What Is a Remittance Transfer and What Are Your Rights?

A remittance transfer involves sending money electronically from a consumer in the United States to a recipient in a foreign country. These transfers are often used by individuals to support family members abroad, pay for living expenses, or cover other personal and household needs.

Defining a Remittance Transfer

A remittance transfer, by federal definition, refers to an electronic transfer of funds initiated by a consumer in the United States to a designated recipient in another country. This definition applies to transfers exceeding $15. These transactions are widely recognized as international wires, international money transfers, or simply remittances.

The initiation of a remittance transfer comes from an individual, distinguishing it from business-to-business transactions. Remittance providers, which include banks, credit unions, and specialized money transfer companies, facilitate these cross-border payments. A company is considered a remittance transfer provider if it conducts more than 500 such transfers annually in the normal course of its operations.

Key Information for Senders

Remittance transfer providers are required to furnish senders with specific information both before and after a transfer is completed. The information provided before payment, known as a pre-payment disclosure, must be in a retainable form and include several details about the transfer.

Before the sender pays, the provider must disclose:

• The exchange rate that will apply to the transfer.
• Any fees imposed by the provider, such as transfer fees and taxes collected.
• Any third-party fees that might be deducted by intermediary banks or agents in the recipient country.
• The total amount of currency the recipient is expected to receive, before any foreign taxes or fees charged directly to the recipient.
• The estimated date the funds will be available to the recipient, along with a statement indicating that additional foreign taxes and fees may apply.

After the sender makes payment for the transfer, a receipt must be provided. This receipt typically reiterates much of the information found in the pre-payment disclosure. It also includes a unique transaction number, details about the sender’s rights regarding error resolution and cancellation, and contact information for both the provider and the relevant regulatory body.

Consumer Rights and Protections

Senders of remittance transfers benefit from specific consumer protections designed to address errors and provide cancellation options. These safeguards aim to provide recourse if a transaction does not proceed as expected.

If an error occurs, such as an incorrect amount sent, delays in delivery, or funds going to the wrong recipient, senders have the right to report it. A sender has up to 180 days from the disclosed date of availability of the funds to notify the remittance transfer provider of an error. Upon receiving a notice of error, the provider must investigate the issue promptly and determine whether an error occurred within 90 days. The provider is then required to report the results of their investigation to the sender within three business days of its completion. If an error is confirmed, remedies may include refunding the money, including any fees and taxes, or correcting the transfer as necessary.

Senders also possess cancellation rights for remittance transfers. A sender can cancel a transfer within 30 minutes of making payment, provided the funds have not yet been picked up by the recipient or deposited into their account. If a timely cancellation request is made, the provider must issue a full refund, including any associated fees and taxes, within three business days. For transfers that were scheduled three or more business days in advance, a sender can cancel the transfer up to three business days before the scheduled transfer date.