When sending funds to someone without a bank account, a range of practicalities must be considered. The money transfer needs to be not only safe and secure but also efficient and easily accessible. In this guide, we detail the various ways to successfully and securely transfer money to an unbanked person, whatever the circumstances.
When sending money to someone who does not have an active bank account, there are many things to consider. In this day and age it might seem unheard of but a reported 1.3 million Britons do not have a bank account, as well as 14 million of the US population. India, China, Mexico and the Philippines are among the top 10 remittance-receiving countries, and with millions of migrants around the world sending money to these predominately unbanked populations, alternative transfer methods for those without a bank account or using specific financial institutions are essential to financial synchronicity.
With this in mind, it is important to consider why people do not have a bank account. If it is due to technological challenges consider sending a simple, more traditional remittance. If they are unbanked due to age or location, ensure the money sending method you opt for is accessible (such as cash pickup options). It is wise to assess the circumstances of the money transfer as well; will this be a domestic or international money transfer? Will this be a one off or a series of payments?
If the payee has recently left the country as an expatriate, and is in need of new bank account, have a read through our guide to the Best International Bank for Expats.
After you have confirmed the details outlined in the previous section, the following considerations need to be made by both the sender and the recipient:
Now that you have identified the main obstacles and understood the unique requirements, you will be in a better position to consider the most suitable option for you. We have put together a list of the most reliable options for sending money to someone who does not have a bank account.
Before international banking was widely available, sending cash through money transfer providers was a reliable option for many. It remains one of the safest and most simple ways to send money to someone without a bank account. Companies such as WorldRemit and Xoom offer first-rate deals on cash money transfers.
WorldRemit offer an instant cash delivery, with payees able to pick up the cash within minutes of the transfer. The company is a global service provider which employs sophisticated safety measures to ensure your money gets to the recipient safely and quickly. WorldRemit determine fees based on the destination and monetary value of the cash transfer. Service charges and fees are displayed on the transfer interface so customers know in advance how much it will cost.
Xoom is another reputable cash transfer service, offering users the option to arrange cash pick up as well as door-to-door cash deliveries. The company has partnered with a number of providers to facilitate the pickup function. The fastest transfers are available when paying with a credit or debit card or via PayPal. As with WorldRemit, Xoom takes the destination and transfer method into account when charging fees.
Finally, consider your transfer options: are you setting up your money transfer online, over the phone or in person? The delivery speed for sending money this way differs depending on the company, with faster deliveries costing more for both parties.
For in-person cash collection, we suggest finding out which money transfer provider is located closest to your recipient, to ensure the payee can easily access the agent. Once a location has been confirmed, make sure you relay all the required details to the recipient who is collecting the cash.
A prepaid debit card is a sensible way to send money to someone without a bank account. Like an ordinary debit or credit card, these prepaid cards are available from major global payment companies like Mastercard or Visa, but they will not be tied to a bank account. You can also purchase prepaid debit cards online through vendors like Amazon and Walmart, or over the counter at supermarkets or the post office.
To use the card, the sender needs to load funds onto it using a card payment or cash. Once a monetary value has been loaded onto the prepaid debit card, the recipient is free to use it to withdraw money, go shopping or order items online. When the funds on the prepaid debit card need replenishing, cash can be used to top up the account balance. Features of prepaid cards can include the option to transfer funds, establish direct deposits and manage the balance using a mobile app.
In the interest of security, we recommend sending the prepaid card to the recipient before loading any funds onto it. Once the prepaid card has safely reached its destination, the recipient can be top it up using cash, or the sender can deposit an online payment into the account.
As the name suggests, a digital wallet or e-wallet is accessible on a mobile device or smart tablet and is a great alternative for someone without a bank account. The majority of modern smartphones come with mobile wallets like Apple Pay or Google Pay pre-installed on the device. Generally speaking, mobile wallets work with point of sale systems all over the world, however in certain countries there may be compatibility issues with the brands of mobile device and point of sale system.
In addition to pre-installed mobile wallets, it is worth researching credible money transfer providers that facilitate mobile money transfers. Two leading examples are WorldRemit and Azimo, who facilitate deposits directly to mobile wallets. WorldRemit offers an instant money transfer for mobile money deposits, while Azimo offers mobile money transfers that take between 1 – 3 days to arrive but are attached to a lower price tag and more favourable rates.
Used by over 5 million customers worldwide, WorldRemit is one of our top-recommended options for sending mobile money to someone abroad. The company operates in over 130 countries with the ability to send over 70 currencies within minutes.
To initiate a mobile money transfer, all you need is your recipient’s phone number and for them to be signed up to a mobile money transfer service in their home country.
Constant improvements to financial technology and digital wallets mean they are often considered safer than carrying a physical bank card, due to the extra protection of sophisticated cybersecurity. If the recipient is overseas, you can send money to a mobile wallet via online payment. Before choosing this method of money transfer, be sure to check the recipient is in ownership of a fully functioning mobile device, to ensure ease of access.
A money order – also known as a postal order – is similar to a cheque, but does not require the assistance of a banking institution. Much like a cheque, a money order comes in the form of a paper slip with the value printed on the front. When sending a money order to someone without a bank account, the sender will pay for the desired value, completing the money order form and signing their name. If you are sending a money order overseas, check out the MoneyTransfers guide to International Money Orders.
Unlike a cheque, when the money order arrives with the payee, it can be cashed out over the counter and does not require the help of a bank. It is often cheaper and easier to cash out the money order with the same provider who issued the money order in the first instance. As long as the sender retained the receipt and proof of purchase, the money order can often be tracked or cancelled if necessary. This long-standing money transfer method is readily available around the world and can be purchased over the counter from post offices, supermarkets and other major retailers.
The task of sending money to someone without a bank account may seem challenging at first, but thanks to ever-evolving advancements in fintech, the possibilities are plentiful. We would not recommend posting cash to the payee under any circumstances, even if this is something you have done before. Instead, familiarise yourself with the global payment providers mentioned in this article as many of the options available are flexible.
April is a journalist and full-time content writer for MoneyTransfers.com. Over the last decade she has written for a number of different online and print publications. Having lived overseas in Canada and Vietnam, April hopes to see more of the world as soon as possible, with Japan at the top of her travel list. As a former expat, April has first-hand experience of managing finances from overseas. She enjoys writing about forex trends and the future of banking.