The market for cross-border person-to-person (P2P) remittances is massive. It experienced double-digit growth in 2018 as consumers migrated from one country to another in search of better economic opportunities, as well as to escape political and financial upheaval in their home countries.
In many cases, the migration pattern may involve only one member of a family leaving their country for a job on an oil rig in Kuwait, a construction job in the U.S. or as a live-in daycare provider in Singapore while the remaining members stay home. In cases such as these, as well as those who have permanently emigrated yet still want to support an extended family in their home country, remittances play a vital role in the transfer of wealth and represent an economic boon to the receiving country.
The annual volume of remittances grew to almost $689 billion, in 2018 according to a report from the World Bank. For a reference on the scale of this market, as a total value it is larger than the entire GDP produced by the Kingdom of Saudi Arabia ($683.8 billion). Given the large size of the market and the lucrative nature of these payments which tend to be small value (oftentimes $100 to $300) and frequent (typically a weekly or bi-weekly payday) it has attracted the attention of newcomers such as TransferWise, Remitly, and WorldRemit. It has also attracted the attention of larger organizations such as PayPal, which acquired Xoom; as well as Western Union and MoneyGram making further technology investments to maintain their leadership positions.
This opportunity has also led to unique relationships such as payments player Brightwell partnering with the cross-border payout platform, Transpay, to serve a unique market niche of serving cruise line staff that send funds home from a different country every payday.
According to the World Bank, the worldwide volume for cross-border remittances is estimated to have reached almost $689 billion in 2018, up 10 percent from 2017.
A major beneficiary of this increase has been a remittance flow to low- and middle-income countries which grew by almost 11 percent in the year. The remaining volume of remittances are flowing to developed nations such as France and the U.S.A. In 2018, approximately 77 percent of remittances went to low- and middle-income countries, which was up from just under 76 percent in 2015. The overall market for remittances is forecasted to grow to $747 billion in 2020 with developing countries maintaining their share.
Remittances in 2018 to the South Asia region grew the most quickly out of all regions, by rising almost 13 percent from 2017. The two key recipients in the region, India and Bangladesh, grew by double digits for the year. India was the largest global recipient of remittances for both 2017 and 2018. In contrast, Sub-Saharan Africa and the Middle East/North Africa regions were both below the overall market growth rate for the year with each rising by approximately 9 percent.
While countries such as Mexico often grab the global headlines for remittances — making it appear that they represent an inordinate share of remittances — the reality couldn’t be further from the truth. In fact, the flow of remittances is spread out across the globe with the largest beneficiary, India, representing just 12 percent of the total market.
India retained its number one spot in 2018 by adding almost $10 billion in remittances for the year, obtaining $79.45 billion in total inflows. This dramatic growth has led a variety of startups to invest heavily in attracting non-resident Indians to use their services. Seattle-based Remitly increased its daily transfer limits to $30,000 and hired a Bollywood actor, R. Madhavan, as its brand ambassador to capture share from competitors in the U.S. to India remittance corridor. Digital gift card platform Swych acquired GiftCardsIndia in an effort to provide an instant gift card service as an alternative to traditional money transfers.
China holds on to the number two spot by adding over $3.55 billion in remittance inflows to reach over $67.4 billion for 2018. The Philippines added $910 million in volume to retain the number three position with a total of $33.73 billion for the year. Meanwhile, Mexico added over $3 billion in volume to solidify its number four position with $33.68 billion in money sent to its residents. Rounding out the top five was France, with $27.7 billion in remittance inflows.
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