{"id":18215,"date":"2021-03-02T06:00:59","date_gmt":"2021-03-02T14:00:59","guid":{"rendered":"https:\/\/www.trulioo.com\/?p=18215"},"modified":"2024-01-29T19:42:07","modified_gmt":"2024-01-29T19:42:07","slug":"digital-remittance","status":"publish","type":"post","link":"https:\/\/www.trulioo.com\/blog\/payments\/digital-remittance","title":{"rendered":"Digital Remittance \u2014 A Foundation for Financial Growth"},"content":{"rendered":"\n

Foreign workers sending money back home electronically \u2014 digital remittance \u2014 is a powerful driver of economic growth. Improving the capabilities and reach of this money transfer channel has a material impact on people\u2019s lives and is a significant business opportunity.<\/p>\n\n\n\n

As the pandemic has slowed down cross-border money flows, many remittance companies have had to learn how they can operate in a digital-first environment. They need to control costs to offer their customers lower fees, while still maintaining profitability. They also must ensure they meet compliance obligations and position themselves for substantial long-term growth.<\/p>\n\n\n\n

Besides a general economic slowdown, the pandemic has had significant impacts on worker migration. The World Bank projects that remittance flows to low- and middle-income countries<\/a> will fall 7.5% in 2021, after a 7% drop in 2020. (It\u2019s important to note that the World Bank initially projected a 20% drop for the year in April 2020, so although the decline wasn\u2019t as bad as initially forecast, it\u2019s still significant.)<\/p>\n\n\n\n

The resulting economic pain affects both personal lives and national economies. Before the pandemic, over 270 million people worked outside of their home country, sending back money that accounted for more than 5% of the GDP<\/a> in 60 developing countries. These funds are often critical to the economic survival of the recipients.<\/p>\n\n\n\n

Shifting to digital remittances<\/h2>\n\n\n\n

Traditionally, remittances<\/a> involved multiple parties, lots of paperwork, slow transfers and high fees. Often, both the sender and receiver have to go to a physical location to send or collect their money, which has become problematic due to pandemic-related restrictions.<\/p>\n\n\n\n

Fortunately, digital remittances were already a growing trend, so many remittance companies had some preparation for the rapid shift to online and mobile channels. An article in Forbes noted that \u201cmoney transfer companies squeezed four years of digital growth<\/a> into just two months.\u201d WorldRemit saw 150% year-on-year growth in the first months of the pandemic. MoneyGram saw a 17% increase in digital revenue in Q1 2020, while Western Union saw a 13% increase.<\/p>\n\n\n\n

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From Forbes: Western Union and MoneyGram share of digital transactions FXC INTELLIGENCE<\/small><\/small><\/em><\/p>\n\n\n\n

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Digital remittances solve many of the problems of sending money cross-border to a person in a low- or middle-income country:<\/p>\n\n\n\n