The number of people sending money across borders is increasing day by day owing to various purposes. Individuals, immigrants, businesses, consultants, freelancers, and many people are sending money to various countries in multiple currencies via diverse electronic modes as the means to pay for products, services, friends, or family offered globally.
Remittances prevail as a channel of income for many families as overseas workers send money back to their families through it. And cross-border payments facilitate payment to people/parties or businesses around the world for both personal and professional objectives.
In most cases, common people consider cross-border payments and remittance to be the same. Yet, they are different technically on various grounds such as purpose, types, regulation, exchange rates, cost, operational time, applicability, etc.
Let us explore in detail the distinct difference between cross-border payments and money remittance in the following section.
| Specification | Cross-border Payments | Money Remittance |
|---|---|---|
| Definition | Cross border payments are the funds transfer which are primarily made between two parties belonging to different countries in exchange for goods or services provided by individuals and businesses. Cross border payments involve both personal and business-related money transfers across borders. | Money remittance is a sum of money that is transferred from the Individual to the other residing in same or different country. It is primarily done on personal grounds to satisfy the financial needs of one’s family or promote their standard of living by offering education, purchasing properties etc. Money remittance corresponds to any type of money transfer that occurs between two parties either domestically or internationally. |
| Purpose | Most possibly, cross-border payments are used to transfer funds between two different countries to pay employees, suppliers, partners, etc.For example: Online purchase from different countries, Paying the importer in export business. | Money remittance is specifically used to transfer funds between two individuals.For example: Sending money to friends, paying tuition fees for students studying abroad. |
| Types | The payments are sent between countries through digital payment platforms such as PayPal and wire transfers. | The payments are transferred between the individuals in different as well as same countries via the following ways:
|
| Regulation |
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| Time | As cross-border payment deals with business transactions in most cases, the payment takes a certain time, from weeks to months at times, depending on the payment service provider. | Since specific amount is transferred through money remittance, the payment is transferred in real time like the credit/debit card payment. |
| Security | Significant security breaches in the cross-border payments regime are typical. As regulations vary across nations, hackers have the accessibility to have control over the payment when the payments are transferred into a country that holds a lethargic security policy and regulation. | Compared to cross-border payments, money remittances are secure as it is regulated by FATF, and no deviation of regulation is available in the sender/receiver’s country. |
| Volume | Any volume of payment shall be transferred between nations in cross-border payments. | Generally, small/sizeable volume of data is remitted in money remittance. |
| Currency | In cross-border payments, the payment is transferred to the receiver in the currency of the sender’s country. | Conversion of the sender’s foreign currency to receiver’s local currency is involved in money remittance and hence the payment is received by the receiver in their local currency. |
| Exchange rates | In cross-border payments, the payment is exchanged at the receiver country’s currency rate. | In money remittance, the payment is exchanged to local currency based on the sender country’s exchange rate. |
| Application | Cross-border payments are meant for both professional and personal use. Most international business transactions take place through cross-border payments. | Money remittance is used for personal use like sending money to family members living abroad, paying their bills etc. |
| License |
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| Cost | As payment service providers are a vital part of cross-border payments, they need to be compensated and hence the cost of cross-border payments is comparatively higher. | The cost of money remittance to overseas countries is lower when compared to cross-border payments. |
| Cross-border Payments |
|---|
Definition Cross border payments are the funds transfer which are primarily made between two parties belonging to different countries in exchange for goods or services provided by individuals and businesses. Cross border payments involve both personal and business-related money transfers across borders. |
Purpose Most possibly, cross-border payments are used to transfer funds between two different countries to pay employees, suppliers, partners, etc.For example: Online purchase from different countries, Paying the importer in export business. |
Types The payments are sent between countries through digital payment platforms such as PayPal and wire transfers. |
Regulation
|
Time As cross-border payment deals with business transactions in most cases, the payment takes a certain time, from weeks to months at times, depending on the payment service provider. |
Security Significant security breaches in the cross-border payments regime are typical. As regulations vary across nations, hackers have the accessibility to have control over the payment when the payments are transferred into a country that holds a lethargic security policy and regulation. |
Volume Any volume of payment shall be transferred between nations in cross-border payments. |
Currency In cross-border payments, the payment is transferred to the receiver in the currency of the sender’s country. |
Exchange rates In cross-border payments, the payment is exchanged at the receiver country’s currency rate. |
Application Cross-border payments are meant for both professional and personal use. Most international business transactions take place through cross-border payments. |
License
|
Cost As payment service providers are a vital part of cross-border payments, they need to be compensated and hence the cost of cross-border payments is comparatively higher. |
| Money Remittance |
|---|
Definition Money remittance is a sum of money that is transferred from the Individual to the other residing in same or different country. It is primarily done on personal grounds to satisfy the financial needs of one’s family or promote their standard of living by offering education, purchasing properties etc. Money remittance corresponds to any type of money transfer that occurs between two parties either domestically or internationally. |
Purpose Money remittance is specifically used to transfer funds between two individuals.For example: Sending money to friends, paying tuition fees for students studying abroad. |
Types The payments are transferred between the individuals in different as well as same countries via the following ways:
|
Regulation
|
Time Since specific amount is transferred through money remittance, the payment is transferred in real time like the credit/debit card payment. |
Security Compared to cross-border payments, money remittances are secure as it is regulated by FATF, and no deviation of regulation is available in the sender/receiver’s country. |
Volume Generally, small/sizeable volume of data is remitted in money remittance. |
Currency Conversion of the sender’s foreign currency to receiver’s local currency is involved in money remittance and hence the payment is received by the receiver in their local currency. |
Exchange rates In money remittance, the payment is exchanged to local currency based on the sender country’s exchange rate. |
Application Money remittance is used for personal use like sending money to family members living abroad, paying their bills etc. |
License
|
Cost The cost of money remittance to overseas countries is lower when compared to cross-border payments. |
Cross-border payments and money remittances are the two crucial fund transfer methods that assist individuals and businesses by facilitating international payment across the globe. They possess unique features and are employed by users based on their requirement scenario.
We hope that we have explored extensively the differences between cross-border payments and money remittance in detail here, bringing insight into their operation, purpose, application, efficiency and many more.
Have Effective & Secure International Money Transfers with NetRemit!
To ensure “your customer delight,” we have re-engineered our flagship product, NetRemit – White-Label International Remittance Software from the ground up to provide a robust and consistent user experience across all devices and platforms. Crafted to the finest shape and form by a 40-member team of professionals who have more than a decade of experience in the remittance industry.
NetRemit is a powerful and versatile solution for your international money transfer business, which is complete with improved security architecture and a more thorough built-in framework for managing risks and adhering to regulations.
From Know Your Customer (KYC) checks and payment gateways to foreign exchange and payouts, NetRemit gives you access to the world’s best marketplace apps for making and receiving cross-border payments.
With NetRemit white labelled Cross-Border Payment Suite, you can optimise your remittance success rate and set yourself apart from the competition.
What's unique in NetRemit?
- An air traffic control-style back-office platform (NetRemit Admin Center) to configure and control your brand and business rules for any single and multiple currency corridors.
- Boundless Marketplace Integration starts from KYC to Pay-outs.
- RaaS (Remittance as a Service) can meet all your remittance service needs (legacy migration, compliance, AML & KYC, and payout).
- Extensive Data-Rich Analytics with 40+ reports.
- Centralised CGI Gateway for Core Banking or Accounting platforms.
- Built-in incident service management module.
- You can set up a wide range of possible conversion rate slabs between the currencies you receive and the currencies you pay with.
- Enterprise-grade security enables businesses to connect and manage their operations globally.
- Flexibility to adopt Open Banking and Open Finance.
- White-label SaaS – All under your brand name. By leaving all the heavy lifting with us, you can focus on your core business growth and maximise your remittance success rate.
As your business expands, NetRemit enables you to scale, automate, and increase your profitability without interruption.
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