An informal money transfer is a way of sending or receiving money that operates outside of the formal financial system. Informal money transfer systems are often used in regions or countries where access to traditional financial institutions is limited or where there is a lack of trust in these institutions. These systems can take various forms, including hundi, hawala, and other informal networks or channels.
Examples of informal money transfers include:
- Sending money to a family member in another country using an informal network of agents who facilitate the transfer in exchange for a fee.
- Receiving payment for goods or services in cash, rather than through a formal financial institution such as a bank or payment processing company.
- Using a prepaid debit card or mobile banking app to transfer money to someone in another country, without the need for a traditional bank account.
Overall, informal money transfers can be a convenient way for individuals to send or receive money, particularly in regions where access to formal financial institutions is limited. However, these systems can also carry a higher risk of fraud or money laundering due to their informal nature and lack of regulation.
This page was last updated on January 3, 2023.