What is Cash transfer?

Cash transfers are a service offered by a range of financial service providers, allowing cash to be sent and received anywhere in the world without the sender or recipient needing a bank account.

The sender pays an amount of money – plus a transfer fee in most cases – at one of the provider's branches or one of its distribution partners. The amount is then paid to the recipient at a branch at the destination.

In Germany, the sender has to present a valid form of ID, such as an EU identity card or passport. At the branch, the sender usually has to complete a form, submit it together with the money and show their ID.

The recipient also has to provide valid proof of identity when collecting the money. The types of identity documents that are accepted also depend on the country of destination and the provider.

The recipient has to provide additional information, including the amount of money sent, the sender's name and the country from which the money is sent. In addition, the service provider gives the sender a reference number for the transaction, which has to be communicated to the recipient before the money can be collected. It is important to ensure that the recipient's name is absolutely correct and written in Latin characters without any Umlaut characters – otherwise the money cannot be paid out.

When are cash transfers worthwhile?

Neither the sender nor the recipient needs to have a current account for a cash transfer. In addition, money transfer providers claim that they can process payments worldwide very quickly and that the money is often already available at the destination after a few minutes. In some situations, this can be very useful, e.g. if you are abroad and lose your wallet with all your payment cards and cash and need money very quickly.

This service is often used by migrants in order to send money to family members in their country of origin. In poorer countries or developing countries in particular, many recipients do not have a payment account, which is needed for regular bank transfers. In some countries, bank transfers entail even higher costs or are not even offered as a service by institutions. In such cases, cash transfers are often the only way to send money.

Cash transfers – what are the risks?

High costs

Money transfer providers advertise their services as a quick and convenient way to transfer money to foreign countries. However, the costs of a cash transfer are generally higher than those of a regular bank transfer – at least within the eurozone. In addition to the high fees that are charged for this service, further costs may be incurred if the provider uses an unfavourable exchange rate to convert the money into a foreign currency. Significantly high fees may also be incurred for cash transfers to particularly poor countries where there are no alternatives to bank transfers.

Risk of fraud

Unfortunately, there are also fraudsters taking advantage of cash transfers in the following types of situations:

In the context of an online transaction (e.g. to buy/sell a car), the seller, using a fake name or the name of an associate, may ask the buyer to transfer the money and provide the reference number for the transaction. Scammers convince their victims that this is to protect their money until they have received the goods or services. Then, the seller gets an ID issued under the fake name, collects the money, and the goods never arrive.

You should pay special attention to any requests for payments or refunds using cash transfers from people or companies you do not know.

You should also be wary of those who claim they know you and ask you to transfer money abroad because of a supposed emergency. They may be scammers in disguise attempting to withdraw your money with a fake ID. Once the money has been withdrawn, the chances of getting your money back are extremely low.

This is why you should only use cash transfers if you know and trust the recipient.

Who should I contact if I encounter problems with a cash transfer?

If you have reason for complaint, you should first contact the company through which the transfer was made. When doing so, it is recommended to request a statement or decision from management in writing before taking matters any further. Reputable providers offer information on how to lodge a complaint, e.g. in the terms and conditions published on their websites. It is always a good idea to retain all documents, keep a record of any correspondence and make a note of who you have spoken to and when. This information may later serve as important evidence should you encounter any problems.

If you are not satisfied with the solution offered by your service provider or your complaint has been rejected, you can contact the competent supervisory authority as a next step. If the institution in question has a branch in Germany, you can contact BaFin. If the complaint is directed at an institution operating on a cross-border basis with no representation in Germany, the relevant authority in the institution's home country is, as a rule, responsible for supervisory matters.

To settle matters out of court, you can also contact a recognised private consumer dispute resolution entity. If no private dispute resolution entity is responsible for settling the dispute in question, you can contact BaFin's arbitration board, which is also a member of the European Commission's financial dispute resolution network (FIN-NET). If required, network members can forward complaints to the competent authority abroad or provide information on other steps that can be taken.

You can search for the competent dispute resolution entity for a specific company in BaFin's database of companies.