With international remittances expected to reach above $500 billion in 2017, as per the World Bank report; the global community is searching for technologies that will improve the efficiency, safety and ultimately positive impact of these cross-border payments. Peer-to-peer money transfers, cross-border money transfers, which are also known as remittances, are an integral part of societies across the globe, especially in developing markets where receiving funds matters a lot, and this also includes households and banks. Remittances cross national boundaries, they cross currencies, and they also cross financial institutions. All these barriers add up to inefficient and expensive transactions for everyone. As we all are aware, money moves slowly and inefficiently from one country to another, and similarly core cause of high fees for such remittances are frictional. Transferring money is expensive because there are limited connections between financial institutions and systems. Currently, we need to have a neutral network to tie our dissimilar, isolated institutions so that we can move money cheaply and seamlessly from one country to another.

Understanding remittances

A remittance is a transfer of money to a friend or family member in another country. Millions of people across the globe depend on this money, which is often used for basic household goods, food, housing, education and health care costs. In fact, remittances have constituted the single largest source of foreign exchange in developing countries since 2000, so much more than international aid. But for many, traditional remittances mean waiting in line for several hours just to get money wired to pay bills, and they almost always come with loads of fees.

How is technology changing the remittance industry?

The rise of mobile and digitization of money are the two biggest opportunities that are changing the way we manage and move money. Mobile phone usage is rampant, even in developing countries. According to a study, the number of smart phone users worldwide will surpass 2 billion in 2017. For individuals around the globe, mobile phones and Internet technology can help reduce the cost and effort associated with sending money back home. One of the biggest areas within that has been money transfers, where people who live in one country or city use basic cellular services such as SMS to initiate, send and receive payments to family members. Mobile technology is helping to break down these barriers, making remittances more convenient, secure and affordable. For instance, consumers can easily and quickly send money transfers with a swipe on their device.

The latest technology also demonstrates convenience and peace of mind while making secure money transfers, anytime, anywhere, showing that users receive SMS alerts when money has arrived - or a refund in the rare case money does not arrive. Another key development has been digitization of money. We are in a period of profound transformation: how people shop, how merchants sell and how people interact with financial institutions. The very nature of money itself is changing. Digital remittances can help people everywhere make their lives easier by allowing them to do what they want with their money, more securely, efficiently and affordable.

When we talk about technology, internet plays a very important in regards to remittance. Today, internet has helped people to stay connected to their families and equally it has given reasons to be aware of lot of new technologies. The remittance market is a valuable external source of funding for many families around the world. The traditional costs of securely and efficiently managing and moving money across borders have been relatively high. Increase in access of financial services such as basic bank accounts among remittance recipients and rise in internet usage offer growth opportunities for the market. With the help of internet, the growth of digital remittance market is driven by rise in digitization and automation, reduced remittance cost and transfer time, and growth in adoption of banking and financial services. Integration is the key to advancement in technology in the global Digital Remittance Systems market. Companies that offers the latest integrated technologies at an affordable cost are expected to thrive in the Digital Remittance Systems market.

Basic money transfers are just the beginning, and some companies are reinventing this model, bringing it into new territory with cross-border bill pay and mobile reload. In short an efficient payment system, a proper regulatory framework, and enabling and competitive market conditions underpin new technology and innovations for remittance services. In addition, providing more people with access to transaction accounts would reduce use of cash in remittance transactions. While the landscape is unlikely to be completely revolutionized overnight, current progress should propel significant changes within the next decade.