Note: This article is part of our Basic Banking series, designed to provide new savers with the key skills to save smarter.
There are plenty of ways to send money to people that don’t involve cash in an envelope. Online payment apps let you transfer funds to friends and relatives instantly. Some people still write checks and send them by mail, like the $20 you got from your grandmother on your birthday. But sending money becomes more complicated when the recipient doesn’t have a bank account.
The problem is more common than you might think. According to the FDIC’s 2017 National Survey of Unbanked and Underbanked Households, 6.5% of U.S. households were “unbanked,” meaning that no one in the household had a checking or savings account. That translates into some 8.4 million households, with 14.1 million adults and 6.4 million children who don’t have access to basic banking services.
According to Ken Tumin, founder and editor of DepositAccounts.com, most unbanked consumers don’t have enough money to keep in an account or can’t open an account because they don’t have proper ID or evidence of prior banking activities. Others simply distrust banks.
Below, we’ve rounded up several good options to send money to someone who doesn’t have a bank account, including information about how the strategies work and what they cost.
Money orders and wire services
Money orders and wire transfers are the old-school way to send money to people without a bank account. Money orders are inexpensive and very simple to use, but they also require you to mail a paper check to your recipient. Western Union and MoneyGram wire transfers are much faster, but you’ll pay for the convenience.
U.S. Postal Service money order
It’s easy to send a Money order for up to $1,000 from any local U.S. post office. A money order is like a cashier’s check: It’s prepaid by you and guaranteed by the USPS, and made out to a specific recipient. The fee the post office charges depends on the amount of the money order: for money orders up to $500 the cost is $1.25, and for money orders over $500 and up to $1,000 the cost is $1.70. Money orders issued on a military facility cost only $0.45. You can replace a lost or damaged money order for a $6.15 processing fee.
The disadvantage of a USPS Money order is you then have to mail it to the ultimate recipient. But if you aren’t in a hurry, post office money orders are a very inexpensive way to get the job done. Recipients can cash a postal money order at a U.S. post office for free, or at a check cashing store for a fee.
Walmart money order
You can buy a Walmart money order at thousands of Walmart Supercenter or Neighborhood Market locations throughout the United States. The maximum fee for a Walmart money order is $0.88. Walmart will also replace lost or damaged money orders. As with USPS money orders, you will need to send the money order to the recipient by mail. The recipient can then cash the money order at a Walmart store or a check cashing store, although in both cases, a check cashing fee generally applies.
Western Union money order or wire transfer
Western Union offers a variety of ways to wire money to someone without a bank account. You can purchase a Western Union money order at more than 56,000 agent locations across the country, including convenience stores, supermarkets and check cashing outlets — you can find an agent here. Fees vary by location, and you can replace a lost or damaged Western Union money order for a $15 fee if you have the receipt, $30 if you do not. Again, money orders then need to be mailed to the final recipient, who will be on the hook for a check cashing fee.
You can also use Western Union to transfer up to $5,000 online. Fees vary widely depending on how you pay, how quickly the money is available (ranging from minutes to up to four business days), and how the receiver wants the money — cash pickup is the right option for a recipient without a bank account. For example, sending $5,000 for cash pickup and paying with your debit card costs $50. To pick up the cash, the recipient only needs an ID and the transaction’s tracking number. This chart lets you calculate the fees and transfer speed that makes the most sense.
MoneyGram wire transfer
You can easily wire money anywhere with MoneyGram’s online services or at 350,000 retail locations in 200 countries. Payment can be in cash, by credit card or debit card, or by a transfer directly from your bank. MoneyGram will ask you to provide some information about yourself so they can verify your identity. In addition to domestic and international transfers, MoneyGram also offers the ability to send money to prison inmate commissary accounts.
Recipients can pick up their money in cash at a MoneyGram location, have it deposited to a mobile wallet or directly to their bank account, if they have one. For cash pickups, recipients will need to provide a reference number and show a valid ID. Costs vary widely depending on how you pay or a recipient’s location. You can send $500 to Florida and pay via an online bank account for $3.99 or use a credit or debit card for $8.99. If you pay in cash, the fee varies by the location where you make the payment.
Money transfer apps
The unbanked may lack traditional bank accounts, but many do have mobile phones. Some money transfer apps, like Venmo and Cash App, let you send money to people who don’t have a bank account. Most users of these apps link them to checking accounts to send and receive funds, however many apps let you link to prepaid debit cards as well. You don’t need a bank account to have a prepaid debit card, making online money transfer apps a fast, inexpensive and easy way to send money to someone who is unbanked.
Venmo transfer to prepaid debit card
Venmo lets you instantly send money to friends and family. You may use funds you already have in your Venmo account, or draw money from a linked checking account or credit card. When you send money using your Venmo balance, bank account or debit card, Venmo charges no fees. A 3% fee applies to credit card payments.
Users typically link their Venmo accounts to a checking account to receive money. However, you can also link your Venmo account to a prepaid debit card, provided that the card is registered in your name. This makes Venmo a viable option for people who need to receive money who do not have a traditional bank account.
PayPal transfer to prepaid debit card
PayPal provides a secure way to send or receive money instantly. PayPal doesn’t charge a fee when you use your PayPal Cash or PayPal Cash Plus balance to make the transfer. If you use a credit card or a debit card, a 2.9% fee applies.
Recipients who don’t have a bank account need to have a PayPal Prepaid Mastercard to receive money transfers via PayPal. You can use the card like a regular debit card to shop online or pay at any retailer that accepts Mastercard. You can also use it to withdraw cash from ATMs worldwide.
Square Cash App transfer to prepaid debit card
If you have a Square Cash App account, you can send money to an unbanked recipient who also has a Cash App that is linked to Square’s Cash Card prepaid Visa debit card, or other prepaid debit cards. If a recipient wants to transfer money from their Cash App account to their linked prepaid debit card immediately, there’s a 1.5% fee for the convenience. If they wait one to three business days, transfers out are fee free.
The bottom line
Your choice of strategy for sending money to someone without a bank account depends on how quickly they need to get the money and how much you want to spend. Also, your strategy depends on whether the person who needs the money has a prepaid debit card or not. But the good news is that you’ve got tons of options to choose from. So go ahead and send those funds to the person who needs them — no cash or envelope necessary.