What is a remittance?
What is remittance and how to use it
If you’ve moved abroad for work, whether to the UK or elsewhere, and are looking for an easy way to financially support loved ones back home, a remittance may be the answer.
So, what is a remittance? Quite simply, a remittance is the transfer of money between two groups, whether people, companies or billpayers. It’s a term usually associated with workers who send money back home to their families abroad.
As of 2019, around 800 million people around the world were said to be receiving remittances.
Options for remittance include money transfers, cheques, bank transfers and prepaid cards. There are also several ways of sending money without a bank account.
Read on to discover how a remittance works in the UK, the people who traditionally use them, and how to complete one.
In this article
- Remittance definition: what it means
- Who uses remittance transfers?
- How to send a remittance transfer
- How can you receive a remittance?
- What’s the difference between a remittance and a bank transfer?
- FAQs and guides
Remittance meaning
What’s the meaning of remittance? A remittance is simply a money transfer, sent between two parties, like you and a loved one. Though a remittance can refer to any kind of monetary transfer, it usually describes someone sending money to another country. For example, you might be sending funds to your family abroad to contribute towards bills back home, for example.
If you want a deeper dive into the meaning of remittance, it comes from the word ‘remit’, which means ‘to send back’. It’s a very common transfer option and can be made using a money transfer company, like Western Union.
Who sends remittance transfers?
Remittances are a common way for migrant workers in the UK and elsewhere to send money back home to their friends and relatives.
A percentage of your wages can be sent to family members and loved ones regularly, or a remittance can be used as a one-off gift, such as for a graduation or wedding.
India is the most common destination for remittance transfers, with $83 billion wired to locations in the nation in 2020[1]. The destination with the most transfers sent out of the country was the US, where $68 billion was transferred out in 2020[2].
However, despite their popularity among migrant workers, anyone can make a remittance transfer.
[1] https://migrationdataportal.org/themes/remittances
[2] https://migrationdataportal.org/themes/remittances
How to send a remittance transfer
There are several different ways to send a remittance transfer from the UK. The one that suits you best will depend on your personal circumstances. Let’s take a look at some of the main options to choose from.
Money transfer services
Money transfer services like Western Union offer a convenient way of sending funds from the UK to over 200 countries. You can send money online, through the app or in person at an agent location near you.
Banks or credit unions
It’s possible to transfer money between bank accounts at home and abroad. However, both you and your receiver will need access to an account.
Cheques and money orders
You can send money back to another country without the assistance of an agent.
Cheques and money orders can be written and sent yourself. However, these methods rely on the receiver having access to a bank account to cash the cheque.
However, posting cheques may not always be the most reliable option for remittance.
Prepaid cards
You can use prepaid debit cards to send money home. With these, you’ll load the amount you wish to send onto the card and then post it to your family. They can then use the card much like a debit card, spending it where they want until the funds are gone.
How can you receive a remittance?
There are several ways you can receive a remittance sent by a loved one abroad, from cash pickup to a bank account transfer.
Cash pickup
If you receive a money transfer from abroad, you might be able to pick it up as cash from participating agent locations. All you need to do is head to a convenient agent location with your details.
Cheque
You can receive a cheque in the post sent to you by a family member or friend abroad. You’ll need to deposit it into a bank account to withdraw the money.
Prepaid card
You may also receive a prepaid card. This works like a regular debit card and can be used at participating retailers until the balance on the card is spent.
Bank transfer
If you have a bank account, you can receive a remittance via an electronic bank transfer. The money should become available to withdraw shortly after the transfer has been made.
What’s the difference between a remittance and a bank transfer?
What are remittances vs bank transfers? Although they’re both methods of transferring money between people, remittances and bank transfers differ in several ways.
A bank transfer requires two bank accounts to take place. Money is sent digitally from one account to the other. For you to be able to transfer funds abroad, both you and your receiver will need access to separate bank accounts.
A remittance, meanwhile, covers money transferred from a variety of sources. Though you can still transfer from a bank account, you’re also able to send money via other means. These can include money transfers, prepaid cards and physical cheques. Depending on how you choose to remit your money, your receiver will not always need regular access to a bank account.
You now know all the basics of remittances in the UK, including what is remittance and how to send and receive them. If you’re looking for more information on money transfer topics, we have a range of helpful guides and FAQs available.
Send a remittance with Western Union
Ready to send a to loved ones abroad? It only takes a few minutes to get started with Western Union. Simply or online or on our money transfer app, or visit your nearest agent location.
You can , so you’ll know when your remittance has reached your loved ones.
