A common way to send money to someone is by transferring the funds to their bank account. However, this isn’t always an option.
About 6% of Americans are “unbanked,” meaning neither they nor their partner have access to a checking or savings account, according a 2024 Federal Reserve Board survey.
Fortunately, there are several ways you can send money to someone who doesn’t have a bank account. Here are some of your options.
Mobile Payment Apps and Digital Wallets
One of the most convenient ways to send money to someone without a bank account is through peer-to-peer payment apps or digital wallets.
PayPal
This may be the most flexible option for sending money to someone with no bank account simply because it provides recipients with a variety of ways to access funds. Both you and the recipient will need to have a PayPal account.
A PayPal balance can be transferred to a linked prepaid debit card or a PayPal debit card, which can then be used to make purchases or to withdraw cash at an ATM. It’s free to withdraw money from a PayPal debit card at any MoneyPass ATM, but you’ll be charged a fee for using ATMs in other networks.
Don’t want to link a debit card? PayPal will send you funds from your balance by check, although it generally takes five to 10 business days to receive it, and you’ll be charged a fee.
Venmo
This popular mobile payment app also allows you to send funds to someone without a bank account. Like other payment apps, you’ll need to create an account before you can send or receive money through Venmo. After you send money to someone, they can keep those funds in their Venmo balance or transfer them to a linked prepaid debit card or Venmo Debit Card.
There’s no fee for a standard transfer to a debit card, which typically takes one to three days. Instant transfers are processed in minutes but cost 1.75% of the total transfer amount. Cash withdrawals are free when you use the Venmo Debit Card at MoneyPass ATMs.
Cash App
Another frequently used payment service, Cash App, offers basically the same features as Venmo for sending money to someone without a bank account. Once the money is transferred to the recipient’s account, they can withdraw it at an ATM using a virtual or physical Cash App Card. In-network ATM withdrawals are free, but Cash App charges a fee for out-of-network ATM withdrawals, and the ATM operator may also tack on an additional charge.
Apple Cash
If you and the person receiving the money both own iPhones, you may want to consider using Apple Cash to send funds. Apple Cash is a digital card that allows you to make purchases and send or receive cash. You can send cash through messages on your phone or through your Apple Wallet. Recipients can store money in their Apple Cash balance and then use it to make purchases online or in stores that accept Apple Pay. You can also transfer funds from Apple Cash to a prepaid debit card, although a fee applies.
Money Transfer Services
If someone needs to receive money quickly, particularly in the form of cash, transfer services such as Western Union may be the best option.
Western Union
Western Union has long been one of the most popular ways to send money, and it remains a convenient and secure option, although it is one of the pricier methods on this list. You can initiate a transfer online, using the Western Union app or by visiting one of the many agent locations throughout the U.S. (Many grocery stores and retailers offer Western Union services.)
You can send money from your bank account, debit card or credit card, or you can send cash at an in-store location. Fees are typically higher when sending money using a card, although the amount you’ll be charged varies based on several factors, including the speed of the transfer, the location you’re sending it to and the funding method.
After you select the amount you wish to send and provide the recipient’s name and address, you’ll choose a cash pickup location where they can collect the money. They will need to bring a government-issued ID and provide a tracking number to receive the money.
Western Union also offers a prepaid debit card, which can be a convenient alternative to cash pickups. To send money, you can simply reload the recipient’s card.
Other Services
MoneyGram is another popular service for sending money both domestically and internationally, and works similarly to Western Union, allowing cash pickups at many locations.
There are also multiple services that allow you to send international transfers to someone without a bank account. These include platforms such as Wise, Xoom and Remitly. You’ll typically pay a transfer fee and exchange rate markup when sending money abroad using these services.
Money Orders
A money order is a prepaid document that serves as a form of payment that can be sent and then cashed by a recipient. You can purchase a money order from a bank or credit union, at various retail locations and even at a U.S. post office. You’ll fill it out and sign it, similar to a check, and then send it through the mail. Money orders can be cashed at certain retail locations and at the post office.
While money orders are secure and can be cashed without a bank account, they do come with some drawbacks. The amount you can send per money order is typically capped at $1,000, so you would have to fill out multiple money orders to send larger amounts. They also come with fees, which vary based on the provider of the money order. For example, the post office charges $2.55 for money orders up to $500 and $3.60 for orders between $500.01 and $1,000.
What to Consider When Sending Money to Someone Without a Bank Account
Cost
When sending money to someone without a bank account, it’s important to consider the fees and charges that might apply, says Jillian Stephenson, assistant teaching professor at Carnegie Mellon University’s Heinz College and a certified public accountant.
“There’s going to be a cost for pretty much all of these,” says Stephenson.
Those costs can vary significantly, however. For example, a $1,000 transfer through Western Union might come with a fee that ranges from $10 to over $100, depending on how you’re funding it. Sending money through a mobile app may be free, but it may cost money to actually withdraw those funds.
Speed and Convenience
Before selecting your sending service, consider how quickly your recipient needs the money and how easy it will be for them to access it. A Venmo transfer might arrive in seconds, but the recipient would need a prepaid debit card and to make a trip to the ATM to withdraw the cash. If you’re using Western Union or MoneyGram, be sure that there is a cash pickup location that is convenient for your recipient.
Technological Savvy of Recipient
Mobile payment apps can be fast and inexpensive, but they might not be the best option for sending money to someone who isn’t comfortable using unfamiliar technology, says Stephenson.
If that’s the case, she suggests opting for a money transfer service or money order.
Beware of Potential Fraud
When using many of these money transfer methods, the transaction can’t be reversed after it has gone through. Therefore, it’s important to verify the identity of the recipient.
“The primary concern that the sender should be cautious of throughout this process is risk of fraud,” says Tim Ruhe, vice president and head of payments strategy at Fiserv. “It’s crucial to trust the person they are sending to since these types of physical transfer methods are generally irrevocable once the transaction is complete.”
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How to Send Money to Someone Without a Bank Account originally appeared on usnews.com
