The UAE has the second largest concentration of Pakistani expatriates in the world and, as of this writing, there are approximately 1.7 million Pakistanis in the United Arab Emirates. That’s 17% of the estimated 10 million UAE population and 70% greater than the population of Emirati citizens, pegged at around one million.
Suffice it to say, there are many Pakistanis who need a way to send money to Pakistan. If you belong to this demographic, what are your money transfer options?
1. Telegraphic transfer
Telegraphic or telex transfer is an electronic fund transfer method typically used in overseas money transfers. It is essentially an interbank transfer.
There are two banks at the endpoints of this process: the origin and destination banks. However, the process involves intermediary banks through which the money passes from the originating bank to the destination bank.
Telex transfer gets its name from the telegraph service, the method financial institutions used to communicate with each other in the past. These days, however, banks no longer communicate via telegraph lines. They instead use modern data transfer infrastructure.
Telegraphic transfers are routed through correspondent banks (the intermediary banks mentioned earlier), say through the Society for Worldwide Interbank Financial Telecommunication or SWIFT, a wire network that facilitates interbank telegraphic fund transfers.
If you’re using telegraphic transfer to deposit money directly into your recipient’s bank account in Pakistan, you may be asked for the destination bank’s SWIFT code. This should tell you your transfer is being coursed through the SWIFT network.
Aside from SWIFT, global telegraphic transfers may also pass through the Clearing House Automated Payment System (CHAPS) or the Clearing House Interbank Payment System (CHIPS).
Telegraphic transfers typically take two to four business days to complete. This is standard because the money has to pass in series from one bank to another before it can reach its destination bank, and every correspondent bank has its own processing timeframes.
Specifically, banks will often process transfers by batch to save on costs. Therefore, even if a customer has requested a transfer in the early morning, the bank may not send his money until late afternoon. The bank collects all transfer requests and submits the requests in bulk.
The fact that telegraphic transfers entail interbank routing is also why they can be rather expensive. Every bank the money passes through has its own fee rules.
Note: Administered by the Bank of England, CHAPS is a clearing house network that facilitates transfers among 30 primary member institutions. Businesses and other non-member financial entities and organizations worldwide can interact with and use CHAPS by signing an agreement with its direct participants. Meanwhile, CHIPS is a U.S. private clearing house that specializes in large-volume transactions, facilitating over one trillion dollars in domestic and international payments daily.
2. Instant credit
Instant credit transfers money almost instantaneously from the sender to the recipient. Other terms that describe the same service include instant money remittance and instant money transfer. Recipient accounts can be bank accounts and digital wallets.
Instant credit transfers are processed through an instant payment platform like the Real Time Payments or RTP from the Clearing House network or the Faster Payments platform in the United Kingdom.
These are also electronic transfers, but unlike telegraphic transfers, the money does not pass through from one bank to another. Institutions also do not lump transactions into batches. Instead, money is sent and processed in real-time.
The Instant Credit payment system’s advantage over the telegraphic transfer method is clear. With Instant Credit, your recipient will receive your remittance almost instantaneously. There’s no waiting time, and you will be notified the moment the money gets credited to its destination account.
Instant credit transfers also work 24/7. The entire process is automated, so there’s usually no need to wait for banks to open for transfers to be completed. You can initiate real-time transfers yourself if you have an app that can interface with the instant credit system or platform.
One disadvantage of instant credit systems is their higher service charge. Real-time transfers are done on a per-transaction basis instead of through batch processing. Therefore, there are no bulk-processing savings for the sender. However, you can get more value the bigger the amount of money you are sending. Still, there can also be higher exposure to losses.
Both telegraphic transfers and instant credits utilize electronic networks. But since telegraphic transfers can take a couple of days, senders typically have more time to stop transfers if they learn they sent their money to the wrong account.
Meanwhile, there’s virtually no chance of stopping instantaneous transfers once initiated since it takes only seconds or minutes for instant transfers to push through. Therefore, if you instantly credit money to the wrong account, you are unlikely to get it back — unless the incorrect recipient transfers it back.
3. Cash pickup
You can use the cash pickup option if your recipient in Pakistan does not have a bank account or a digital wallet. In this case, your money transfer provider will remit your funds to a retail network like Western Union, and your recipient can proceed to the retail network’s nearest agent to pick up his remittance.
In cash pickup, your recipient need only present a valid identification and a transaction reference code or number to claim their remittance. On your part, you must provide your recipient with the transaction code. The name indicated in the transaction details must also match the name on the recipient’s ID.
Cash pickups are instantaneous transfers, too. Thus, it takes only minutes after sending before your recipient can claim the money from a money remittance agent.
Know your money transfer options
When sending money from the UAE to Pakistan, you typically have three main options: telegraphic transfer, instant credit, and cash pickup. Your choice depends on many factors, including service charges, transfer timeframes, and your recipient’s convenience. The context also matters.
For instance, if you are sending your retainer fee to your enterprise resource planning consultant or paying your supplier, the telegraphic transfer is probably the better option because it allows you time to stop erroneous transfers.
Such transactions also likely involve larger amounts. However, if you are sending family members their monthly allowance, you may want to consider using the instant credit or even the cash pickup option.
Whatever you pick, some money transfer companies in the UAE can provide all three options. Some even offer convenient telegraphic transfers, instant credit, and cash pickup from a convenient mobile app.