Remittance
A remittance is a cross-border transfer sent by one individual to another — typically a migrant worker sending money home to family. It is distinct from a commercial payment between businesses, and regulators define it more narrowly than everyday speech does.
Also called: remittances · worker remittance
The defining features are the parties and the purpose: a person sending to a person, across a border, usually to support a household rather than to settle an invoice. That is what separates a remittance from a commercial cross-border payment. The two are priced differently, generally move through different providers — a money transfer operator rather than a bank’s corporate payments desk — and attract different consumer-protection rules.
Two further usages catch people out. In the United States, the Electronic Fund Transfer Act and its Regulation E treat “remittance transfer” as a defined term with its own scope and its own disclosure duties, narrower than the everyday sense of the word. And in accounting, a “remittance advice” is a note telling a supplier which invoices a payment covers — no transfer, no border, and nothing to do with this entry.
In practice
Remittance in ordinary use means a consumer-to-consumer transfer. Regulators define it more tightly: in the United States, Regulation E’s remittance transfer rules have their own scope and disclosure requirements, and whether a given transfer falls inside them is decided by the text of the rule, not by what the industry calls the product.
Commonly confused with
| Term | How it differs |
|---|---|
| Remittance advice | A remittance advice is an accounting document listing the invoices a payment settles; it is not a transfer of money at all. |
| Cross-Border Payment | Every remittance is a cross-border payment, but most cross-border payments are commercial and are not remittances. |
| Money Transfer Operator | The remittance is the transfer; the money transfer operator is the business that carries it. |
See also
- Payment CorridorA payment corridor is a specific send-and-receive country pair, treated as a market in its own right. Each corridor carries its own regulation, rails, payout habits, competitors and price, and is analyzed separately from every other.
- Money Transfer OperatorA money transfer operator, or MTO, is a non-bank business whose main activity is moving money for customers, usually across borders. A global network and a single neighborhood storefront are both MTOs — the term describes what the business does, not what it is licensed to do.
- Cross-Border PaymentA cross-border payment is one where the payer and the payee are in different jurisdictions. It usually involves a currency conversion and at least one intermediary, and it answers to the rules at both ends rather than only the sender’s.
- Money Services BusinessA money services business is a category in US federal law under the Bank Secrecy Act, covering seven capacities: dealer in foreign exchange, check casher, issuer or seller of money orders or traveler’s checks, provider of prepaid access, seller of prepaid access, money transmitter, and the US Postal Service.