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January 2016

Remittance reality: Getting to 3% and beyond

Michael Kent's picture

The personal transfers sent home by migrant workers (technically knows as remittances), undoubtedly help fuel the global economy. They alleviate poverty, feed, help educate and support millions of families all over the world. Increasingly they also provide a pathway to financial inclusion for some of the over 2 billion unbanked adults worldwide - for many, receiving a remittance is the first regular, recorded financial transaction that they make.

We know the amounts involved are vast. According to the latest World Bank Factbook 2016, global remittances will exceed $601 billion this year, with developing countries receiving over $440 billion. That’s nearly three times the amount of overseas aid and pretty much all the experts agree those numbers are likely vastly understated.

So far so good, but despite these positive numbers, we’re still at that point where the average cost of transactions globally is hovering at 5 - 10%.