Every year, around one billion people in the world—or one in seven—send or receive remittances. The average remittance is small, with migrant workers, who are the average users, sending around $200 or $300—or 15 percent of their income—home every month. Nevertheless, these flows of money make a big difference in supporting workers’ families in their home countries and lifting millions out of poverty.
Sending a remittance used to involve going to a post office or money transmitter, filling out paperwork, and paying a huge markup. Today, thanks to financial technology and innovative fintech companies, people can send remittances conveniently, cost-effectively, and efficiently with the touch of a button. Mobile apps are the cheapest way to send money abroad, with an average cost of 4.5 percent, according to the World Bank. Banks, in comparison, charge 11.8 percent, more than double the price.
The rise of digital remittance providers has contributed significantly to global financial inclusion and helped more people access the financial system. In the U.S., digital remittance payments are safe and regulated, with significant oversight at the federal and state levels. Fintechs offering remittances enhance the safety of the customer experience, lower the cost of sending money abroad, and help combat bad actors with robust authentication and security measures.
Regulators play a role, too. FedNow’s launch in the U.S. can help make these costly cross-border payments cheaper and faster – but today, it can only be accessed by banks. At a time when nearly nine in 10 Americans use a fintech app, with the average consumer relying on three or four to manage their finances, it is time to expand Fed access in order to unlock even cheaper and faster remittances for all.
To mark International Day of Family Remittances, we are celebrating the millions of people who use a fintech app like PayPal, Wise, and Remitly to send money to family abroad.
⭐️ Customer Spotlight ⭐️
Jorge, a Remitly customer in Calgary Alberta, Canada, shares the importance of using fintech to easily send money to family abroad. “When I moved from Colombia, originally to the US, I was motivated by the possibility of new opportunities that could help improve my life. Coming to the US I felt like I was learning something new daily! While in the US, I worked several jobs, including restaurant delivery, house painter, pool cleaner, and more. Today, I live in Canada, and I have Canadian citizenship. I have a good job that allows me to financially support my daughters so they can study. With the support I send through Remitly, they feel more secure, and I feel satisfied to be contributing financially.”
Jorge continues, “I really appreciate Remitly because it’s easy for me to use the app on my phone and send money at any time and from anywhere I am, at work, in the car, etc. I love that it’s available in Spanish! And I value the speed, reliability, and capabilities of tracking my transfers, which are made possible by digital technology.”