How to Send Money Online: Limits, Fees, Speed, Refunds & Risks

When moving money, we expect payments to be frictionless. Whether you send or receive funds, paying should be the easiest part of the process.

At least, it still is when paying with cash. With online payments, not so much.

Sure, there are free ways to move money fast. But are they reliable?

It may sound shocking the first time you hear it. But on the Internet, you pay to process payments the same way you do for any service you use. That means you often PAY to move money, whether you send or receive.

Without banks and companies, online payments would be near-impossible. But wouldn’t it be great to transfer money easily just like giving someone cash? Well, with the latest innovation, it seems that it’s possible to move money fast and free. Sometimes, even anonymously.

Banks may still be mainstream. But you can’t ignore the many better options out there, all of which we cover in this article.

What Is The Best Online Payment Method?

Let’s get it straight from the beginning. All those payment methods exist because each of them is best for a specific situation. There’s not a particular method that you should use all the time.

However, there are six factors you want to look for when choosing payment methods:

#1 Limits & Fees

How much can you send and receive for free? And if you include the fees, what are those limits?

Payment companies want your money. So in general, there’s no limit to how much money you can move as long as you pay those extra costs. The only thing you may need is KYC, also known as identity verification.

The ideal payment gateway would charge nothing to transfer money. But that usually means limited features: no payment protection, currency conversion, among others. If there are, they won’t be free.

You may argue that you can bypass those limits by opening several accounts (which is usually against TOS). While scammers do it all the time, most companies have improved security to prevent the same person from doing it.

#2 Account Control

Do you always control your money?

We like to think of banks and companies as our personal safe box. With a password and 2FA, we think we control what gets in and out. But depending on the Terms and Conditions, you may not have full control.

Most companies’ TOS require you to give them consent to control your account. No, they can’t steal your money, but they reserve the right to freeze, block, or suspend your account if you don’t follow those terms. And because nobody reads such long pages, they eventually find a reason to close your balance.

According to the agreements, companies have no obligation to inform you about the reason for account suspension. So you may wake up one day and find yourself with zero liquidity.

The ideal payment method wouldn’t have this inconvenient.

#3 Customer Support

How quickly and effectively does the company/bank solve technical problems?

Luckily, most problems are easy to solve by providing some verification documents. The problem is, you won’t fix it until the internal team gives it attention. So if the company is unresponsive or swamped with requests, you will be holding for months. All for a problem that takes five minutes to fix.

Sometimes, not even support can help you with a problem. Most companies use third-party software for identity verification, for example. That means they can’t directly tell you what you did wrong or right. You just try again and hope that the AI accepts your request.

If you make a mistake and need to request a refund, you want customer support to help you asap. But if it takes weeks, you’ll regret every dollar you spend with that company.

#4 Reversibility

How easy is it to undo an action?

Some methods allow you to cancel a payment if it hasn’t been completed yet. With methods like wire transfers, however, transactions are permanent.

If the method allows you to undo actions, it would be great to do so with a few clicks. But most of the time, you instead need to contact support to fix it personally.

You expect refunds to process quickly, whether you’re the customer or the seller.

#5 Security

Can you guarantee that your balance is safe, or that your payments will go through?

Most methods are inherently secure, but the risk lies in who you trust your money. If the payment processor isn’t reversible and you send it to the wrong person, you lost your money. Customer support cannot refund you because it’s your responsibility.

Security also relates to payment verification. Do both parties get a record of the transaction? How do you protect against double-spending or identity theft?

The payee may claim they didn’t receive the money. But if you don’t have the virtual receipt, you don’t know if that’s true.

The biggest banks and companies are generally safe. But problems arise when impostors pose as those entities and reach out to you. So just because a platform is reputable, that doesn’t protect you from identity theft.

#6 Transaction Speed

How fast can you move those funds?

Time is money. So the sooner you can receive funds, the more liquidity you have.

When a payment method involves many bank entities, it usually takes business days to complete. But most companies offer instant transfers for a fee.

With blockchain and similar methods, transaction speed depends on the network size, availability, and order size. If you consider the most innovative “defi tokens,” we’re talking of nearly a million transactions per second.

Transaction speed can also be a downside. Because while payments are processing, you still have one last chance to undo a mistake.

7 Common Online Payment Methods

What makes one payment method better than another? Context.

Here are the most common methods, how they work, how much they cost, how fast they are, and when it’s the right time to use them.

#1 3rd-Party Processors

Paypal, Venmo, Skrill, Stripe, Google Pay, Payoneer. I’m sure you’ve heard of at least one of these. Many people have started using these as if they were their second checking account. Because they are really convenient to make small payments here and there.

How it works:

All you need to open an account is to enter some personal information, a phone, and an email address. After you verify your email, you’re ready to receive payments. If you want to load money onto your balance, you can request it from other accounts or link your credit card.

That’s all you need to do to make payments today. But you still have too little control, which makes it risky to deposit large sums. To fix that, you need to pass identity and address verification. After the approval, the company removes the limits. So you can send and receive as much as you want.

If you want to send money:

Limits and fees:

Without verification, you can send a maximum of ~$1000 per month. But after completing it, you no longer need to worry about limits.

Sending and receiving money is inherently free when transferring with the same banking system (ACH for the USA, SEPA for the EU, and so on).

You only pay fees when:

Processing speed:

Even the free transfer takes a few minutes, although it can take hours or days in rare cases. If you pay a fixed+percentage fee, it completes instantly.

Refund Options:

You reserve the right to get refunded if you paid for protection. But the platform does NOT refund you directly. Instead, you open a dispute with the seller.

If you asked for a refund and won the dispute, the platform will take the person’s balance from the platform. But they cannot use other funding sources without authorization.

If you leave the account with negative balance, the platform may limit or suspend the account until you fix the issue. Ultimately, the payee decides whether you get the refund or not.

The biggest risk:

The company can decide to terminate your account anytime. You can still withdraw money from your other sources. But if you didn’t have any, you may not get back that amount.

The ideal scenario:

3rd-party processors are convenient for customers shopping online. For sellers, not so much. Because the gateway charges you for buyer protection fees, lowering your profit margins.

You won’t have any issues if you use them sparingly, keeping low balances on them. Don’t treat them like a savings account.

#2 Credit/Debit Cards

It’s, by far, the most preferred payment method (worldwide-accepted). If you choose the right bank, you can use these to pay for anything at fair rates.

How it works:

All you need to get one is opening an account and verifying your data. You request the credit/debit card, and they ship it to your address, sometimes for free.

Some may charge you a maintenance fee for having these, but as long as you use them or keep a minimum balance, they are easy to avoid.

Debit cards charge your bank account immediately after you enter the details. Credit cards also allow you to borrow money from your card’s issuer up to a limit, so you can complete payments even with insuficient funds.

Once you get the card, you can start buying anything online. Just make sure the payment gateway is safe before you enter your secret numbers.

Limits and fees:

Since cards are designed for spending, the limits aren’t very different from what you could expect from a checking account. You can spend and receive thousands of dollars online every day. For ATM withdrawals, most banks range from $300 to $2000 daily limits.

The default limits are usually enough for day-to-day payments. But you always pay to remove them by upgrading your account. That’s why companies offer multiple card tiers.

For the most part, paying with cards is free (unless you borrow). But sometimes, businesses pay for processing costs, so they charge you a credit-card fee (2-5%).

Most credit cards include yearly fees, so consult your issuer first.

Processing speed:

These can process payments instantly, even when you don’t have enough balance. Mind that with credit cards, you need to repay all the money you used within 30 days, or they’ll charge you interest thereafter.

Refund Options:

You can get a refund months after paying if you request a chargeback, win the dispute, and pay the refund fee. But if you paid with credit (and the seller’s funds are still on hold), you may revert the transaction for free.

The biggest risk:

An unresponsive use of credit cards will hurt your credit score, which affects you for 5-10 years. We know most of you are responsible borrowers and pay back on time. The real problem is phishing. It’s too easy to fall for imposter scams and hand your financial details to a scammer.

They appear in the form of emails, cloned platforms, even robocalls. To learn more about phishing, check our guide here.

The ideal scenario:

There are many ways these cards can help you financially:

• Responsible buyers can build up their credit score. This allows you to get better interest rates and borrow more money
• Most issuers offer cashback rewards
• Credit-card churners can get rewards from money they’d spend anyway

No matter what your financial goals are, these cards will make your life easier.

#3 Wire transfers

When sending large amounts internationally, 3rd-party processors aren’t efficient. These will charge you percentage fees when sending thousands of dollars to other countries. Conversion fees are often unfair, and even then, the company may keep the payment on hold after the payee receives it

A wire transfer costs, at most, $50. So the more money you send, the lower the fee proportion is.

How it works:

You only need a bank account and the other person’s account numbers. depending on the location, you make a national or international bank transfer.

You enter their details and the reason for the transfer. You click on Send, verify it with a code, and the money will be on its way.

You can also send money online worldwide with firms like Western Union. You go to their location and choose your payment method, including cash.

To receive money, you don’t need to do much. Just make sure you provide the right information. Wire transfers are irreversible.

Limits and fees:

Banks designed wire transfers to effectively move large amounts. There usually no limit on how much to send, and the only fee ranges from $15 to $50.

While the payment is processing, you might revert it for a cancelation fee. You first contact your bank and ask if it’s still possible.

Processing Speed:

The payment may take a few business days to arrive, but you can pay a small fee to speed it up.

With international transfers, you don’t have that much control of the process length. It depends on the foreign banks involved.

Refund Options:

Once the other person receives the money, you cannot revert the wire transfer.

The Biggest Risk:

If you type the wrong number, you’ll have sent the amount to a stranger. If you trust the person, they may send you back the difference. But if you wire to a scammer, for example, you lost your money forever.

The Ideal Scenario:

You want to send a large amount of money to another account within the same banking system (ACH, SEPA…). In that case, your bank transfer might cost only a few cents.

If a country has two official currencies accepted, then you pay nothing for the conversion.

#4 Direct Deposits

Direct deposits are automated methods to pay recurrent bank accounts. Because they deposit money directly, you don’t pay anything for the transaction.

How it works:

You first need to get a direct deposit agreement from the bank that will send money. Next, the payee has to fill up this document with their banking information. By doing that, they authorize you to deposit funds in their account.

Once you set the system, you can also choose where to transfer (in case the payee has multiple accounts). But the sender can never withdraw money from the recipient’s account.

Limits and fees:

There is no dollar limit for direct deposit, and there are neither any fees.

Processing Speed:

A few weeks after submiting the agreement, the system will be enabled. So every month, it will deposit from your account at the chosen date. It charges immediately, but funds take one to two business days to process.

Refund Options:

You might retrieve the funds if the payment is still processing, but it requires support from your bank and can get complicated.

The Biggest Risk:

Lack of liquidity. Even though the payee hasn’t received the funds yet, you pay on the set day. With checks, by contrast, your bank only charges you the amount after they cash it out.

After setting multiple direct deposits, you have to record what recurring payments you have. If you no longer work with a service provider, it will keep charging you unless you manually delete it.

The ideal scenario:

You’re an employer who doesn’t have much time for complex accounting and payrolls. So you set up direct deposits with your employees. You automate your payments so you don’t need to worry about them, and they get paid sooner.

Your employees can assign what percentage they want to receive in their savings and checking account.

#5 Gift Cards

Gift cards are widely used for buying goods in the major retail stores. They are also convenient to send money for friends and family without paying any fees or taxes.

How it works:

You go to any big brand offering gift cards: Apple, Amazon, Starbucks, iTunes, Walmart, or Visa.

You can buy them online using the payment methods, but they are also available in physical stores. The gift card value is the amount of money you can spend with the brand.

Scammers have found complex ways to turn gift cards into cash. But to keep things simple, let’s say you can only buy products from that brand.

If you want to send it as a gift, you can either mail the card or share the one-time secret number, which appears on the back. The first person who enters it claims the gift card.

Limits and fees:

As a gift, you rarely find cards worth more than $500. But that’s not a problem, because you can buy as many as you want.

Virtual gift cards are free. But if you want to send a physical one, the card itself costs $2-$4 plus a standard shipping cost of $2.

You have about 12 months to spend it before they charge inactivity fees. And after ~5 years, they disable.

Refund Options:

The only way to refund is returning a physical card with the code unseen. Unless the package is still sealed, your chances are near-zero.

Processing Speed:

Since you’re buying it, claiming a card depends on how fast you enter your payment details. You instantly receive the code and can start shopping after you enter it.

It doesn’t matter where nor who bought it. You access it immediately with the code from anywhere in the

The Biggest Risk:

You cannot refund gift cards. And if the wrong person gets the code before you, they can claim your money. If you mail a gift card, hope that it reaches the right person and they claim it immediately.

Unlike money orders, you’re unlikely to refund a card lost on delivery.

The second risk is gift card scams. It’s one of scammer’s preferred methods, because it has no refund protection and it’s anonymous.

If you find an email or ad offering a gift card reward, it’s probably a phishing attempt.

The Ideal Scenario:

You don’t know what to send your friends or family as a gift. But if you send money, they can buy what they want. But wire transfers are expensive, especially when your friend lives abroad.

If you buy them a gift card, you send it online with a message included. It takes seconds to arrive and is free worldwide.

#6 Electronic Checks

Checks are better than cash because you can choose who will receive your money and how to use it. By contrast, anybody who steals cash can use it freely.

How It Works:

You get a checkbook and write one like you would do physically. Next, you scan it and send the file.

The payee can upload the scanned check to his bank account online and claim it. If successful, they charge you the set amount and they receive the money.

Limits & Fees:

Traditional checks cost money to print and deliver. But electronic checks are inexpensive, about $0.30-$1.50 each.

There’s usually no limit for checks since the intent is to process large transactions. As long as the send has enough balance, you can send as much as you have.

Before you claim the check, make sure the sender has enough money, or it may bounce back and result in a fee.

Processing Speed:

You can cash out checks the same business day when sending a few hundred. For larger amounts, it may take two to five business days.

It may take longer to clear, about one to two weeks. So if the check is fake, (or the person has insuficient funds), it reverts.

Refund Options:

You can ask your bank to void the check while the payee hasn’t cashed it yet. But the simplest way is to empty your bank account balance. If you have no funds for the check, it will bounce back.

The Biggest Risk:

Do NOT spend checks that haven’t cleared yet. If someone asks for money right after you cash their check, that’s a red flag.

If it bounces back, the amount you received reverts. So you spent money you don’t have. And if you have a negative balance, that can impact your credit score (plus overdraft fees).

The Ideal Scenario:

You’re sending a large sum to a trusted person. But you’re worried that someone else claims that money. So you write a personal check and send the screenshot file online.

The payee can claim it immediately. And because you trust the person, you can void the check if you made a mistake and write a new one.

#7 Blockchain

For the last few years, many financial firms have tried to reinvent payment security. But blockchain is better known for Bitcoin payments, which are anonymous and permanent.

This 2020, we’ve witnessed the defi revolution. It’s a trend with the goal of making payments more secure with decentralized systems. It means you no longer need to trust a bank or broker. Instead, you trust a network of users who are just like you.

There’s an endless list of projects, and every new token that comes out proposes its own payment system. But let’s stick to the main one: Bitcoin.

How it works:

You choose a place where to store your money, which can be an exchange, a hot/cold crypto-wallet, or a hardware device.

To receive cryptocurrency, you go to your app and select the coin you want to deposit. You get a wallet address, which you share with the person who will send you the funds. Next, a network of computers will validate the blockchain transaction, and after 10-40 minutes, you receive the funds.

If you want to buy crypto, you either buy it from exchanges or trade with local sellers. You can buy and withdraw to your bank account.

Even though we use Bitcoin to send and receive, you can hold money in fiat currency. Some companies include crypto-cards, so you can spend that money easily (accept worldwide).

Limits & Fees:

Processing Speed:

Some coins take longer than others. But Bitcoin takes 10 to 60 minutes to complete transactions.

There are two processes that may take hours:

As for currency conversions, it’s immediate and based on the real-time rate.

Refund Options:

Because blockchain links transactions to the previous one, there is no way to refund your money.

The Biggest Risk:

If you send money to the wrong address, you lost the money forever. If someone accesses your wallet, you lose it all. If an exchange decides to close your account, it’s the same story.

Besides, it’s not safe to transfer large amounts using volatile cryptocurrencies. Because there’s a 10-60-minute delay, we don’t know what value the coin will have when the order completes.

Worst of all is the general perception that crypto can make you rich. Many scammers use this to their advantage, offering fake crypto-giveaways, for example.

If you keep money on exchanges, it’s not enough to time it right. If you get crazy gains and want to sell, that doesn’t benefit those companies. For example, Bitcoin has been rallying in the past months. In the past, Coinbase and others have restricted withdrawals and suspended accounts with no warning.

The Ideal Scenario:

There’s nothing essential crypto can buy that you can’t get with real money. But exchanges make trading accessible for everyone. And because crypto-wallets don’t require verification, you can keep as much tax-free money as you want, using crypto-cards for daily expenses.

Here’s a short guide on different types of investments, so that you don’t keep your money only in the bank account. Where it is bound to devalue.