The large Latin American diaspora in the United States, Europe, or Australia seeks options to send money home.
LatinAmerican Post | Santiago Gómez Hernández
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Leer en español: 4 opciones para enviar dinero al exterior
Latin Americans are the largest diaspora in the United States and one of the largest in Europe and Australia. In addition to being a vital labor force for the growth of these countries, they are also an essential source of money for millions of families in Latin America. According to the Inter-American Development Bank, in 2022, Latin America received 142.235 billion dollars in this category. This capital inflow is vital for several nations in the region, such as El Salvador, where remittances represent 26.4% of GDP; Honduras, 25.5%; Haiti, 20%; and Guatemala, 18%.
However, according to the Wise platform, people who send international remittances from the United States "lose" US$2.2 billion every year. According to the study, this money is lost in the chain of payments that users need to be made aware of. Although this study only considers the case of the United States, the situation may be similar in the rest of the world.
This is why there are several options for sending remittances in today's world. The Wise platform is an ideal option for small remittances, as it has low fees. In addition, here we show you the other alternatives (from the most traditional to the most modern) for sending money to another country.
The most traditional way to send money abroad is through an interbank transfer. Usually, these are secure transfers backed by financial institutions and regulated by governments. For this, banks use the international SWIFT system.
However, they may delay money movement due to holidays or bureaucratic processes. The disadvantages are that they are restrictive for certain countries with international sanctions and because they generally have high and unfavorable interest rates for the client. Also, to make the payment, both the sender and the receiver must have bank accounts (a fact that is sometimes unusual in Latin America).
World-renowned money transfer companies are one of the most traditional ways to send money. They handle exchange rates and costs more competitively than banks. The advantages are that several companies have different locations where you can send cash. This saves the hassle if either or both (sender, receiver) do not have a bank account. In addition, they operate as a banking company, so they are regulated. Disadvantages: they also handle exchange rates that can be unfavorable and can only be claimed during customer service hours and after some time during the bureaucratic process. There are limits on the amount of money sent daily, weekly, and monthly.
In the modern world, the blockchain revolution impacted several aspects. One of the most significant impacts was in the financial world. Cryptocurrencies such as Bitcoin became famous because of their speculative nature. However, outside of the speculation issue, digital currencies can clearly show the idea of decentralizing money. All that is required is that the sender and receiver have a virtual wallet. Advantages: transferring money internationally is cheaper and much faster. In some business countries, it is possible to pay with cryptocurrencies, in which it is unnecessary to change back to local money.
Disadvantages: Given the constant changes in the value of cryptocurrencies, there are better alternatives to save money. Very few places receive cryptocurrencies, so they must be sold in local currency. Always use safe intermediaries and handle accounts responsibly, as they may lend themselves to suspicious movements.
Nowadays, virtual shopping has become very common. However, there is one method that stands out, and that is platforms such as PayPal or Payoneer. These companies are digital wallets that allow you to have money online and to transfer it or pay quickly or easily. These digital wallets allow you to send money quickly (between 0 to 3 days) and at no cost (between Payoneer wallets).
The benefits are that both can be connected to a MasterCard debit card (at no cost to PayPal), and you can also pay at multiple merchants.