What’s the difference between a bank account and a Moneygram/Western union account and why would one choose the latter to transfer money?

Question

Thanks!!

In: 3

Answer 1

A bank account is for storing money, and using money to make purchases (either through debit cards or checks). Banks use your money to make investments and loans, and in exchange pay you interest for storing your money with them. Your money is also insured up to a certain amount – if the bank collapses, you are guaranteed to get at least that limit back.

MoneyGram and Western Union are money sending services specifically. These are both old services – MoneyGram was founded in 1988, Western Union was founded in 1851! They were made as a convenient service for people to quickly send money securely across long distances – between cities, states or even countries. This service can be good for a person who does not have easy access to their regular bank for making withdrawals (for instance if they are in a different country and need cash right away). **They are not for storing money in, like a bank account is**.

The times are changing a bit. Now we’ve got alternatives like Venmo, CashApp and even Zelle, a service that many banks are building directly into their own web platforms to make transfers easier. So there is more competition and it is actually forcing companies like Western Union to update how they do things a bit.