the telegram would forward the amount to the receiver of the money. It was simple.

It was simple but it needed the sender and the receiver of the money to be both present at the telegram office (in this case money transfer business office). As time progressed, and as the technology improved, the money transfer industry improved as well. With the advent of telephone, fax, email and the internet, sending money abroad has become a lot easier and quicker.  Today money is sent online.

Sending money online is an online version of the old fashioned ‘wiring the money’ i.e. Wiring money through use of modern technology. The money transfer businesses, or the banks, use the electronic funds transfer (EFT) to send money across. In other words, they do not send the actual money across, rather send the data that represents the amount. For example, if I have to send money from my account to someone else’s account in another country, then I do not have to send the ‘actual’ money but only the data that represents the amount.

Sending money abroad or making international payments have become so fast paced that it requires only few minutes. Thanks to the internet, the data is exchanged instantaneously and money is delivered across. However, with internet there is always a question of safety i.e. How safe is it to send money (or rather data that represents the amount) over the internet where it can be hacked. This problem has been dealt with.

Money is transferred on the internet safely with the help of highly secured layers of coding. In simple words, the data that is sent over the internet is coded several times so that it is illogical for the hackers. Once the data is received at the destination, the coded data is decoded and it makes sense or represents actual amount. This way the money is sent across safely.

The money transfer applications (computer softwares) can help a great deal in making payments. These softwares make businesses smoother, quicker and safer. Money transfer applications are built by specialist companies (such as <FinCode>) for the businesses in order to smoothen the process of sending money. Business applications would make sure that the money sent by the money transfer business is sent securely over the internet. The money transfer applications will be tailor-made for the each particular business, thus making a unique product for a unique business.

In addition to the above, a money transfer business needs to be registered with the government. The money transfer businesses have to comply with rules and regulations set by the respective countries in order to combat money laundering.

Money transfer business is simple, easy and secure. It works on the old phenomenon of wiring the money. The convergence of modern technology with the old idea has made this industry one of the fastest growing industries.

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