Where does the money for transfer payments come from?

It depends: It is either pre-funded, i.e. arrangements are made to have enough money on the other side, so that when a payment is made, the money is taken out of the available balance and paid for. The other arrangement is credit (which has a counter party risk factor higher than the pre-funded one). In both cases, […]

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How did travelers (e.g., aristocrats on their continental tours) access funds before the invention of credit cards and global banks? There were no ATMs and presumably carrying enough cash to last the whole trip would’ve been too dangerous.

Credit Lines. In the olden days, if you were traveling outside your banking circle so to speak, you took with you credit notes that were honored in various other cities. Sometimes these notes were coded, sometimes they were carried by external couriers in advance and sometimes you carried it yourself. That is the whole premise […]

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How does money flow physically in remittances?

It doesn’t! (unless of-course you are operating a 100% cash only money transfer network – an example of which I do not know of). To understand how cash is transferred between countries, read this answer: Faisal Khan’s answer to Where do currency exchanges get their currency? To understand how money transfer works between countries, including remittances, […]

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What is the average monthly revenue that an independent sales organization (ISO) is expected to bring in for a small and medium-sized principal license holder? What are the average commission rates earned by an ISO? Is it a flat fee?

This depends on the corridor and the margins on the corridor. Typically, a PLH (Principal License Holder) will be raking in about 20–25 basis points, and would a minimum. So for every $1 Million processed, the PLH takes about $ 2,000 in income. Anything above and beyond is the pricing set by the ISO (typically […]

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Can I pick up a MoneyGram transfer sent to me via Western Union?

No, you cannot. Western Union and MoneyGram are two separate payment systems. They are not interoperable in the sense that you can send a payment from one system and pick it up on the other end. Previously, in the world of exclusive arrangements, an establishment could only choose one, MoneyGram or Western Union. In many […]

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