The Expert Podcast

Look, the future of financial transactions is mostly going online. Gone are the days of writing checks. Even credit card payments are less common than money transfers like Gazelle, TransferWise, World Remit, and some of the other transaction platforms. And if that's the case, there's a question of how you should structure those transactions. Is it better to send a one-off large payment or sending smaller payments regularly? And we're not talking about taxes or tax evasion - we're talking about financial security.

The question many times comes up is how should I send payments to somebody - let's say for rent or for purchase of an item or for reimbursement. If it's a small amount, obviously you want to send the whole thing. If it's a larger amount, sending smaller payments divided up might have an advantage. And here's why: if you accidentally send the payment to the wrong recipient, you're not going to lose the whole thing. There are many cases of a purchase of an item - a vehicle, real estate, some large asset - where the buyer sends the payment to the wrong address, to the wrong email, and once it's sent you can't get it back.

So if you send a small payment to begin with and then make sure the seller - the proper seller - received it, now you can follow up and send the larger payment. If you send smaller payments over time, let's say for your rent divided up into four, send one every week, now you can budget your money better rather than forcing yourself to save it up and then at the end of the month hope you still have it. So there's advantages to splitting up these payments into smaller chunks.

Now obviously, if there's a fee for each payment, that's going to cost you more money that you may not want to do. So check with your payment platform that you use to see, first of all, what safety and security measures they have for your payments. Second of all, if there's fees for each payment or is the fee based on the amount? And if it's based on the amount, it doesn't matter - the total amount will be the same. And also, what does your seller or recipient prefer? Maybe they have to pay a fee every time they receive money.

But transferring funds using these fintech platforms, these electronic platforms, is the wave of the future. But it removes some of the protections you have by using a credit card. Look, the credit card industry has payment protection, disputes, chargebacks that you can get payments returned if you sent them incorrectly. Sending a wire transfer or money transfer through one of these platforms may not have the same protections. So you want to look at the contract that you have with your provider to know what protections you have.

Also, if you're sending through different currencies to different parts of the world, how do they figure the exchange rate? Because the exchange rate might make a difference to you and to your recipient of what net money they receive. And even splitting up the payments might be good for the recipient for their budget rather than waiting until the end of the month to get their reimbursement for whatever you're sending to them - rent or food or whatever it is. Having those payments come in throughout the month, every week, might be also beneficial to them.

If it's inconvenient, you might be able to set up an automatic transfer, and that could be something that makes it even more convenient. According to this article from World Remit, they have options for both, and so your platform may also have both of those options available to you. The most important thing is making sure that it's not going to create any unintentional consequences - more fees, more inconvenience.

The safety aspect is important. We get a lot of inquiries from people who have had money sent to the wrong place, and you can't get it back most of the time if you accidentally did a typo on the email address or the cell phone number. So make sure you're sending it to the right place. Maybe start with a small payment and then verify that it went through before you send a larger payment. And I'm sure your recipient will be glad to receive smaller payments more regularly than waiting for lump sums.

One of the biggest news stories in the last couple months is more and more employees want to get paid every day than even get paid once a week. So it proves the point that people like to have their money on a more regular basis rather than building up a lump sum and then getting it all at once at the end of a week or end of the month.