Small wonder, then, that so many resort to the unregulated networks that are ubiquitous in many countries. It’s all an expensive, inconvenient, inefficient hassle. The family gets word that the money has been sent, and someone goes to the closest money transfer outlet (which is often not particularly close), pays another hefty fee, and receives the remittance as local-currency cash. They take some of that cash to a money transfer outlet, and pays a hefty fee to send it to family back home. The migrant earns wages or salary in the local currency of their host country. Most formal remittances are over-the-counter, cash-in/cash-out transactions. In some, that figure is 25 percent or higher.Ĭash remittances are all an expensive, inconvenient, inefficient hassle.ĭespite the importance of remittances, they have remained stuck in a couple of inefficient models. In more than 60 developing countries, remittances exceed 5 percent of GDP. Remittances are thus important to migrant households, many of which are low-income or otherwise vulnerable, and they’re important at the national level, too. Their families may depend on that money to meet basic needs, or they may intend to save it up to build a house, buy land, launch a business, get a degree, or some other longer-term goal. Wherever their home or host countries, for most migrants, sending money back home is a major priority.

And contrary to the archetypal image of the migrant who leaves a low-income country in the global South for a rich one in the global North, most migration actually happens south to south. More than 85 percent are economic or voluntary migrants. As of 2019, an estimated 270 million people, or roughly 3.5 percent of the total global population, live and work outside their home countries.

To understand why innovation is so vitally needed in remittances, a bit of background is helpful.

The Change by Remittance Girl