Remittances constitute a major chunk of the economy of a developing country. However, due to the additional charges associated with the transfers of money and the various amounts of risk associated with different ways to send money abroad, the industry is in need of a facelift. Owing to this rising need of changes in the traditional methods, several new developments for money remittance are being adopted by the Governments as well as the transfer companies to provide the migrant workers with the best way to send money abroad.
RECENT TRENDS IN THE REMITTANCE INDUSTRY
Out of the many developments for money remittance that have come up or are being experimented, there are a handful that possesses potential to provide the necessary Renaissance to the various ways to send money abroad. A few of them are listed as under:
- CURTAILING THE REMITTANCE FEES
This has to be the primary development for money remittance since it attacks the primary cause of loathing for several ways to send money abroad. The worldwide average of the costs of transferring remittances has been experiencing a decline in the last few years. (8.93% in 2013 to 7.52% in 2015). This drop saves a huge lump sum of money which comes to be around 16 billion US dollars per year. This development for money remittance owes to the cheaper online remittance facilities which come to be nearly about 5%. With the boom of digitalisation, one might expect a larger drop in the near future.
- GRADUAL DISBAND WITH THE TRADITIONAL METHODS
The newer business models with all their attractive features and charges tend to overshadow the traditional agent-based ways to send money abroad. This has to be one of the most eminent developments for money remittance. Showing a huge decline, currently, the traditional methods account for only about 47% of the total remittance industry. There is huge scope for further reduction in the figure with the increasing number of customer-friendly business models that provide instant money transfer services abroad.
- A BOOST TO THE NET REMITTANCES
In the past few years, there has been a significant development for money remittance in terms of an increase in the total money that is being remitted. This has led to the introduction of more and cheaper ways to send money abroad. This creates a healthy competition among the various methods where the remitters derive the benefits.
- THE SHIFTING OF FOCAL POINT TO NEWER MARKETS
A saturation in the existing markets has led to the shifting of the focus of the companies to newer markets. Sub-Saharan region has seen the highest growths in remittance in this context. This development for money remittance has led the companies to provide several ways to send money abroad equipped with attractive features in these new markets.
- INTERDEPENDENT BUSINESS MODELS
Several business models have grown which aim to revolutionize the several ways of sending money abroad by their collaboration with the existing models. This is quite a development for money remittance which aims to provide innovation blended with experience for better solutions to customers.
- A CHECK ON THE FRAUDULENT PRACTICES
The recent developments for money remittance also include a stricter transfer policy aim to reduce the fraudulent charges that the remitters pay in the name of additional transfer charges. As per the latest estimates, money laundering consists of 3 to 5 percent of the total GDP which might be as high as 3.7 trillion US dollars per annum. Stricter money laundering policies have been introduced in different ways to send money abroad which makes it one of the best and much-required developments for money remittance.
- REMITTANCES THROUGH MOBILE COMPANIES
The various developments for money remittance also include devising ways to send money abroad through mobile operators. Operators like M-Pesa have been striving to create a feasible solution to aid the customer to get remittances on their mobiles. This method also helps in the remittances to the rural areas as well.
- VIRTUAL MONEY
The technology behind the bitcoins, also called as the Blockline technology can be used to reduce the remittance costs and also provide the necessary transparency in the transactions. The concept of virtual money also eliminates the requirement of correspondent banks from the transaction chain which ultimately results in the reduction of the associated costs. This is definitely one of the trend-setting developments for money remittance. This method has already been adopted by a world leader in remittances BitPesa.
The remittance industry is already on a boom and that day is not far when several ways to send money abroad would be introduced which would charge zero transaction fees and would be a lot safer as well. Even social media can be introduced as one of the ways to send money abroad which would add to the benefits and the ease of the system. Although the present situation is good to go, the public stills need more developments for money remittance to ease out on the additional charges further.