Two of the most popular methods of transferring money are bank transfers and online payments. Online payments work by electronically transmitting information. Bank transfers on the other hand works by, as the name implies, transferring money between banks. Both have their own pros and cons, and it can be confusing to decide which to use when planning to transfer money. It is important to know what each service brings to the table, so take into consideration all aspects that might matter to you, like reliability, total cost, transaction speed, and exchange rates. Let us first identify what an online payment and a bank transfer is, and then list the main factors that differentiate these two services from one another.
Online payments, sometimes called e-payments, are a form of payment wherein one transfers money to another through an electronic medium. Common examples of such methods include credit card and debit cards (Visa, Mastercard), ewallets (Apple Pay, Google Pay), and mobile payments (PayPal, Paxum). Electronic transfers are the fastest way to send money. Since online payments are generally utilized for online purchases, they are a popular choice for a majority of people as a result.
In a bank transfer, money is delivered from one bank to another. There are two kinds of bank transfers: a domestic bank transfer, where funds are sent from one bank to another within the same country, and an international money transfer, where funds are sent to another bank overseas, usually involving an exchange in currency in the process. Bank transfers are great for when moving large sums of cash around.
What’s the Difference Between the Two?
So we’ve identified what an online payment and a bank transfer are. But how different are they from one another?
Bank transfers cost more
Online payments require only minimal transaction costs, with most services even offering them for free. Domestic bank transfers in general are also relatively cheap, and can also be for free depending on the bank. International bank transfers, however, are not. This is due in part because of a hidden fee called the exchange rate margin; this fee is for converting your currency into the target location’s currency. This, along with all other fees involved (fixed fees, commission fees, etc.), can rack up to a pretty hefty price if you aren’t aware of it. Always remember to calculate for the final cost of the transaction. You never know how much you’re losing from this.
Online payments are prone to system issues
Being an Internet-based medium, online payments require you to connect to the Wide Web in order to process online transactions. However, when your connection to the Internet goes down, so does your access to online payment services. It doesn’t help that these things can happen on the fly and can be frustrating to deal with, especially if you are dependent on dealing with online payments in your work.
Online payments and bank transfers both do similar things – they move your money from one place to another. But that’s where the similarities end. As long as you research what unique aspects each service has, you can apply this knowledge and know which service works best for you.