The future development of digital remittance

Today, many people who move abroad are economic migrants, seeking work and the means to support family members back home. These migrants need a safe, convenient and affordable way to send money earned in a destination country to their home country, what we’ve come to call remittances.

Remittances are not a new phenomenon in the world, being a normal concomitant to migration which has always been a part of human history. Several European countries, for example, Spain, Italy, and Ireland were heavily dependent on remittances received from their emigrants during the 19th and 20th centuries. In the 1990s we saw these money transfer businesses bloom, with companies like Western Union and MoneyGram developing a new business model for remittances based on a system of international agent networks.

But for now, several factors is fueling digital growth globally, such as increased smartphone penetration, greater demand for digital transactions, and an overall need for faster cross-border transfers. And with the shift to digital comes an audience of younger, digital-savvy customers using remittances — a segment that companies are looking to target.

As a result, the global remittance industry is becoming increasingly competitive for firms to navigate, with incumbents like Western Union and MoneyGram competing for the same pool of customers as digital upstarts like WorldRemit and Remitly. And in order to win, companies across the board will need to prioritize the four areas consumers value most in remittances: cost, convenience, speed, and safety.

Compare to the traditional remittance vehicles, remitting using digital remittance methods don’t have to queue up for more than 2 hours at bank, and people don’t have to burden high hidden fees and bear the long long transfer time.

Except for online transfer institution like WorldRemit, TransferWise, and Xoom, lots of blockchain-based online payment providers have come to the fore. Such as Ripple and Epay. By adopting the blockchain technology, enabling fast, low-cost and transparent peer-to-peer cross border transactions. The global remittance network launched by Epay brings together qualified remitters from all over the world. One remittance agency collects the local currency of the remitters from country A, the other remittance agency pay the local currency to the receiver on country B, and the official stablecoin EUSD, issued by Epay is circulated among remittance agencies as the valuation currency. Therefore, the sender only needs to create a remittance order in Epay and pay to remittance by local bank account or cash. Achieve efficient and low-cost cross-border transfers.

Banks across the globe, including BBVA, have been working for years to make cross-border payments fast and smooth. One of the main initiatives in this area is gpi which SWIFT launched in the market in 2016 with the idea of improving customer experience in the world of international payments; JP Morgan also launched its Stablecoin JPM Coin to make it a bridging currency for cross-border payments and assets transfer; Even the remittance giant Western Union announced to integrates with crypto wallet to expand Philippines remittances.

So, what’s next for remittances?

According to the latest remittance report from World Bank, Although the total remittance volume is increasing, the remittance fee still keeps high. A growing international consensus says that the cost of sending remittances must be reduced, putting money back in the pockets of economic migrants and their families. Yet cheaper online services have struggled to compete with brick and mortar agents. Who are today’s remittance innovators and what will they do to deliver cheaper, faster and more convenient services?