The modern 21st century has witnessed significant technology changes across all industries, leading to a rise in the number of transactions done each day. With technology connecting the whole world, people can easily interact with people internationally and even do business in other territories. Several other factors have caused an increase in cross-border payments.
International payments are money transactions between two parties in different countries or territories. International transactions can take place between individuals, companies, government agencies, and banking institutions. Millions of transitions are done internationally each day. You can easily transfer money to Mexico or another country in the world.
Purpose of Sending Money Overseas
The purpose of sending money across border depends on who is sending. The three common parties involved include – An individual, a company, or the government.
A person can send money to another individual for the purposes of healthcare, migration, education, etc. When transacting with a business, they can send money to buy goods or for tourism during holidays, etc. Individuals can also make payments to government institutions overseas.
Businesses can send money to individuals as reimbursements or salaries. It can also transact with other international businesses by purchasing services or goods. Lastly, businesses can pay governments in the form of licenses ad tariffs.
Governments can send money across borders to individuals who have retired (pension) or for other purposes. They can also send funds to businesses they work with as well as other governments.
Laws for Sending Money Internationally
Every country has specific guidelines and rules that govern its foreign exchange and financial markets. Money transfer institutions have regulations that guarantee the protection of the parties involved. After the 9/11 attack, the US formed new laws like the patriot act that allow the federal government to track funds more carefully.
When transferring money internationally, here’s what you should keep in mind.
1. Identity proof.
Regulations require individuals to show proof of their identities while using money transfer services and banks to make international payments.
2. Rules for online transfer.
There are various rules of transfer that ensure the money goes to the right recipient. Some institutions require recipients to collect funds in person.
3. Storing user data.
User information for all parties involved is required for verification and legal purposes.
4. Transfer amount limit.
International payments limit the amount of money you can send to prevent criminal activities such as money laundering.
Rights of an Overseas Money Sender
When you are involved in an international payment transaction, you are guaranteed certain rights under the Federal law defined by the Consumer Financial Protection Bureau (CFPB).
These rights include:
1. Error resolution.
You have the right to consult a firm if you suspect there may be an error in the remittance transfer.
2. Cancellation rights.
Senders have the right to cancel a transaction at their own will. However, you need to report to the transfer company within half an hour after making the payment.
3. Prepayment disclosures.
The federal law protects your right as a sender to have complete information on the amount of funds the recipient will receive, the day they will receive it, the exchange rate, taxes, and fees.
Several laws regulate international money payments. With the rising trend of money transfer across borders, you need to be familiar with the laws and regulations.