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It costs a lot to do an International money transfer. Even with the high cost of International money transfer, money sent back to relatives is the largest source of foreign investment for many African and Latin American countries. Traditionally, people have used a money transfer agent such as Western Union or used a bank wire transfer to send money to relatives and families. With the advent of the internet and prepaid debit cards, there are now more choices when sending money overseas.

There are now many choices for International money transfer. These choices include cash transfers, money orders, bank transfers, prepaid debit / ATM cards, eWallets, or credit cards. See below for the advantages and disadvantages of these different types of International money transfer methods.

Cash Transfers

Cash transfers using a money transfer agent is a convenient, but expensive method to transfer money overseas. Western Union and MoneyGram are examples of money transfer agents. With a money transfer agent the sender gives the cash to be sent to the local money transfer agent, and the receiver then can collect the cash at a local money transfer agent. Both Western Union and MoneyGram will also accept payment online or by phone to transfer money overseas.

International Money Orders.

International money orders are cheap, but they have to be mailed to the recipient. If you use an United States Postal Service (USPS) money order, it can be cashed in most banks or post offices in foreign countries. Banks and financial institutions also offer money orders, but money orders other than the USPS may be difficult to cash.

Bank Transfers

Bank transfers are convenient and secure if at least the receiver has a bank account. The sender does not have to have a bank account as most banks will accept cash from a non-bank customer for a bank transfer (fees will be higher for a non-bank customer). Many banks offer banking accounts that cater to multi-currency transactions at a very competitive rate. Most banks provide various International money transfers options such as wire transfers, currency exchange, money orders, bank drafts, and even ACH services.

Transfer Money To A Prepaid Debit / ATM Card.

A prepaid debit card is a great way to avoid high International money transfers fees. Great for family members where money is transferred on a regular basis. You can either send the recipient an ATM card containing the money or transfer money to a re-loadable ATM card that the recipient carries with them. You can send money to the debit card from your bank account, eCurrency, credit card, or another prepaid debit card. Many ATM cards now carry the Visa or Mastercard logo which means that they can be used at ATM machines or be used for shopping instead of converting the money to cash.

Transfer Money Using an eWallets.

eWallets can be a cheap, secure way to transfer money if both the sender and receiver have access to online accounts. An example of an eWallet is PayPal that specializes in person-to-person payments online. There are also several International companies that fulfill the need for a global currency by offering private eCurrency backed by gold. By using the gold standard there is no need to convert currency. Money transfers between eCurrency accounts can happen in seconds. In most cases you can open up an eCurrency account for free. Depending on the financial services company, there are many ways to add eCurrency to your account and to transfer the eCurrency to your local financial institution and local currency.

Transfer Money Using Credit Cards.

Credit cards can be a convenient way to transfer money between a parent and a student studying overseas. Credit cards can also be a way to readily receive cash by using the cash advance feature on most credit cards. You can also have multiple cards issued to family members tied to the same account. Then for example, a parent’s college student needs money he would just use a cash advance at an ATM to get cash. The downside to cash advances on credit cards is that there are many times additional fees and higher interest rates tied to a cash advance vs. just regular credit card purchases.

Supply Chain - the Way We Were. The term “supply chain” many years ago was a phrase that not many people understood, but it distinctly described the nature of moving goods to market. Everyone in the supply chain knew who they were linked to in the supply chain. The supplier linked to the manufacturer, and the manufacturer linked to the distributor and so on. Also, every member of the supply chain knew what the end product was and who the end-customer that would use the product. Additionally, the supply chain usually only had a couple of links. If one link failed, everyone in the supply chain was affected. If all the links in the supply chain were strong, then the entire supply chain was strong.

Supply Chain Network - the Way We Are. The term “supply chain” now is a commonly used term to describe the process of moving goods to market, but now the term “supply chain” does not fit what is really going on in the supply chain. The supply chain has turned into a supply chain network. A computer chip manufacturer may manufacture a computer chip, but many times chip manufacturers do not know if their chips will be in a TV or an electronic toy. If a link in the supply chain network fails, it does not necessarily mean disaster up and down the supply chain any more. Ideally, each link in the supply chain network has many links and is not completely dependent upon one link in the supply chain network. With a network, one chain will not bring down the system. On the other hand, a supply chain network can become fairly unpredictable when it is under stress such as the current recession. You can be a manufacturer of machine tools in California, and be immediately affected by the changes in the local economy in China.

Wall Street Journal posting, Clarity Is Missing Link in Supply Chain, has a great write-up on the effects that the current recession is having on an electronics supply chain network. It brings home the point that most supply chains now have many connections, many of them global, and that many supply chain “links” have dependencies to other distant links in the network. In many cases, these dependencies and risks are not known to many businesses in the supply chain network. Not sure if I agree with the author’s use of the work “clarity” in the title. It implies that supply chain networks need clarity. Not sure that will happen within a complex supply chain network. What is needed is redundancy in the supply chain network and methods to manage risk. No supply chain link (business) should be completely dependent on another business for its survival.

Importing and exporting is a costly business in terms of complying with all the International documentation requirements. Now the SAFE Port Act will require additional information prior to a ship sailing to an U.S. port. The security filing initiative of this act is called 10+2 because it requires 10 data elements from the importer and 2 data elements from the carrier before a ship sails to an US port. Technology such as EDI and electronic data exchange can solve a lot of things, but it can also support a bureaucracy. I am all for supporting the Homeland, but I would hope some smart people figure out a way for us not to stifle free trade. See SourcingInnovation’s post: 10 + 2 = 690,000,000 for more information.