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G. Madhan

ONLINE money transfer is currently the rage. The advantage it offers vis-à-vis the other modes of money transfer, such as cheque, draft and telegraphic transfer, seems to have attracted users towards it.

Quite a few banks, including ICICI Bank, HDFC Bank, Union Bank and Indian Bank, offer this service. Indian Overseas Bank (IOB) has also joined the list with `e-Cash Home'.

Features

Through `e-Cash Home', an individual in the US can send money to India for purchasing property, making investments or as donations. It can also be used to remit money to his bank account in India.

All the sender needs to do is register for the service online and provide details about himself (social security number, bank account number, account type, and so on) as well as of the receiver. Once the online registration process is completed, the bank takes about three working days to verify and activate the account.

Once the account is activated, one can start sending money. The payment, however, needs to be made in dollars. The bank takes four-five days to process and credit the money in rupee to the receiver's account. If the receiver is an IOB accountholder, the money reaches on the third day.

If the investor does not have an IOB account, but in a different bank, it takes a few more days. The currency is converted into rupees on the basis of the prevailing exchange rate at the time the funds are credited. The maximum amount that can be sent is $5,000 a month or $60,000 a year. Both the sender and the beneficiary can track the status of the fund transfer online. The beneficiary does not bear any charges.

Pros and cons

The time taken to deliver is lower than other options such as cheque and draft. However, it is slower than money transfer companies, which can send the money in an hour, and telegraphic transfer, which takes about a day. But the charges involved in an online transfer are substantially lower.

For instance, Western Union charges $76 for every $1,000 remitted. The transaction charge under e-Cash Home varies between $3 and $9, depending on the amount involved; Union Bank's charges are slightly lower — $2-8. However, private banks score on this count, as they do not levy any transaction charge. Money is also delivered at the receiver's doorstep in the form of a demand draft.

This option, however, will not be available in the case of money transfer companies, as the receiver needs to go to the nearest outlet to collect the money.

Suitability

Given the competitive transaction charges and the relatively shorter delivery time, the e-Cash Home facility is suitable , especially if the beneficiary already holds an account with IOB.

But for those who prefer to receive the money quickly, money transfer companies or telegraphic transfer would be a better option.A word of caution: Before sending money through any of the options discussed, evaluate the cost involved in each method, the time taken, the ease at which you can send and receive funds, safety and the transaction limit.

Also compare the exchange rate offered by the various players as this, too, will make a difference to transaction costs.

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