What is the safest way to receive a large amount of money

Millions of U.S. households send billions of dollars abroad every year. Whether the funds are for family or friends, or to purchase international assets, it is often difficult to conveniently send large sums of money. In addition, with so many options available, people need to take into account the speed, support, and costs of the various methods that financial institutions provide for sending and receiving funds abroad. The following are five of the best and most secure ways to accomplish this task.

1. Bank-to-Bank Transfers

Some banks let people take money directly from one bank account and deliver it to a recipient's bank account. These types of transactions can be arranged online, over the phone, or in person at the delivering bank. They may have a fee depending on the institution, and the account and routing numbers for both the sending and receiving banks are required.

Key Takeaways

• Speed, costs, and support are some of the factors to consider when sending money abroad.
• Banks can transfer money overseas, but weaker exchange rates and higher fees can make them more expensive compared to alternatives.
• ACH, cash-to-cash, and wire transfers offer other options.
• Receivers of prepaid debit cards can use them to withdraw cash or make purchases.

Some banks may offer special remittance programs for transferring slightly smaller amounts. However, in cases such as these, it is important to look at the exchange rates because although a fee might not be charged, the institution could be making money off of the transaction fee spread.

2. Wire Transfers

Additionally, it is possible to send large sums of money from one bank account to another through the use of a wire transfer. These types of transfers are initiated through a bank officer at the delivering bank who fills out the necessary forms. Wire transfers, for the most part, must be done in person. There is also a fee for this type of service, but wire transfers offer protection from both banks involved, making the fee worth it. For people residing in the U.S., wire transfers must be executed before 5 p.m. EST for the money to arrive the same day.

3. Automated Clearing House Transactions

Similar to wire transfers and bank-to-bank transfers, Automated Clearing House (ACH) transactions are electronic but use a computer-based clearing house that acts as an intermediary to process the exchange of transactions. The Federal Reserve bank, for example, is the largest U.S. ACH operator, processing 63% of all commercial ACH transactions in 2019. There are no fees for these types of transactions, but they do require both banks to be linked together. To do this, both parties need to follow bank-specific instructions.

4. Cash-to-Cash Transfers

If a person has a large sum of money in cash and needs to send it abroad, it is possible to use domestic, walk-in money transfer centers to transfer that money to an international money transfer center. Institutions such as Western Union, MoneyGram, and Ria, are the classic players offering this type of service. In the last several years, many fintech companies have started providing international money transfers. Some names that are prominent in the industry are Wise, Payoneer, PayPal, and WorldRemit.

Physical cash is deposited in one of these money transfer centers. The domestic currency is converted to the currency of the destination country and can be picked up by the recipient at a participating money transfer center. In some countries, the money can be delivered to the recipient at a residential or commercial location.

5. Prepaid Debit Cards

There are some services that can send funds via a prepaid debit card. If this method is chosen to send a large sum of money, the sender can load a prepaid debit card with cash funds, and the receiver of the funds can withdraw them using the prepaid debit card. In some cases, the prepaid card can be used to make purchases just like with a normal debit card. However, there is normally an activation fee or monthly fee.

The Bottom Line

There are several ways to send large sums of money to friends or family abroad. While speed is often the primary objective, costs and security of sending funds abroad should be considered as well. Wire, ACH, or cash-to-cash transfers might be cheaper alternatives to using bank-to-bank transfers. Lastly, recipients of prepaid debit cards can usually use the cards to withdraw funds or make purchases after paying an activation fee.

Thanks to services like Apple Pay and the now-standard EMV chip cards, you likely have more payment options than space in your wallet (or in your smartphone). But having ample choices doesn’t necessarily translate into better security.

When it comes to secure payment methods, it’s worth knowing the pros and cons of each, so you can make an informed decision. With that in mind, here’s a look at the top options and what you need to know for payment security.

Payment Apps

Mobile payment apps are designed to free you from cash and credit cards by allowing you to digitally transfer funds to family, friends, or merchants. You link your bank account or credit card information to the app on your phone or tablet, and your connected card is used to pay when you tap, swipe, or scan the app through e-commerce sites, in-store at the register, or to transfer money to a person or business. These apps are widely used by about 80% of U.S. adults and are used weekly. That percentage jumps to 94% for millennials.

Mobile payment vendors are highly sensitive to payment security concerns, so they maintain robust controls to keep information safe. If you also employ mobile device security, these digital wallets can be safer than credit cards tucked into a traditional wallet or billfold. Keep in mind that while these types of robust controls are likely are in place, mobile payment technology that collects all a user’s financial data in one place seems too tempting for hackers to pass up. As widespread adoption has occurred, payment app scams are on the rise. For non-users, 42% say security concerns are the reason why they have not embraced payment apps.

EMV-Enabled Credit Cards

Also called “chip and PIN” or “chip and signature” cards, these smart credit cards are designed to be more secure than traditional cards that require only a user’s signature.

These cards have an integrated chip that creates a new authentication code for every transaction, so it adds an additional layer of payment security. Also, the cards can’t be “cloned,” which is a hacker’s way of stealing information from a traditional card’s magnetic strip and making a new card. However, while many retailers have readers that can accept these cards, and federal law has motivated the shift by transferring payment fraud liability from the credit card issuer to the merchant processing the payment, not every restaurant, shop, or venue has the technology to read them. You can still use the cards by swiping and giving your signature, but you’ll miss out on the extra security the chips provide.

Bank Checks

With online banking growing in popularity over the last decade, many people write only a few checks per year, and that may be a good thing. Banks are attempting to put more payment security controls in place, but check scams are still far too common.

For one-time payments (such as magazine subscriptions, charity donations, or monetary wedding gifts), checks can be a convenient payment method. But, be aware that checks not only may feature your name and address, they also include your bank account and bank routing numbers. Worse, they give identity thieves an example of your signature. Because of this, you should send checks only to people or companies you trust, and regularly review your bank transactions to look for fraudulent check amounts.

Cash

The use of good old currency is starting to seem like a thing of the past. Even small transactions, like buying a newspaper or a cup of coffee, can be done with a swipe of a card or smartphone. But don’t ditch the paper money quite yet.

As easy as it is to swipe a card everywhere you go, security concerns will go along with you. That’s why it makes sense to pay with cash whenever possible, especially for smaller transactions. Cash carries zero risks of identity theft. The downside to cash is that no one feels particularly safe carrying a large amount of cash around, and if that cash is lost or stolen, it’s gone – unlike credit or bank cards, which can be replaced and fraudulent charges disputed.

Gift Cards

Electronic or physical gift cards are an easy way to show appreciation and provide recipients with a safe way to pay in store or online without exposing sensitive bank or credit card information. Just be sure you’re purchasing them directly from the retailer, as some third-party sites may be selling gift card scams.

A gift card is not connected to your bank or credit card account, so financial details are kept safe from scammers. Like cash, gift cards carry a very low risk of identity theft when they are unregistered. Just like cash, however, you may not feel safe from thieves when carrying gift cards, especially since so many say “treat this card like cash” – if the gift card is lost or stolen, so is the money. Some gift cards do have registration options to give them more protection against theft or fraudulent charges, but then you are required to hand over your personal information as part of the registration process.

In general, every form of payment has its risks, and it can be tricky to keep payment security in mind when you’re running errands or trying to speed through online ordering. But, to increase protection and minimize the chances of identity theft, it pays to focus on security during any transaction.

Stay Protected

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