Gift Cards vs Traditional Money Transfer Services: A Comparison

The ability to send money across borders is more important than ever. Whether you support family members overseas, pay freelancers, or gift money to a friend abroad, you have multiple transfer options. Today’s standard comparison is gift cards vs traditional money transfer—two increasingly popular choices with advantages and use cases.

While traditional services like Western Union and bank wire transfers have long been the standard, digital gift cards are emerging as a modern, tech-savvy alternative. This blog compares these two methods, analyzing fees, speed, convenience, security, and accessibility, to help you decide the best option for your needs.

How Gift Cards Work for Money Transfers

Gift cards are generally viewed as tools for shopping rather than money transfers, but they are gaining traction as an alternative way to send funds.

Types of Gift Cards

There are mainly two types:

• Prepaid cards (like Visa or Mastercard gift cards) function like debit cards and can be used wherever the brand is accepted.
• Retail-specific gift cards (like Amazon, Flipkart, or iTunes) can only be redeemed on specific platforms.

The Process

To send money via a gift card, the sender purchases a digital or physical card and shares the card number and redemption code with the recipient. Depending on the type, the recipient can redeem the card online or in-store. Some digital platforms also allow the conversion of gift cards into digital wallets or cryptocurrencies, adding more flexibility.

Read related blogs: How to Send Money with Virtual Gift Cards and Avoid Transfer Fees

How Traditional Money Transfer Services Work

Traditional money transfer services offer reliable ways to send funds locally or internationally through banks, agents, or digital platforms with varying fees and speeds.

Traditional Money Transfer Services Include Companies Like:

• Western Union – A global leader in cash pickups and transfers with thousands of agent locations worldwide.

• MoneyGram – Offers quick transfers with multiple payout options, including bank and cash.

• Bank wire transfers – Direct money transfers between banks, often used for large or official payments.

• Digital platforms like PayPal, Wise, and Remitly – Online services offering convenient international transfers with transparent fees and exchange rates.

The Process

1. Register for an account: You must sign up online or in person, often requiring ID for verification and compliance with financial regulations.

2. Provide recipient details: Enter the recipient’s name, country, and transfer method to ensure the funds reach the correct person and destination.

3. Choose the delivery method (bank deposit, cash pickup, etc.): Based on convenience, select how the recipient will receive money—via bank, mobile wallet, or physical collection point.

4. Pay applicable fees: Fees depend on the service provider, amount, currency conversion, and delivery method—some platforms charge more for urgent transfers.

5. Wait for the funds to arrive: Delivery times vary by provider. Some transfers are instant, while others can take several business days.

Key Differences – Gift Cards vs Traditional Money Transfer Services

1. Fees

Gift Cards:

• Many gift cards, especially digital ones, come with low or no transfer fees.
• However, some prepaid Visa/Mastercard gift cards may have an activation fee (typically $3–$6).

Traditional Services:

• Transfer fees can be substantial.
• Additional fees may include currency conversion charges, service fees, and receiving payments.
• Sending $100 through some services can cost up to $15 in fees.

Comparison: Gift cards can be more cost-effective, especially for small to medium-sized transfers.

2. Speed of Transfer

Gift Cards:

• Instant delivery when sent digitally via email or messaging apps.
• Physical cards can take days to arrive by mail.

Traditional Services:

• Cash pickups through services like Western Union can be instant.
• Bank transfers may take 2–5 business days, depending on the banks and countries involved.

Comparison: For instant delivery, digital gift cards are often faster.

3. Accessibility

Gift Cards:

• No need for a bank account.
• It can be purchased and redeemed through retailers and online platforms.
• Ideal for people without access to formal banking systems.

Traditional Services:

• Usually, the sender (and sometimes the recipient) must have a bank account or access to a physical agent location.

Comparison: Gift cards offer broader accessibility, especially for the unbanked population.

4. Security and Privacy

Gift Cards:

• It doesn’t require the sharing of personal banking details.
• Less exposure to potential data breaches or identity theft.
• Some anonymity for both sender and recipient.

Traditional Services:

• Require personal and banking information, which may be vulnerable to fraud or hacking.
• Many services require compliance with Know Your Customer (KYC) regulations.

Comparison: Gift cards can offer more privacy and security, but risk being lost or misused if not appropriately handled.

5. Currency and Redemption Options

Gift Cards:

• Generally limited to the currency and platform of the issuing company.
• It may not be usable in certain regions due to local restrictions.
• Retail-specific cards can only be used on that platform.

Traditional Services:

• Offer a wide range of currency options.
• Funds can be deposited directly into a bank or mobile wallet in local currency.

Comparison: Traditional services are better suited for transfers involving multiple currencies or regions with limited online retail access.

6. Ease of Use

Gift Cards:

• Quick to purchase and send.
• Minimal documentation required.
• Available at supermarkets, convenience stores, and online retailers.

Traditional Services:

• May involve multiple steps like registration, verification, and manual entry of recipient details.
• Some older recipients or those in rural areas may find the process cumbersome.

Comparison: Gift cards win on simplicity, especially for tech-savvy users.

Read related blogs: Pros and Cons of Using Gift Cards for International Transfers

Pros and Cons of Using Gift Cards for Money Transfers

Gift cards have become popular as an alternative way to send money due to their convenience and accessibility. While they offer a fast and low-cost solution, especially for those without traditional banking access, they also come with limitations regarding usage and security.

Pros

Low or zero fees—Purchasing and sending gift cards often have no transfer fees, making them a cost-effective option.

Instant transfers (especially digital cards) – Digital gift cards can be delivered within minutes, allowing for near-instant gifting or transfers.

No bank account required – Recipients don’t need a bank account to receive or use a gift card, increasing financial inclusion.

More privacy and anonymity – Gift cards don’t require sensitive banking information, offering enhanced privacy for both sender and recipient.

Cons

Limited redemption options in certain countries – Not all retailers or cards are usable internationally, limiting where the funds can be spent.

It cannot often be converted into cash – Most gift cards are intended for purchases only and can’t be exchanged for physical currency.

Risk of loss or fraud if the card number is shared insecurely – If a card number is exposed, it can be used fraudulently without recourse for recovery.

Pros and Cons of Using Traditional Money Transfer Services

Traditional money transfer services like Western Union, MoneyGram, and bank wire transfers have long been the go-to option for international remittances. While they offer broad accessibility and reliable delivery, they also have some drawbacks that may not suit every user’s needs.

Pros

Wide global coverage – These services operate in hundreds of countries, making them ideal for sending money anywhere.

Multiple delivery methods (bank, cash, mobile wallets)—Users can choose how the recipient receives the money, whether through a bank deposit, cash pickup, or even a mobile wallet.

Support for multiple currencies – Traditional services can convert and send money in various international currencies, making cross-border transfers simple.

Cons

High transfer fees – Sending money through these platforms often includes hefty fees, especially for small transfers or urgent deliveries.

Slower speeds – Depending on the service and destination, transfers can take several hours to a few business days.

Often, both parties must have bank accounts or visit physical locations. Many services necessitate bank accounts or in-person visits, limiting accessibility for unbanked or remote users.

Read related blogs: Why Gift Cards are Revolutionizing International Money Transfers

When to Choose Gift Cards Over Traditional Money Transfer Services

Gift cards are an excellent option when:

• You want to save on fees.
• You need to send money instantly.
• The recipient can redeem the card locally or online.
• The recipient doesn’t have a bank account.

Traditional services are better when

• You’re sending large amounts
• The recipient needs cash
• The recipient lives in an area with limited online shopping or digital infrastructure.

You need a regulated, traceable transaction.

Conclusion

Both gift cards and traditional money transfer services have their place in the evolving landscape of international money transfers. Gift cards offer speed, low cost, accessibility, and privacy, making them ideal for informal or quick transfers, especially for people outside the traditional banking system. Meanwhile, traditional services provide currency flexibility, global reach, and bank-level infrastructure, making them ideal for formal transactions or larger amounts.

Need to send money fast? Beem lets you transfer funds instantly, even to recipients without a bank account. It’s perfect for emergencies, offering convenience without delays. With Send Now, Pay Later™, you get instant access to reliable transfers without waiting.

Ultimately, the right choice depends on your goals, destination, and the recipient’s needs. By weighing the pros and cons outlined in this blog, you can make a more intelligent, more efficient decision for your next international money transfer.

FAQs: Gift Cards vs Traditional Money Transfer