Modern money transfer systems

Introduction

Money is an essential tool in our day to day lives and as a consequence, efficient ways of getting it from point to another are also an essential part of life as well. The systems should fast, secure and also guarantee the client that the money will certainly get to the intended destination

Over the years, various ways of transferring money were used but none are more secure and faster than the modern money transfer systems. Most of the modern money transfer entails non-cash transfers i.e. there is no physical movement of money from one point to another. Of the current systems, the most common include use of banks to make account to account money transfers, use of wire transfers, electronic funds transfers, and email money transfers.

Modern money transfer

In Europe and other well developed economies, money transfer systems such as the bank transfers are the most common form of payment. Therefore, money transfer is an essential tool in that it facilitates purchase of goods and services, payment of bill etc. through the use of debit and credit cards, the velocity/ speed of money in the economy is enhanced.

The evolution of money transfer systems reached its peak with the introduction of internet currency. This allowed purchase and sale of commodities and services over the internet. With this, there was a need for some form of banks to facilitate the payment and receipt of money over the internet without utilizing the services of conventional banking systems. These “internet banks” have grown over the years and the fact that they can actually be linked to client’s bank accounts has made their popularity grow over the years.

The latest innovative way of transferring is the use of mobile phones. This was the brain child of Safaricom, a Kenyan mobile phone service provider. The service known as MPESA helps in transfer of money and is quite helpful to the un-bankable in the society as it only uses one’s card and other national identification documentation to use. One does not have to have an account of some form with the banking institutions as is the requirement with most other money transfer systems. The service is slowly catching up in other parts of the World.

Cost of money transfer

The money transfer service providers usually charge certain fees depending on the quantity of money as well as the distance of money transfer. Money transfers across boarders are usually subject to higher commissions/ charges. To facilitate money transfers to different locations in the World, these money transfer agencies have to have offices, agents or representatives strategically placed to maximize business returns and good service delivery.

Advantages of modern money transfer systems 

This form of the transfer is fast compared to the distance that is covered, other alternatives like cheques takes a longer time compared to this. 
The transfer is more flexible and one can easily move money from one bank to another or even from one country to another without following long procedures.

iii.    This transfer is more secure considering there is no money in cash-form; it just needs use of passwords and security checks that only the involved parties are well informed.

iv.     This mode of money transfer promotes foreign currency exchange as the sender sends in their own domestic currencies which are later converted in to the other currency depending on the rate of currency exchange.

Disadvantages of modern money transfer systems

I.                    Due to use of computer systems in most of modern money transfer systems, trust and reliability issues are a constant threat.