Introduction
The word remittances is used to describe the money that flows from developed nations such as the United States of America to developing nations, as a result of economic migrants working there and sending money back home to support relatives. This now accounts for a sizable proportion of the GDP of many countries.
The amount of money sent globally is staggering. According to global statistics aggregator Statista, the total remittance value in 2024 is estimated to be as high as 883 Billion USD, rising to 913 Billion USD in 2025.
The year-on-year increases are aided by the introduction of new financial technologies, which make it much easier to move money internationally across borders without the traditional impediments such as cost, bureaucracy, and a lengthy timescale. New technologies such as apps and money exchange websites are slowly changing the face of how remittances are paid. Where once it was banks and financial institutions with money orders or money wiring technology, now we are seeing instantaneous transfers between app users with online money transfers.
The Historical Context of Remittances
Bank transfers and money orders were the traditional method of sending remittances back home and these methods had many weaknesses inherent in them. Cash could also be given to a sending agent in one country on the understanding that it would then be paid to the recipient in the receiving country upon request.
Due to international time differences, it often took some time for the correct instructions to be relayed between various countries. Sending agents may also benefit from fluctuations in currency exchange during this time. Changing US dollars to a different currency would often incur a charge, which would mean less money available for the recipient.
Banks and financial institutions have traditionally been expensive and slow when handling remittances and international money transfers, which is why the move to more modern transfer methods has been a revelation for many worldwide.
Digital Services Streamlining Remittances
Many money transfer providers have produced innovative solutions and consumer services that have made remittance payments much easier over the past few years. Apps available on even the most basic smartphone models are changing the way that remittances are sent and helping them become more affordable. Making these apps compatible with the most basic smartphones opens up and democratizes their use, removing a significant financial barrier to their implementation by the end users in developing countries.
Being able to extend the use of digital remittances has made them available, even in areas that aren’t well-served by traditional banking services and lacking in banking infrastructure. There has been close cooperation between money transfer providers and local organizations to provide financial services to people who may not have access to a traditional bank account. This has allowed customers to take advantage of credit, savings and insurance which they may not have been able to access in the past.
BOSS Revolution is an innovative money transfer provider that allows for transfers to over 100 countries from the USA. As well as providing online money transfers, BOSS Revolution also offers a mobile top-up service that allows mobile credit to be sent internationally. This is a great way to keep in touch and to show family and friends back home that you are thinking about them, despite the distance between you.
Modern Trends in Cross-Border Money Transfers
One of the problems that has always been faced by people sending money internationally has been the fees charged by the financial institutions involved. Some of the new breed of financial technology (FinTech) companies are challenging the traditional business model of the banks and are offering much lower transaction fees, some as low as 0%.
This increasing competition is forcing the banks and financial institutions to adapt or die in this market and this will almost certainly see much lower charges for users in the future. It is not unknown for banks to charge a base fee for the wire transfer which can be anywhere between $20-$45. On top of this, they will often then charge a fee in the range of 2-6% of the transaction.
It is clear to see why there has been such a strong pushback against the traditional model outlined above, as many see it as exploiting and undermining the remittance model and siphoning money from the intended recipients.
Digital remittances have been shown to be significantly less expensive than either cash or traditional financial institutions, with the World Bank showing that analog remittance for $200 cost 6.94% compared to digital which cost 4.96%.
New advances in FinTech make digital remittances not just cheaper but faster as well, as the money transfer companies generally have less red tape to navigate than traditional banks. Another reason their systems are faster is that they have been built from the ground-up with international money transfers in mind and don’t have to deal with outdated software and hardware that many banks and financial institutions still use to this day.
Blockchain technology is increasingly being used by money transfer providers to offer added security. Blockchain is a technology that underpins Bitcoin and other cryptocurrencies but it is more than that, it is a system that is incredibly hard to hack and is considered to offer some of the best security currently available for individual transactions.
Relying on digital infrastructure and processes that have been automated makes for a much faster money transfer than an interlinked system of banks which all have to authorize the transaction before it is able to complete successfully.
One of the biggest advantages to making money transfers digitally is the way that it has removed barriers for people who want to send or receive money internationally. It has improved the user experience immensely and has simplified the process to the point that it no longer requires specialist knowledge to be able to do it.
Future Prospects of Remittances
No less an organization than the World Bank describes remittances as “a critical economic stabilizer” and they believe that remittances play a vital part in helping households in receiving them to build their own resilience. This allows them to survive better when economic conditions worsen both locally and globally.
Research shows that remittance payments have actually reached the level that they have outpaced foreign direct investment in many countries and exceeded foreign aid by up to three times. It can be hard to measure the true scale of remittances, as many of these transactions are carried out informally but it is plain that they are rising every single year.
There is no reason to believe that remittances will do anything other than rise, especially as the technology that underpins them is becoming faster, more efficient and less expensive to use. The future for remittances is bright and they are likely to continue to increase year-on-year for the foreseeable future.
Remittances Will Continue to Flourish
There has been considerable evolution in the remittances market from the earliest days when the only possible solution was to use one of the traditional financial institutions to “wire” money to the recipient.
With the advent of money transfer services such as BOSS Revolution, we have made the step into the digital age, with all of the advantages that come with that.
The increased reliance on apps or websites increases flexibility and lowers the costs associated with digital money transfers. The traditional banks and financial institutions asked for much higher percentages than the new FinTech companies who are vying to take their place.
The traditional banks will need to adapt to the new challenges, and this increase in competition can only be good for people who rely on the receipt of remittances in order to live their lives.
