Types of Foreign Currency Remittances — A Practical Guide for Exchange Houses

“Remittance” is one word, but it covers ten different jobs. A customer says, “I want to send money to Dubai,” and behind that simple sentence sit route selection, fee calculation, risk assessment, and correct posting — get any of them wrong, and the money either arrives late, costs too much, or does not arrive at all.

This guide reviews the main types of remittance from an exchange house’s point of view: when each one is useful, what risks it carries, and how it should be recorded.

Why a remittance is not the same as a trade

First, a basic distinction. A trade means converting one currency into another at the same point. A remittance means moving money from one point to another — usually from one country to another.

From an accounting point of view, the difference matters: a remittance often has multiple stages, and between those stages, the money is “in transit.” The customer pays here, the destination pays out later, and in between you have an open obligation. Managing these open obligations — which ones have arrived, which have not, which are pending — is half the work of running remittances.

Main types of remittance

1. Bank transfer (SWIFT / telegraphic transfer)

Money is transferred through the formal banking system, account to account, across countries.

• Speed: usually 1 to 3 business days.
• Cost: sending bank fee + intermediary bank fee + receiving bank fee. It can be layered.
• Risk: low in terms of arrival, high in terms of compliance — every transaction has a full audit trail and is under scrutiny.
• Posting note: The destination IBAN must be accurate and verified. Match the account holder’s name before sending.

2. Hawala (network remittance)

This is based on trust between exchange houses, not the physical movement of money. You receive the money here, message the counterparty exchange house at the destination, and they pay the recipient there. Later, the accounts are settled between the two of you.

• Speed: often same day, sometimes a few hours.
• Cost: usually cheaper than bank transfer, because it does not pass through the formal banking system.
• Risk: depends on the counterparty’s creditworthiness and account balance. If the destination exchange house fails to pay or goes bankrupt, you are left in the middle.
• Posting note: This route creates a mutual due-to/due-from account with each counterparty exchange house. At every moment, you must know how much you owe or are owed by each partner — this is exactly where most discrepancies happen.

3. Dirham remittance (UAE corridor)

Dubai is the main remittance hub in the region. A dirham remittance usually means this: the customer gives you rials or foreign currency here, and through your UAE counterparty, you deliver dirhams to the recipient’s account or hand in Dubai.

• Use cases: imports, supplier payments, capital movement.
• Key point: the dirham rate and the corridor fee are separate. Keeping these two clear for the customer is the difference between trust and a complaint.

4. Lira remittance (Turkey corridor)

Istanbul is another hub, especially for Iranians living in Turkey and for trade with Turkey. A lira remittance works much like dirham, but with its own network and counterparties.

• Compliance note: Turkey has MASAK supervision, and documentation has become stricter. Your Turkish counterparty treats you based on how clean your work is.

5. Crypto remittance (Tether / USDT)

Tether has effectively become a cross-border remittance rail. The customer gives currency, you send Tether to the destination wallet, and it is converted into local currency there.

• Speed: minutes.
• Risk: wrong address = money gone and not coming back. The wrong network, for example sending TRC20 to an ERC20 address, is also a disaster.
• Posting note: every transaction has a hash that is traceable on-chain. Record this hash — both for reconciliation and for proof.

Comparison table

What all types have in common

Regardless of the route, every remittance needs three things. If you do not have them, sooner or later you will get burned:

1. Tracking the open obligation. From the moment you receive the money until the moment the destination pays out, you have an open obligation. You need a dated list of “what has not arrived yet.” An obligation that has been open for three days has either been forgotten or has a problem; you need to know both today, not when the customer calls.

2. Separating the rate from the fee. The value of the currency is one thing; the cost of the remittance service is another. Mixing them means you never know whether profit came from the rate or from the fee — and the customer feels they have been taken advantage of.

3. A clear mutual account. With every counterparty you work with (your partner in Dubai, Istanbul, anywhere), you have a two-way account. The balance of this account must always be clear. Most disputes between exchange houses are about these messy mutual accounts.

Instalment payments: when a remittance is not settled in one go

Many remittances are not completed all at once — the customer pays part today and part tomorrow; or the destination pays out in portions. If this multi-stage “payment obligation” is tracked manually, reconciliation becomes a nightmare: which instalment arrived, how much remains, when it will be completed.

In Nexto, these obligations are tracked as a single unit — each instalment is recorded under its own obligation, the balance and status (open/complete) are always clear, and the open obligations list shows at a glance what is still unfinished. The mutual account with each partner is also kept live and two-sided.

Summary

“Remittance” is one word for several different jobs, and choosing the right route — bank transfer, hawala, dirham, lira, or crypto — means balancing speed, cost, and risk for each customer. But beneath all routes there is one common rule: do not lose the open obligation, separate the rate from the fee, and keep the mutual account clear. These three are the difference between professional remittance operations and constant trouble.

Want to see what remittance posting and open obligation tracking look like in practice? Create a dedicated demo and follow a multi-stage remittance from start to settlement.