How to send money to someone without a bank account

How to send money to someone without a bank account

  • Prepaid debit cards or gift cards are easy ways to send money to someone who doesn’t have a bank account.
  • You can also easily send money online through a virtual wallet or payment app.
  • If you’re sending money to someone who isn’t banked, be aware of security and potential limits.

If you need to send money to someone who doesn’t have a bank account, there are simple transaction tools and resources available, regardless of the person’s banking status.

Here are five simple tools you can use to send money. We’ve also included additional resources for the unbanked that you can share.

1. Prepaid debit cards

According to a 2019 FDIC study, 27.7% of unbanked households commonly use prepaid debit cards. Prepaid debit cards are a common tool for sending money, as they are easily activated and work the same as regular debit cards.

You can find prepaid debit cards at financial institutions or grocery stores. Be aware of sign-up fees, monthly fees, and top-up fees.

2. Mandates

Marguerita Cheng, CFP® Professional, RICP and CEO of Blue Ocean Global Wealth, says you should never send money through the mail. If you’re looking for a more traditional way to send money, Cheng notes that you can get a


money order

Instead.

Money orders can be purchased from a financial institution or store. There is usually a purchase limit of $1,000 and a low fee of less than $5.

3. Gift cards

Stores and some financial institutions offer gift cards. You can send money to an unbanked person in the form of a gift card, but keep in mind that its use is limited to a specific purpose.

4. Online payment services

Online payment services offer an easy way to send via your smartphone or computer.

PayPal, Venmo, Western Union and


cash app

are some of the most popular payment services that don’t require you to have a bank account to receive money.

If you use a payment app like PayPal, Venmo, or Cash App, your recipient can sign up for the app and link a prepaid debit card.

Meanwhile, Western Union is a money transfer service with over 42,000 centers in the United States and 500,000 locations worldwide. You can send a payment online or through the service app, and your recipient can pick up the money at one location.

Transaction limits for online payment services

You can use this table to help you if you want to send money via an online payment service:

*Western Union fees depend on your payment method (bank account, Western Union branch, or credit card) and the recipient’s location.

Payment apps generally allow higher single transaction limits if you verify your account. For example, Venmo has a one-time transaction limit of $299.99 for people when they first sign up for their accounts. Once the person has verified their account, the transaction limit increases to $4,999.99.

5. Digital wallets

Digital wallets are another online payment tool you can use. Digital wallets are similar to payment apps. You can add payment information to your smartphone or smartwatch via an app. However, digital wallets store payment methods through a unique process called tokenization, which essentially makes your information more secure.

Some digital wallets are only compatible with specific smartphones. For example, you will need an Apple device to use


Pay Apple

.

Transaction limits for digital wallets

Digital wallets have a weekly rollover limit. For example, if you use the $1,000 transfer per Monday on Apple Pay, your limit will be reduced to $9,000. The transaction will also count towards your limit until the following Monday.

Tips for sending money without a bank account

When sending money to someone without a bank account, Cheng suggests comparing different options to find the best one for your situation.

“You have to think, do you want the fastest, do you want the cheapest, or do you want the safest?” explains Cheng. “Sometimes if it’s fast, it’s going to cost more. But you don’t want to compromise on security either.”

If you’re sending money overseas, Cheng says you’ll want to make sure you protect yourself and treat security as a top priority.

“The first thing I did was make sure there was security, which was if for some reason that person couldn’t get their money back, the money could be returned to me,” Cheng adds.

You will also want to confirm that your recipient will be the person who will pick up and collect the payment. They may not be able to receive payment if another person’s name is listed or a nickname is used.

Additional resources for unbanked populations

The 2019 FDIC study cited earlier found that some of the most cited reasons for not owning a bank account are that unbanked households either don’t trust banks or don’t believe they can meet minimum balance requirements to own a bank account. Bank account.

If you also want to help someone who is unbanked find a bank account, here are some resources you can share:

  • Bank on certified accounts: A Bank On certified account has a minimum opening deposit of less than $25, low monthly services and no overdraft fees.
  • Second chance bank accounts: Second chance bank accounts do not review a person’s banking history. These accounts have easy opening requirements and low bank fees.
  • Minority depository institutions: These banks and credit unions often serve low-income and underserved groups in particular.
  • Community Development Financial Institutions: Community Development Financial Institutions are credit unions, banks, or non-profit organizations that also serve low-income and underserved communities.
  • Together, we move Designated Institutions forward: These institutions allow you to open a bank account without a US ID. You can use a foreign passport or Matricula Consular instead.

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