A Guide to Sending Money in the US

Sending Money

Whether you’re finally paying that $500 you owe your friend from that memorable cross country getaway (was that really a year ago—time flies!), or you’re assisting Nigerian royalty down on their luck (you know, the one who specifically needs you to help them out—how did they get my address anyway?)—sending money is a fact of life and the basic transaction that makes the world turn. Before you stuff that envelope full of $20s and throw it in a mailbox, you should know that there are different (and probably better) ways to send money.

For this purpose, let’s assume we’re sending $500, and I’m located in New York. We’ll take a look at how long and how much it costs to send $500 to a friend in San Francisco, California. (Stay tuned for the international version.)

Disclosure: The names of specific companies are provided as examples of popular and common services for the sake of convenience. These are not endorsements. Prices and fees for services were obtained from company websites at the time of writing.

Cash / Check

You could just stuff an envelope full of money or a $500 check, but sending cash usually isn’t a good idea. Mail could get lost or stolen, your cash with it. A check is marginally better—you could always cancel a check—but you’re still at the whim of mail and and the risk of check fraud. It’s a pretty novel way of sending money, though; maybe $10 to your nephew isn’t the worst idea. Plus, you get to use the mail!

Where: Your mailbox

Cost: An envelope and a 49 cent stamp (soon to be $1)

Time: However long it takes mail to get to your destination, around 4 days in this case; if it’s a check, add another business day to cash it on the recipient’s end

Advantages: Cheap and easy

Drawbacks: You’re essentially unprotected from the risk of mail fraud; for checks, you can only cash them during bank business hours.

Money Order

Money orders are a slightly better way to mail money. Available at any post office, you’ll need to fill out a money order form, and pay with either a debit card or cash. The recipient receives the money order in the mail, and will have to go to the Post Office with an ID to cash it—which is instantaneous. Money orders have a limit of $1,000 domestically.

Where: Your local post office to purchase/send; your mailbox to receive and your post office to cash

Cost: $1.25 for up to $500; $1.65 for anything above $500, up to $1,000

Time: However long the mail takes—in this case, up to 4 days (not including Sunday)

Advantages: It’s cheap and post offices are ubiquitous

Drawbacks: Requires a visit to the post office during business hours

Bank/ACH Transfers

Don’t want to deal with third parties? You can go directly to your bank or logon to their website and send money to your recipient’s account. Of course, this assumes that both you and your recipient have actual bank accounts (more than 24 million people in the US do not). This does require you to know some information of your recipients, like their account and routing number, or if doing so online, some banks offer e-mail and phone numbers as identifiers. These payments are only processed during business hours, and may take a couple days to complete.

Note: If you and your friend share the same banking institution, transferring money is often free and delivered either the same next business day at most major banks (like JPMorgan Chase and Bank of America).

Where: Your local bank; online or mobile banking (if your institution supports it)

Cost: Free

Time: Up to 3-4 days; Same or next day for same bank transfers (if your institution supports it)

Advantages: Free, convenient, and reliable

Drawbacks: Slow (inter-bank); only available during business hours

Retail Wire Transfers

Wire transfers are one of the most traditional thought of way to send money. Retail wire transfers are available through companies like Western Union or Moneygram by visiting a brick and mortar store or online. Senders have the option to pay with cash or a debit card (credit card use is available, but cash advance fees apply). The recipient would just need to go to any participating agent, show some form of approved ID (like a driver’s license), and receive cash on the spot. You can also choose to send it directly to their bank account, which can requires an additional 3-4 days.

Where: Online or at retail locations

Cost: 9.5% ($45) for quick delivery; 1%-5% ($5-$25) for 2-3 day service

Time: 10 minutes or up to 3 days; an additional 2-3 days for direct account deposits

Advantages: Fast, convenient for offline

Drawbacks: Expensive, availability can vary depending on retail location depending on business hours

Bank Wire Transfers

Your personal bank also offers wire services that operate much like the retail wire transfers. Much like the ACH transfer, you would need information about the recipient—usually the account and routing number. Once the transaction is verified, the transfer usually goes through before the end of the business day. Note that there are both sending and receiving fees for this method.

Where: At your local bank or online (if your bank supports it)

Cost: Average of $26 to send, and an average of $15 to receive; total of $41

Time: Usually same business day

Advantages: Convenient

Drawbacks: Expensive, at the mercy of bank business hours; Wells Fargo, for example, has a cutoff point of 4:30 pm CT for same business day wires

Online Payment Services (Paypal/Venmo)

Outside the traditional banks and money services lies the world of online payment services. Paypal nowadays is ubiquitous, mobile payment service Venmo is growing in popularity especially among Millennials. But as easy and fast it is to send these virtual dollars to one another, you realize there’s still a fairly large step to getting the actual money out of the service—both services are still tied to your bank.

There is some initial setup required to link your bank to your online service, and it does take a couple days to withdraw money (through ACH). But it’s easy; the actual transaction is quick, and for small amounts, it’s hard to go wrong. Of course, remember that these providers also have control over your accounts (if they decide to hold your money for any reason).

Where: Any mobile device or computer that has internet access

Cost: Free if you fund using your checking; around a 3% fee if using a card (Paypal); free with debit card (Venmo)

Time: Instant transfer; withdrawing funds can take up to 3 business days

Advantages: Instant, convenient, and free transfers at any time

Drawbacks: Cash withdrawals are at the mercy of business hours and their terms (Paypal account can be frozen, for example) and can take days

Decentralized payment protocols and cryptocurrencies

These types of transactions can be relatively quick. Bitcoin, for example, usually takes around 10 minutes for new transactions to be added to the blockchain, and Ripple takes only 3-5 seconds. However, also like online payment services, it takes time to set up the accounts that you use to send and receive the virtual currency, especially to buy the virtual currency or to withdraw money. For Bitcoin, there are also fees associated with currency conversions on both ends (as well as FX risk).

Coinbase, a popular and easy-to-use bitcoin exchange within the US, provides a way to convert dollars into bitcoin, and vice versa. Bank deposits can take a few days, but Coinbase offers instant bitcoin transfers using a credit card. Withdrawing USD from your Coinbase account requires ACH, which can take 2-4 days. Snapswap is a comparable service for depositing and withdrawing funds into the Ripple network.

Cost (Coinbase/Bitcoin): 1% + $0.15 ($5.15)  bank fee to both withdraw and deposit money; optional transaction fee to ensure BTC transfers are timely

Time (Coinbase/Bitcoin): Instant transfer; to deposit it could take up to 4-5 days; to withdraw 2-4 days; Bitcoin transactions are added to the public ledger every ten minutes but larger transactions could require multiple confirmations, which can take hours

Cost (Snapswap/Ripple): 0.99% + $0.30 ($5.30) per withdrawal/deposit

Time (Snapswap/Ripple): Deposits can take anywhere between 1-5 days; Withdrawals take 2-4 days; can take a couple days to link bank account to withdrawal; Ripple transactions take a few seconds to confirm

Where: Online or through mobile apps

Advantages: Convenient, fast transfers at any time

Drawbacks: Initial setup can be a hassle; takes time to withdraw funds; FX risk (Bitcoin)

Photo: Johan Fantenberg