The International Money Transfer & Cross Border Payments Industry

Over the past decade, world remittances have increased by 60 percent from US$437 billion in 2009 to over US$714 billion in 2019. 

These flows exceed three times the combined official development assistance (ODA) and about equal to total foreign direct investment (FDI).

If we add Cross-Border Payments, whether personal or by businesses, and the gig economy with thousands of people working remotely, we can be talking about 750 billion more, for a total of more than 1.5 trillion dollars.

A staggering one billion people, or one in seven in the world, are involved with remittances, either by sending or receiving them. 

One in nine people in the world benefits from these flows.

Adding Cross-Border Payments, we are touching the lives of 1.5 to 2 billion people across the planet. 

That is what the International Money Transfer, Remittances, and Cross-Border Payments industry do: serve the needs of billions of customers.

Over 50 percent of remittances are sent to households in rural areas, where 75 percent of the world's poor and food-insecure live. 

Rural households rely on these flows for improving their livelihoods. The accumulated flows to rural areas over the next five years will reach US$1 trillion.

In 2019, the number of migrants worldwide was estimated at 272 million, up from 220 million in 2010. The growth rate of remittance flows has been greater than the growth rate of migration. 

The driving force behind the remittance phenomenon is migrant workers, sending on average US$200 each, between 10 and 12 times a year, to their families in their home countries.

Between 2015 and 2030, it is estimated that 8.5 trillion dollars will be sent by migrants back to their communities of origin in developing countries. 

About 75 percent of remittances are used to put food on the table and cover medical expenses, school fees, or housing expenses.

Diasporas are paying for their family’s electricity, mortgages, even seeds and livestock. More than US$2 billion will either be saved or invested in small businesses. 

Migrant workers send on average US$200 or US$300 home every one or two months. 

This represents only 15 percent of what they earn, as the rest stays in their host countries.

They can make up as much as 60 percent of a receiving household’s total income and represents a lifeline for millions of families.

In times of crisis, migrant workers may send more money home to cover the loss of crops or family emergencies. Remittances have been key to rebuilding after earthquakes in Haiti, Nepal, typhoons in Asia, and hurricanes in the Caribbean. 

25 percent of remittances are saved or invested in activities that generate income and jobs and transform economies, particularly in rural areas.

Remittances are an engine of peace and development.

In the absence of adequate government social protections in most developing countries, remittances insulate poor families from the full pain of economic crises, and in doing so, reduce the severity of grievances that fuel populist anger, civil unrest, and political instability. 

Remittances perform a social, economic, and political function and have become a de facto social welfare policy in many poor countries.

Same as the 2008 financial crisis, the covid pandemic will impact remittances, this time promoting digital solutions in every market, in an evolution in the market where they will be winners and losers, where innovation will continue to drive the agenda.

Remittances and cross-border payments are costly in certain corridors, but the emergence of fintechs, the technical innovations, mobile technologies, digitalization, blockchain, cryptocurrencies, enhanced compliance and regtech, are fundamentally transforming the markets, coupled with a more conducive regulatory environment and imperative partnerships of banks and non-banks financial institutions, working to better serve a growing interconnected market. 

Remittances and payment innovations around the world are driving all of us forward.