- LA-based research company QY Research Inc. found that savings from using digital money transfers help in curbing poverty
- Fintechs are likely going to make billions of dollars by 2025
- The research team says that the digital remittance market will grow by over 20% between 2018 and 2025
A research firm in Los Angeles, California in the United States says that the digital remittance market is expected to make $8590 million or a little over 8.59 billion in 2025. The news comes as new fintech startups started operating in Europe. Observers say that newcomers, as well as the older ones, will get a bigger share of the pie, experts say.
Data published by QY Research in their study “Global Digital Remittance Market Report 2018 to 2025” found that the sector will expand by 23.3% throughout the said period, amounting to billions of dollars in profit. The study focused on small businesses, migrants, students and the money they send home or receive from their home country.
According to the researchers, it is more cost effective to transfer money internationally through digital transactions as overseas transfer rates have been slashed due to lower overhead costs.
QY Research also found that cheaper rates contribute to the GDP of remittance-receiving nations, a welcome addition to the household income of direct recipients. The research firm added that the savings from digital transfers also curb poverty worldwide.
Digital remittances are “powerful” monetary solutions. A study done by the United Nations supports this claim, noting that remittances and the savings from cheaper transfers can bring positive development for both the local and global economy.
Fintechs are slowly taking a larger chunk of the market as more customers shift to digital transactions. The costs are often just a fraction of the total fees charged by traditional brick and mortar banks. According to experts, digitisation is the future and international money transfer giants are working on new technology to make this possible.
Digitisation also helps the unbanked since it makes banking more accessible. The researchers add that digital banking does not require numerous documents either. Based on data from the World Bank, there are 1.7 billion adults who remain unbanked. The World Bank adds that most of the world’s unbanked population are in developing countries. Aside from this market, the existing refugee crisis is also a potential market for the digital remittance industry. According to the study, digital or mobile-based remittance services will enhance economic opportunities for people who need it the most.
In India, migrants send money home on a monthly basis with a monthly average of $500 per person. The amount sent is usually used for basic needs, but the excess often goes towards starting new businesses. With more money saved from digital transactions, more gets invested into the economy. Aside from India, countries like Bangladesh, Vietnam, Pakistan, Nigeria, Mexico, the Philippines and China also receive billions in remittances every year.
Find out more about the remittance industry here.
