Traditional Money Transfer Methods Vs Modern FinTech Methods

Traditional Money Transfer Methods Vs Modern FinTech Methods

In the last half century; there was the massive migration of people from less developed countries to more developed ones, looking for a better life with access to better basic amenities and better job and loving opportunities.

With this exodus comes the need for these migrants to send money back to their home countries to help their family; friends, loved ones and their business endeavors stay above water. 

Money transfer came to help bridge that gap, helping these migrants connect and be of support to their people back home; and as the years go by; the process continues to get less physical and more electronic. 

Money transfer basically refers to the process of electronically or physically moving money from one party to another. It's become increasingly important in today's world due to several reasons, one being the fact that we now have a globalized economy with businesses and individuals working and interacting across borders more than ever, requiring fast and secure ways to send and receive funds.

The birth and continuance of e-commerce platforms also necessitates easy and reliable methods to pay for goods and services from anywhere in the world.

Finally, as concerns us, money transfer helps support family and friends in different locations around the world.

How Does FinTech Come Into The Mix?

FinTech, or financial technology, has revolutionized money transfer in recent times by introducing innovative solutions that offer people convenience as transfers can be initiated from a mobile phone or computer, eliminating the need for physical visits to banks or money service businesses. FinTech companies also offer speed making money reach recipients almost instantly, compared to the delays associated with traditional methods.

They also offer users lower costs as they often offer competitive exchange rates and fees compared to traditional institutions.

Read Also: How Online Remittance Platforms Protect Their Platforms From Being Used For Money Laundering Practices

How Does The Traditional Money Transfer Work?

It is imperative to understand that traditional money transfer methods are still widely used for money transfer today, even with the advent and popularity of FinTechs. The system works in a list of ways including:

A. Paper Checks

Checks are paper documents instructing banks to pay a specific amount of money to a designated person or business. People transferring money to others will write the recipient's name, the amount, and sign the check. They get the checks sent to or received by the recipient who then deposits the check into their bank account transferring the funds from the sender’s account to theirs.

The limitations to this type of money transfer is that it is not usually viable for cross-border money transfer bringing physical limitations; as they require physical handling and mailing, which can be inconvenient and impractical for some situations.

Checks can take several days to clear, leaving the recipient waiting for access to the funds.

It also poses security risks as checks can be lost or stolen in transit. It can also be easily forged and cashed fraudulently. 

B. Bank Transfers (Wire Transfers)

The process of bank transfers are initiated through the sender’s bank either online or in person. The sender provides the recipient's bank account information and the amount to be transferred, then he electronically sends the money directly to the recipient's account.

This process is great as it is highly secure with encryption and verification processes. It is also reliable as the transfer is guaranteed once initiated, and funds typically reach the recipient within a business day.

The disadvantages of using this process starts with the costs. Wire transfers often incur significant fees, both from your bank and potentially the recipient's bank. It also takes time. While faster than checks, international wire transfers might still take an extra day or two, making it not great for emergencies.

C. Money Service Businesses (MSBs)

Money service businesses like Western Union and MoneyGram are some of the most popular ones that specialize in facilitating money transfers. To get the funds sent, the sender visits an agent location, provides the recipient details and the amount, and pays the transfer fee. On sending the money; the recipient collects the money in cash from the agent location closest to him.

This method offers convenience through their widespread agent locations, making them accessible in many areas. They also offer fast transfers as funds can often be received by the recipient within minutes, depending on the service.

As great as this avenue sounds, the drawback is the higher fees they generally charge compared to bank transfers, especially for smaller amounts.

Read Also: How Online Remittance Platforms Protect Their Platforms From Being Used For Money Laundering Practices

These traditional methods offer varying levels of security, speed, and convenience. While they still serve a purpose, FinTech solutions have emerged to address some of their limitations, offering faster, cheaper, and more user-friendly alternatives.

How Does FinTech Money Transfer Work?

FinTech has revolutionized money transfer with innovative solutions that prioritize convenience, speed, and affordability. This exciting avenue makes its magic work through the following ways:

A. Mobile Wallets & Peer-to-Peer (P2P) Payments Apps

These apps function like digital wallets on your smartphone. To get them working, you will need to link your bank account or debit card to the app to make you able to send and receive money directly with others who use the same app. SanaTransfer is the best example there is.

They also are incredibly convenient as transfers happen instantly between users, eliminating the need for bank visits or exchanging cash, making sending money to your loved one a breeze.

The apps also help by offering strong security features helping you to be mindful of your money. They also ensure that they warn customers from sending money to someone they do not know. They may also carry some risk as stolen phones with access to the app can be problematic. To prevent this, customers are also advised to utilize strong passwords and be cautious with who they send money to.

B. Online Money Transfer Services

These FinTech service companies also operate as online money transfer platforms. They have users create an account, link their bank account or debit card, and initiate transfers to others through email addresses or phone numbers.

These companies are advantageous as they offer competitive exchange rates for international transfers, saving customers money compared to traditional bank fees. They also offer lower fees for money transfers, than bank wire transfers, especially for smaller amounts.

Limitations to their services include the fact that you need to set up an account with the company to enjoy their services, which may involve verification steps.

Their transfer types may have limitations and may only be suitable for personal and not business transactions.

Read Also: Best Ways To Send Money Out Of Canada

Comparison Between Traditional And FinTech Methods Of Money Transfer

To show the comparison between these two methods of money transfer, we shall be creating a table based on speed, cost, convenience, security, and accessibility:


Traditional Methods

FinTech Methods





Varies (high for wire transfers & MSBs)

Generally Lower Costs


Varies (checks least convenient)

Most Convenient






Generally High

As shown in the table above, it is worth noting that the cost of traditional methods can vary depending on the specific service, bank fees, and transfer amount. Also the security considerations for P2P apps involve being cautious with whom you send money to and using strong passwords.

Furthermore, accessibility for FinTech methods depends on smartphone and internet access, which may be limited in some areas.

As you can see, FinTech methods generally offer advantages in terms of speed, cost, and convenience. However, traditional methods may still be relevant in certain situations, such as when sending large sums of money or when the recipient does not have access to a smartphone or the internet.

In Conclusion

With all we have seen so far, we can tell that traditional money transfer methods, though still in use, face limitations in speed, convenience, and cost. Paper checks are sluggish and vulnerable to fraud, while wire transfers come with high expenses. Money Service Businesses, while convenient, often impose hefty fees. However, FinTech solutions have transformed this landscape. Mobile wallets and peer-to-peer apps offer instant transfers, while online services provide competitive rates, especially for international transactions. Despite security concerns, particularly with P2P apps, FinTech methods generally deliver a more user-friendly and cost-effective experience.

Looking forward, the future of money transfer unquestionably lies within FinTech. Expect ongoing innovation, such as enhanced security with biometric authentication and robust fraud detection. Blockchain integration holds promise for faster and more transparent cross-border payments. Additionally, AI-powered money management could personalize experiences, automating payments and enhancing budget management. With a relentless focus on speed, convenience, and affordability, FinTech companies are poised to redefine how we send and receive money.

Though SanaTransfer is a modern FinTech dedicated to helping you send money to your loved ones quickly, affordably and securely; we have technologies in place that will make none of the limitations mentioned above affect our customers. 

To get to the Sana side of life, all you need to do is to sign in or log into our website or download our mobile app for Android and Apple devices. We always have you covered.

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