Almost everyone has a bank account, right? Not exactly! A study titled The Global Findexreport in 2017 by the World Bank group stated that 1.7 billion people in the world do not have a bank account. That means, there are 9 million Americans without a bank account! If you need to transact with any of them, then the question that arises is how to do it. While transacting with someone who does not have a bank account may seem difficult, there are many options available. Here are some of the options to send money to someone who does not have a bank account.
- Money order
A money order is a way of sending money to someone through the postal service. It is similar to a cheque. The difference is that a cheque is issued against a bank account while a money order is a banker’s cheque that does not require a bank account for the recipient. This is an easy way to send money to someone who does not have a bank account. All you need to do is visit your nearest post office, fill in a money order form and record the details of the recipient, including name and address.
After that, you can pay the money that you want to transfer, along with the post office’s charges, which are usually nominal. In some countries, the post office sends the money order to the recipient and they can get their money in the form of cash from the postman. In the US, you need to send the money order to the other person. That person then visits the post office to collect the cash. The recipient would need to hand over the money order and produce an identity proof after which the cash would be paid.
Apart from post offices, some retail outlets also offer money orders. Even gas stations offer money orders. The procedure is simple – you need to pay the cash with the charges at the outlet. The money order is then given to you. This money order can be sent to the recipient who can get the money order cashed. Money orders are generally processed immediately, and the waiting time is usually a few minutes. They can be cashed on the spot by the recipient fairly quickly.
- Wire transfer
A wire transfer is another way of sending money to someone who does not have a bank account. It is offered by private organizations including Western Union and MoneyGram and it is a very simple way to transfer money. You can either do it online through the website of the agency or visit any of their outlets. You can pay cash, transfer money from your bank account, or use your credit card/debit card. The catch is their charges are more than that of the post office (usually 1%).
Once you transfer the money, the recipient can walk into any of the wire transfer agency’s store locations and collect the cash. They would need to show proof of identity and quote the transaction ID that you have sent. The processing time here is as fast as that of a post office. Once you pay money online or at the outlet, it is immediately transferred to the destination location from where the recipient can pick it up. Waiting times would be a few minutes only.
- Digital Wallet
A digital wallet is like a virtual purse. Just like you fill your purse with cash, you can store money in your digital wallet and then spend it wherever the wallet is accepted. The digital wallet can be easily installed on a mobile phone. Even if someone does not have a bank account, there are e-wallet companies that allow him or her to open an account.
You can transfer money instantly from your wallet to somebody else. All you need to know is their wallet ID. This is the easiest and quickest way to transfer money. Top companies like Google and Amazon offer digital wallet services. A recipient can create an account on the website and use it to transfer money to another recipient, who can use the money to spend online or at any shop/outlet that accepts this e-wallet.
- Prepaid debit cards
Another common way to transfer money to someone who does not have a bank account is by using a prepaid debit card. If the recipient has a prepaid debit card, you can transfer money to their prepaid debit card by using your PayPal account or using one of the many money transfer apps.
You may be charged anywhere from 1.5% to 3% for using this service. Once the money is transferred, the recipient can spend it using his prepaid card for any transaction. They can even use it at an ATM to withdraw cash. Getting a prepaid debit card takes some time. You need to approach a card issuing company that will issue the card after receiving your application. There is no credit check needed and the card can be issued on the same day or in a day or two.
When we compare the options listed above, here are the pros and cons of each of them.
- A money order is the cheapest way of sending money. It takes more time as you need to mail the money order to the other party. An ID Card must be produced to claim the money order.
- A wire transfer is instantaneous and is fast. However, the expenses are slightly more than that of a money order.
- Digital wallets offer the fastest way of sending money. The downside is the recipient does not have cash but must use the digital money to spend online or at retailers who accept them.
- Prepaid debit cards take a day or two to be issued. Once you have a card, loading money is done instantaneously. The downside here is the charges the car issuer levies, which is high.
You should compare the pros and cons of each of these options based on your personal situation before deciding the one that suits you and the recipient.