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 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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