The Rise Of Online Money Transfer Services And The Fall Of Traditional Banking

by Jeffery Nevil⁽¹⁵³⁾ Red Star

Making a money transfer online has become one of the primary ways that we as internet users engage in financial transactions. This is the case for both individuals and businesses, and we rely on electronic financial transactions to both pay and get paid. The way in which a lot of people carry out these sorts of payments is through a bank, but this has some limitations. As a result of these limitations people often look for a money transfer service, external to their bank - which does not have these drawbacks.

The limitations of a traditional banking system online are similar to the limitations of a traditional banking system offline. Namely, there are a large amount of delays, fees and restrictions on locations where money can be sent. This is unacceptable to the majority of people however. An instant, cheap service that allows you to send money anywhere in the world is therefore preferred. Let's look at a few case studies of people that might want to use this service. First and foremost are the businesses that need to pay people, or need to collect payments, from around the world. These companies require a dedicated team of employees, and they need to be financially compensated for their work, and in a timely and efficient manner that is not costly to the business I might add. Another potential user of such services is a bit more personal, on an individual level. Imagine if a young student is away travelling and has lost their passport so requires some money in the local currency. There might be difficulty if there is a delay in payment, and the local currency's conversion rate might be unbalanced or even punitive if payment is instigated through a bank.

There are many services out there nowadays and now that we have a better idea of what these services do and the people who may want to use them let's look at the specific aspects that might appeal to those people. Most services work by signing up to an online payment account, where you then transfer funds from your bank account. This is great for security as it removes your bank from the equation. Other security features might be in place too, such as 128-bit encryption, firewalls and secure data centres. A cheap service is also an aspect that will appeal to users; there are a range of options, which sometimes involve a fee. This pales in comparison to bank fees, which can be extortionate - and there may be some sort of penalty. The best services don't charge to receive money either, so that's an appealing factor for potential customers too. As mentioned in an earlier section, delays can be avoided and the ease of making a money transfer online makes for another alluring feature. Ease of withdrawal from your online payment account, back into your bank account makes it especially appealing for people who need quick and easy access to their money. Some services even offer a prepaid credit card, which allows you to withdraw money from your online payment account directly from an ordinary ATM machine.

So there you have a brief overview of what might cause people to make a money transfer online, and what sort of services might help those looking to do so. It is an emerging field but the ease, convenience, security and reliability makes these sorts of services superior to traditional banking methods of online financial transactions.

Jeffrey Nevil writes on a number of subjects including money transfer online.

Article submitted Friday, February 10, 2012 & read 4 times.

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