Remittance

Remittance, or money transborder transfers from one individual to another. As a rule, these are migrants’ transfers to their families, but there is a smaller cashflow directed towards more prosperous countries (support of students studying abroad, etc.).

Annually the volume of remittances goes up for 5% in average (CAGR) and, according to The World Bank Open Data, remittances worldwide will reach 750 billion USD by 2020

For a lot of countries, the volume of remittances share more than 10% of GDP (according to the World Bank) that makes this volume of financial help very valuable for the national economy. For the poorest countries, remittances from compatriots are the basis of supporting the most unprotected population groups: children, young mothers and elderly people.For a lot of countries, the volume of remittances share more than 10% of GDP (according to the World Bank) that makes this volume of financial help very valuable for the national economy. For the poorest countries, remittances from compatriots are the basis of supporting the most unprotected population groups: children, young mothers and elderly people.

A lot of international organizations such as The World Bank and The UN are concerned about the problem of cheapening the costs for remittances.

The UN calls for reducing the average rate of remittances from 7 to 3,5 percent. Costs for sending $200 are twice as high as the UN standards “Factors contributing to high costs include de-risking measures taken by commercial banks and exclusive partnerships between national post office systems and a single money transfer operator. These factors are constraining the introduction of cheaper and more efficient technologies—such as Internet and smartphone apps, and blockchain—in remittance services”

Distribution of Average Total Costs

The Main Channels of Remittances Are:

Via a paying agent

Via an intermediary who receives cash and arranges the transaction

From 30 minutes

Bank transfer

Only at the bank branch, if having a bank account in the sending country

1-3 days

Card-2-card

Via digital services, but there should be a bank card. For a lot of countries, the service is not available

From 30 minutes

The main channel by frequency of sending money is using a paying agent not only for sending but also for receiving money. As a rule, it is the result of the fact that a bank account is often not opened for those who came to a country for a seasonal job and so on. Beside that, migrants often manage non-qualified job and get paid in cash.

A bank transfer is usually the longest way because transactions are made using the payment system SWIFT.

Among the G-20 countries The Russian Federation has the lowest percent of remittance cost, according to The UN.

Russia is a net sender of remittances, especially to post-Soviet countries. More than 11 million people are the common number of immigrant laborers annually staying in the Russian territory and sending money home. Significantly the less expensive cost for sending money is caused by a few factors, having available digital technologies in this field as well. Our company provides a set of services connected with remittances or with creating inherent remittance system, whatsoever.

The Main Problem is Reducing the Costs for Remittances

~700 billion USD - volume of Remittances Worldwide by 2019

Remittances Worldwide will reach 750 billion USD by 2020, according to The World Bank Open Data

From 2010 to 2018 the number of Remittances gradually increased

The most part of the Remittances is committed to Low and Middle Income countries (LMIC)

Since 2010 the percentage of LMIC Remittances stays stable at 73-77%

Compound Annual Growth Rate (CAGR) tends to be about 5% from 2010 to 2018

National Infrastructure of International Remittances Acceptance

To create the national infrastructure of international remittances acceptance there should be:

Providing connection of the national banks with the payment gateway to have them give money via their ATM, in office and deposit on cards.

Let the retail become a payment agent

Example:

Russia has $16 billion of out coming remittances, average rate is 1,9%, according to the Central Bank of Russia

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