- Fintechs are set to make more money as remittances grow, experts say
- The United States is still the biggest remittance contributor in the world
- Migrants are likely to send more money to their native countries in 2019
Money sent by migrants back to their native countries is setting new records and fintechs are set to take advantage of the market, reports say. The benefits of remittances to countries that receive them are undeniable too according to experts. Due to its importance, migrants are also reportedly seeking better ways to send money home. Experts say that this is where fintechs such as CurrencyFair, TransferWise, Azimo, and WorldRemit come in.
International money transfers from the world’s migrants are now reportedly so common that many low income and middle income nations depend on them. Remittances have protected remittance receiving nations from financial crises, a Business World report notes. Citing the Philippines as a major example, the report says that the Asian country was spared from the 1997 financial crisis due to the remittances sent by Filipinos working overseas.
A study released by the World Bank in 2018 notes that the remittances in countries like the Philippines, Mexico, Indonesia, and others, are now higher than foreign direct investments. The decline, according to the World Bank, reflects “persistent weak aggregate demand, sluggish growth in some commodity-exporting countries, and a slump in profits earned by multilateral enterprises”. The organisation’s latest Migration and Development Brief notes that money sent to low and middle income countries reached a whopping $529 billion in 2018. This is a new record, the World Bank notes. Remittances will likely increase this year, with experts noting that it might reach $550 billion by year end.
The World Bank credits the United States economy to the increase. The organisation also adds that money being sent from Russia and the Gulf have also contributed to this growth.
A Foreign Policy report published this week says that India is still the biggest remittance receiving nation in the world. The country received a total of $78.6 billion in 2018. While the flooding disaster in Kerala somehow contributed to the increase due to the international response to the catastrophe, India is expected to keep receiving billions of dollars in remittances through 2019.
It is not surprising for fintechs to thrive. CurrencyFair, for example, offers convenient and cheap money transfer services to its users. Its biggest advantage, according to the company, is its fair fee structure. Sending money to your own account, the company says, is “completely free” while international transfer fees are just £2.50.
In the United States, the biggest players are still MoneyGram and Western Union, according to reports. With the US being the biggest remittance contributor in the world, experts say that these two companies are set to make more money in 2019. Based on recent press releases, both MoneyGram and Western Union have inked deals with fintechs to expand their services.
A whopping $68 billion was sent by migrant workers in America in the year 2017. The amount sent is $24 billion more than the money sent by migrants living and working in the United Arab Emirates.
To get the latest news about the remittance industry, follow FX Compared’s magazine. To find reviews of fintechs that process international payments, take a look at our reviews.
