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Understanding the Differences Between Direct and Indirect International Money Transfers to the Gambia

06 Sep 2023

Gambian migrants working abroad to earn a living, broadly, have different ways to transfer funds back home where several expats choose to send money to Gambia online. One is to send funds directly without any third party and the other is to send funds indirectly. The second method is the indirect money transfer, in which your funds travel through different institutions before they end up in the recipient’s pocket.

All international money transfers take place more or less in these two methods. Both methods have pros and cons.

These two methods of transferring funds overlap and if you are not aware of the difference between the two, you are likely to use a direct money transfer instead of an indirect method and an indirect method instead of a direct one.

Therefore, it is necessary to understand the difference between the two so that you make an informed decision for your upcoming money transfer to Gambia.

This blog will draw lines between the direct and indirect methods of international money transfers to the Gambia for your better understanding.

Background of International Money Transfers at a Glance

The first international money transfer was initiated by the Western Union in the mid-19th century. Some reports say the first money transfer was executed by Western Union in 1870. It was a money transfer through telegraph. It became popular soon after.

The company had carried out 37,190 such money transfers, due to its popularity and rising demand, by 1876.

This transfer could rightly be called an indirect money transfer. Because its flow was similar to the postal transfers.

In postal transfers, the sender would give the amount to be sent to the post office employee. The employee would record the amount in a special record book, and then send the form to the concerned office where the recipient would collect funds.

However, the advent of the telegraph paced up the process and diminished the need to send coupons and forms by mail.

All the information was processed and sent by telegraph.

It was followed by online money transfers the banks offered and it revolutionised how international money transfers worked.

Since then, banks are catering to the money transfer needs of migrants and many out of a total of 118,000 Gambian migrants living in different countries worldwide choose banks for a money transfer to Gambia, despite several challenges banks still have in their remittance transfer operations.

Let’s now understand the difference between direct and indirect international money transfers.

Understanding the Difference Between Direct and Indirect International Money Transfers

First, you should know that the two major modes of sending money online are through banks and online remittance transfer companies.

But there is a lot of difference between their respective services. Let’s understand the difference.

Sending Money Through Banks

Bank transfers, also known as wire transfers, are normally called direct transfers but these have to meet one condition.

That the amount should be transferred to another account directly.

In wire transfers, money is transferred directly and electronically. 

And even different account types can also be used for this type of transfer.

But for a direct transfer between banks, the concerned institutions have to ensure the following:

  • Banks must have a professional liaison between them
  • Banks must have branches in the areas where money is sent
  • A bank must have an international branch network when sending money internationally

In the absence of these conditions, a transfer by the bank will have to be an indirect one because it will have to pass through different institutions before landing in the recipient’s lap.

Although many people still prefer to send money internationally through banks, the institutions have several challenges in their operations.

A few major challenges are discussed below.

Major Challenges Banks Face in Their Remittance Operations

  • One of the first is the high fees banks charge you for their services. Learn essential tips to reduce fees banks charge on international money transfers.
  • The other challenge is the time a transfer takes. Banks still take 3 to 5 days to deliver funds
  • Another issue is the paperwork and associated fatigue that you have to undergo. For example, producing the necessary documents, commuting to the branch concerned, and so on.

Let’s now understand indirect money transfers.

Indirect Money Transfer Across Borders

An indirect money transfer is when you send money to Gambia and the service provider uses intermediary financial institutions to process the transaction.

For example, imagine you initiate an international money transfer to Gambia with a company instead of a bank. Now, if you want your amount to be transferred into the recipient’s bank account, the company will first send the amount to the concerned bank which will process the transaction at its end and then transfer the amount to the account in the respective branch in the area concerned.

This is called an indirect international money transfer because here two entirely different financial institutions are involved in the process.

You may prefer an indirect money transfer across borders but note that this method incurs costs, is time-consuming and involves physical fatigue. 

Here’s, then, the alternative you are wondering about.

The Alternative

Several online money transfer companies have an operational presence in several countries worldwide. ACE Money Transfer, for example, has an operational presence in over 100 countries worldwide. 

Therefore, it becomes easy for you to initiate a direct transfer because you can simply send money as a mobile top-up to the recipient which does not require any intermediary.

And such a direct money transfer is simple, easy to execute and does not incur any additional costs that come with indirect money transfers.

Additionally, direct money transfers initiated this way offer several other advantages too. Some of them are:

  • A direct transfer takes little time to deliver funds
  • It is a cost-effective method
  • Fees and other costs in a direct transfer are relatively lower because intermediary expenses are filtered out
  • These are safe and secure
  • Direct transfers are convenient because these can be initiated from the middle of your comfort zone on a company’s smartphone app or official website

These are some of the major advantages of a direct global money transfer.

Wrapping Up the Discussion

Due to the additional costs of indirect international money transfers, it is better to choose a direct method for your online money transfer to Gambia to save extra expenses. But first, determine your needs and then choose a method that corresponds to them. Because after all, you have expatriated to earn and save instead of spending more on a process whose many cost-effective alternatives surround you. Right?



What is a direct international money transfer?

A direct international money transfer is when one institution sends funds from one country to the account of the recipient in another country. It can be done through banks or online remittance transfer companies. 

What are the benefits of a direct money transfer?

A direct money transfer is cost-effective; it delivers funds quickly; the amount thus processed is safe; it does not involve a lot of paperwork; and does not require the sender and recipient to commute physically as is the case with banks.

What is the major difference between a direct and an indirect money transfer?

The major difference is that indirect money transfers involve several intermediary financial institutions whose number is subject to many factors like the amount, the destination country, where the money is sent from, and the mode of payment.

Which financial institutions offer direct money transfers?

International money transfers are executed by both banks and online money transfer companies. Therefore, both offer direct money transfers. But direct transfers with banks are more complicated than with online money transfer companies.

Why are indirect money transfers costlier than direct transfers?

Indirect money transfers depend on several intermediary institutions that charge fees for their services. Therefore, the charges incurred by indirect money transfers cover the costs intermediary financial institutions incur.

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