Online money transfers are becoming faster and easier as electronic banking becomes more of the norm for the industry. You can transfer between accounts within the same bank or between two accounts at different banks, or you can send money through an intermediary service and allow a second person to complete the transfer. These services are often free; some provide instant transfers.
Within the Same Bank
Customers who routinely conduct banking transactions online generally have the option of managing multiple accounts from the same online interface, provided the accounts are held at the same financial institution. Typically, to transfer money from one account to another, the customer goes to the Payments or Transfers tab on the navigation menu and follows the directions in the software app.
Bank to Bank
If you have accounts at multiple banks and want to transfer money between them, the process can be free and simple, if you link the accounts beforehand. In addition, in the United States, online banking services typically allow you to link multiple accounts at different banks or use bill paying services to send money to bank accounts not under your ownership. You must authorize payment through your bank's online payment service by adding information about the recipient. You will need the account and routing number for all accounts involved in transfers. This information allows your bank to make the electronic payment. Some banks charge a fee for person-to-person money transfers. However, the charges are typically much smaller than wire transfer fees.
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If your online banking services do not permit you to send funds directly to another bank account, a third-party intermediary service such as PayPal can help you accomplish the transfer. You simply set up a PayPal account, verify your identity and link your bank account information to your PayPal account. Money can be transferred among multiple accounts using this service. The person you are sending money to must also have a PayPal account. Transfers between friends and family members are free in most cases.
Transferring money from one bank account to another anonymously also typically requires a third-party service. This can require a bit more effort, such as setting up a virtual wallet with a third-party service, linking your bank account and funding the wallet with digital currency. Digital currency is a medium of exchange used on the Internet. Although it holds value in the virtual world, it has no physical presence. Bitcoin is a prominent form of digital currency used internationally.
When sending anonymous transfer with digital currency, the receiver needs access to a virtual wallet to convert the digital currency into a money transfer to a second account. However, the value of digital currency is not always tied to real-world money, and the value is not always consistent in a real-world conversion, sometimes being valued more and sometimes less than its physical counterpart, depending on exchange rates in the current market.
In recent years, digital currency has been tied to several money-laundering schemes, and the U.S. Treasury Department, the Internal Revenue Service and the U.S. Securities and Exchange Commission have issued guidelines on how this type of transfer should be monitored. For example, the IRS now treats virtual currency as taxable property. When making anonymous transfers from one bank account to another using virtual currency, federal regulations apply, and the penalties for money laundering can be severe.
For casual transfers between friends, mobile apps available on smart phones and Android devices allow instant transfers. One company that offers these services is Venmo, purchased by Braintree in 2012, which was in turn purchased by PayPal. Using Venmo to transfer funds from your bank account to a friend's account is free. Transactions from your virtual Venmo wallet are instant; transfers from the wallet to bank accounts can take one business day, according to the company's website.
Before using unfamiliar online money transfer services, check with the Better Business Bureau to see the company's report card. The BBB handles consumers’ complaints both for companies that choose to become accredited through the BBB and those that do not, but are reported to the agency by consumers.
- Bank of America: Electronic Funds Transfer FAQs
- Businessweek: Mobile Payment Startup Venmo Is Killing Cash
- Coinbase: What Is Bitcoin?
- U.S. Bank: Transfer Money Online | Pay A Person Electronic Funds Transfer
- Venmo: How It Works
- Forbes: New York's Financial Regulator, Benjamin Lawsky, Maintains Lead On Bitcoin Regulation
- Internal Revenue Service: Notice 2014-21