Every day, $4.8 trillion is transferred in the form of transactions on foreign exchange markets. A large proportion of that figure is international remittance. Remittances are transfers of money or equivalents by a foreign or migrant worker to an individual, friend or family member in their own home country. According to the World Bank, remittances will grow to $616 billion in 2018 – with more migrant and foreign workers supporting their families from abroad than ever before.
The climate of remittance is changing as migrants seek new, more efficient and less costly ways of sending funds and support home. The phenomenon has been disrupted by innovative technologies, apps, the rise of mobile technology and cryptocurrencies as remittance moves away from traditional banking methods and remittance alternatives empower migrants with new solutions. In light of this, let’s take a look at 5 key international remittance trends making waves in 2018:
5 Key Trends Transforming International Remittance in 2018
1. Alternatives To Banks
In the past, big banks supported money transmission overseas, facilitating remittance through low-cost international transfers. Recent years have seen a shift away from this with banks such as Bank of America closing their low-cost services which enabled, for instance, Mexican migrants to transfer funds to families and friends over the border. Banks are increasingly dropping their support for remittance, and closing accounts used to transfer funds abroad because of concerns about money laundering, illegal activity and compliance with regulations. This means that more and more migrants are having to look beyond traditional banking routes to send remittance, using alternative means and providers to large world banks.
2. Going Mobile
Sending money across borders used to mean a lengthy and complicated process involving going in person to a bank. Then came the days of logging in via internet banking from a computer to send and receive payments. In 2018, this process will be carried out much more simply via mobile. This means senders don’t need access to a computer, nor will they have to travel to bank branches in person. Apps like Reloadly mean that recipients don’t even need a smartphone, just a mobile number to be able to receive support from their families in the form of airtime. A key trend already gathering momentum is remittance going mobile.
3. Avoiding bank fees
The World Bank has estimated that, in 2017, $450 billion was sent to developing countries. However, it’s thought that around $32 billion of that doesn’t reach recipients due to the extensive transaction costs of money transfers. However this is set to change in 2018 as migrants seek alternative ways to support friends and family back home without being penalized. With the move away from traditional banking methods comes a reduction in fees for migrants looking to support their families from abroad too, meaning those receiving funds get a higher percentage of the remittance sent.
4. Cryptocurrencies
New technologies like cryptocurrencies are another trend set to hit international remittance in 2018. They are predicted to tackle the issue that an estimated 1.1 billion people cannot officially prove their identity, whilst also avoiding high charges and the role of intermediaries. However, the effects of cryptocurrencies on the sending of payments or financial support remain to be seen and the lack of regulation poses some potential security threats. In addition, the use of cryptocurrency depends on internet access, which some migrants or families of migrants may not have.
5. Sending Airtime Rather Than Money
Additionally, migrants are increasingly choosing to send airtime, rather than money, to their families back home. More simple, fewer fees and quicker than transferring funds between accounts; by remotely topping up loved ones’ mobile phones via apps like Reloadly, migrants can keep in touch with family members, no matter where they are in the world. International remittance in the form of airtime is set to be a game-changing trend in 2018, keeping people connected and reducing the hassle of bank transfers.
Conclusion
So there you have it! These 5 trends are set to transform international remittance in 2018. Reloadly’s solution for sending airtime via mobile will also be transform remittance for migrants wanting to support their families aboard. Check out how to send airtime home in just three easy steps.
