Every Money Transfer And Remittance Term You Need To Know: Letter P

Last updated: October 05, 2022

Payment Method

A payment method is how you pay for your money transfer. When you start a new international money transfer transaction with a money transfer company, they first need to get your payment before they can send the money overseas. In other words, you first need to fund your money transfer, and then the money transfer company will work on moving the funds abroad.

Payment methods can be electronic as well as non-electronic, and in some countries, there could be cheaper local payment methods in place. Read our sections on all these types of payment methods to know more about them.

Also see: Electronic Payment Method, Local Payment Method, Non-Electronic Payment Method
Further reading: Payment Methods for Money Transfer

Peer-to-Peer (P2P) Money Transfer

A peer-to-peer (P2P) money transfer is a smart optimization done by some money transfer companies whereby they try to minimize the actual, physical movement of funds from one country to another. They do this by trying to balance money transfer demand and supply.

For example, you want to send USD 1,000 from the US to Germany via a money transfer company. If that company also has customers who want to send Euros from Germany to the US, then the money transfer company does not need to move any funds overseas. They can simply debit/credit customers in the same local currency!

The biggest advantage of P2P money transfers is cost saving. Since the money transfer company does not actually need to move funds overseas, they save on costs they would incur otherwise. This should, hopefully, make the cost of sending money with them lesser (or they could just choose to put the extra profit in their pocket!).

Another major advantage of P2P money transfers is transfer speed. Since the funds do not need to go through intermediary banks and payment networks in multiple countries, your recipient will get access to the money you send to them rather quickly.

Also see: Money Transfer, Money Transfer Agent, Money Transfer Operator (MTO), Online Money Transfer, Online Remittance, Remittance, Remittance Service Provider
Further reading: Best Ways to Send Money Internationally
Complete Guide to Send Money Online
What Is a Remittance and How Does It Work?
How To Make The Most Of Your Remittance

Percent Fee

A percent fee is a transfer fee calculated on your international money transfer as a percentage of the transfer amount you send. As opposed to a fixed fee which does not depend on how much money you send, a percent fee varies as the transfer amount increases or decreases.

For higher amounts, a percent fee may become prohibitive, so you should keep an eye on the transfer fee if your money transfer company charges a percent based fee.

Generally, money transfer companies that charge a percent fee will have a ceiling to avoid making the transaction too expensive. If that is not the case, you may be better off looking for an alternative company that either has a ceiling on a percent fee, or charges a fixed fee.

You would, of course, want to minimize the impact of fees on your money transfer in a bid to maximize your payout for your overseas recipient. To do this, look for choices that have low, or even 0, transfer fees.

Also see: Currency Conversion Fee, Fixed Fee, Free Money Transfer, FX Fee, Wire Fee, Wire Transfer Fee
Further reading: Currency Exchange Rates: What Are They, How They Change, and More
What Is a Remittance and How Does It Work?
How To Make The Most Of Your Remittance

Personal Identification Number (PIN)

A personal identification number (PIN) is a secret code that you configure for access to a protected resource. For example, you will set up a PIN for your ATM card. Similarly, mobile wallets like GCash necessitate you to have a Mobile PIN (MPIN).

As a security best practice, never reveal your PIN to anyone including the money transfer company's customer support team. Also, make sure to change your PIN regularly.

Further reading: Safest Ways to Send Money Online

Pip Spread

When currencies are traded, the selling exchange rate is called the Bid (Sell) FX Rate and the purchasing rate is called the Ask (Buy) FX Rate. The difference between these rates is called the FX Spread, implying the overall price range for the said currency pair.

A pip is a unit of measurement to express FX Spread, and equates to 0.0001 units of currency. For example, let's say that the FX Spread for a currency pair is 0.0064 units. In pips, the same spread is 64 pips.

In both print media as well as spoken language, it is much easier to say that the FX Spread is 64 pips instead of saying its 0.0064. And that is where the utility of pip spreads lies - a pip is a measurement unit that makes it easy to communicate about FX Spread.

Also see: Ask FX Rate, Bid FX Rate, Buy FX Rate, FX Margin, FX Markup, FX Spread, Sell FX Rate
Further reading: 5 Key FX Concepts You Need to Know

POLi

POLi is a popular online payment network in use in Australia and New Zealand. It has gained very good adoption as POLi payments come straight from your bank account, and you do not need to use any credit or debit cards, nor share your bank information when making online payments.

POLi is, thus, a local payment method that can be used to fund your international money transfers from Australia and New Zealand. Simply check with your money transfer operator (MTO) if they accept POLi payments; if they do, you can pay for your transfer with POLi.

Also see: Local Payment Method, Payment Method
Further reading: Payment Methods for Money Transfer