Digital Remittance Market

Market Overview

The global digital remittance market size was valued at USD 19.65 billion in 2022. It is estimated to reach USD 72.44 billion by 2031, growing at a CAGR of 15.6% during the forecast period (2023–2031). The increasing number of migrants from developing nations to developed nations and increasing internet penetration promote market growth.

The electronic transfer of money or funds across borders utilizing digital platforms like websites, mobile apps, or digital wallets is known as "digital remittance". It makes sending money to others in other nations quick, safe, and convenient. With its many benefits over more conventional methods like wire transfers or cash transfers, digital remittance services have become popular. Senders can start transactions using a user-friendly interface for digital remittance, enter the recipient's information, and send money electronically. The beneficiary normally receives the monies in their local currency through a cash pick-up site or in their bank account.

Compared to conventional methods, digital remittance platforms frequently provide competitive exchange rates, cheap costs, and faster transfer speeds. They use secure internet platforms, encryption, and identity verification procedures to guarantee the security and integrity of transactions. For people who depend on remittances as a primary source of income, digital remittances are essential for facilitating cross-border financial transactions, promoting global trade, and allowing financial inclusion. People can easily transfer money abroad thanks to its accessibility, cost-effectiveness, and convenience.

Market Dynamics

Global Digital Remittance Market Drivers:

Increasing Number of Migrants from Developing Nations to Developed Nations

Many people from developing nations like India, China, South Africa, and Lebanon go to industrialized nations for better employment and education. Better job prospects and economic incentives are the main reasons people migrate to affluent countries. The age range of 18 to 30 comprises the great majority of migrants. Many industrialized nations offer migrants advantages, including social and economic stability and well-developed infrastructure for higher education. Some of the countries with the highest migrant populations are the U.S., Germany, Saudi Arabia, Russia, and the United Kingdom. Over 40 million migrants have been registered in the United States, according to the Pew Research Center. Since digital remittance solutions provide cheaper transaction costs, instantaneous money transfers, and real-time funds tracking, many migrants prefer to use them when sending money back home.

Increasing Internet Penetration

Financial service providers may now offer customers cutting-edge digital services thanks to technological improvements and the noticeable rise in internet usage worldwide. The increasing use of mobile-based apps for international financial transfers drives the demand for Internet banking. Governments worldwide are working to spread awareness of Internet services in rural areas. For instance, the British government has committed USD 5.9 billion in rural areas to deliver fast internet services. The global remittance volume in billions is shown in the graph above. Digital and non-digital remittances are both included in the worldwide remittance volume. The growing use of mobile-based apps for international financial transfers and digital wallets results from increased internet usage.

Global Digital Remittance Market Restraint:

Problems Associated with Regulations

The market for digital remittances is governed by a diverse set of laws and is required to comply with several regulations. Both the anti-money-laundering regulations (also known as AML) and the know-your-customer requirements (also known as KYC) are included in this group of laws and regulations, which is also known as KYC. This creates obstacles for them to overcome to access the market and limits their capacity to comply with regulatory requirements because conforming to these standards can be more challenging and time-consuming for smaller enterprises.

Global Digital Remittance Market Opportunities:

Increasing Use of Block Chain Technology for Cross-Border Payments

Thanks to blockchain technology, traditional cross-border payments can now be made more quickly, affordably, and securely. In contrast to SWIFT, which levies fees for bank-to-bank transactions, blockchain technology employs an encrypted ledger for real-time verification. It does away with the need for intermediary banks. Many businesses, like Ripple Labs Inc., which provides the Ripple payment network and the XRP currency, provide blockchain-powered cross-border payments. In contrast to normal transactions, which take 3–4 days to complete, these transactions take 5–7 seconds. Banks worldwide are integrating blockchain technology into their payment networks to overcome the difficulties of facilitating cross-border transactions. To facilitate incoming remittances utilizing blockchain technology from the UK, North America, and the Middle East, Yes Bank in India has teamed with Ripple Labs. This shortens the settlement time and makes it possible for procedures to be processed quickly.

Additionally, eliminating many intermediaries in conventional cross-border money transfers using blockchain technology results in significant cost reductions for users. The Philippines is gaining prominence due to its cheaper transaction costs as more nations focus on blockchain technology for its ease. The digital remittance market is predicted to experience growth due to this trend.

Regional Analysis

North America Dominates the Global Market

Based on region, the global digital remittance market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America is the most significant global digital remittance market shareholder and is estimated to exhibit a CAGR of 12.0% over the forecast period. Companies such as Continental Exchange Solutions, Inc., Western Union Holdings, Inc., and MoneyGram are all headquartered in this area, making it a major hub for the financial services and communication industries. A significant number of people migrate to the North American region in the expectation of enhancing their educational and professional opportunities, as well as conducting business there. Other motivations for this migration include the desire to find better economic opportunities. The growing population of immigrants in the region would create opportunities for firms that provide digital remittance services to expand and grow.

Additionally, the development of various payment applications has helped fuel the movement toward accelerating the process of transferring money in the North American region. This movement is being driven by the acceleration of moving money from one location to another.

Asia-Pacific is anticipated to exhibit a CAGR of 13.94% over the forecast period. Over the projected period, it is anticipated that the Asia-Pacific regional market will become the one with the fastest growth. Many residents of the Asia-Pacific region annually remit thousands of trillions of dollars to friends, family members, and business partners abroad. Over the projected period, an increase in the region's use of banking and financial services is anticipated to fuel market expansion. Adopting mobile banking, cashless transactions, and mobile-based payment solutions is a major emphasis for economies like China and India, helping the regional market's growth. Throughout the forecast period, the regional market is anticipated to see growth prospects due to rising competition from new competitors and a growing client base.

Europe is a large market for digital remittances. The region has a big immigrant population and strongly emphasizes international money transfers. European countries with advanced digital infrastructure and high levels of digital adoption, such as the United Kingdom, Germany, France, and Spain, aid the development of digital remittance services. There is a chance in this area to use mobile apps, websites, and digital wallets to offer quick, inexpensive, and secure remittance services. Collaboration with reputable financial institutions and respect for laws like the revised Payment Services Directive (PSD2) are also necessary for operating in the European market.

Latin America's digital remittance business is expanding more quickly. Numerous diaspora populations exist in the area, and significant sums of money are remitted to countries like Mexico, Brazil, Colombia, and Ecuador. The availability of mobile payment options, increased smartphone adoption, and increased internet usage all contribute to the growth of digital remittance services. Through mobile apps, digital wallets, and agent networks, there are chances to meet the needs of unbanked people while offering competitive prices, convenience, and speedy transfer speeds. Partnerships with local banks and financial institutions are also necessary to expand a company's market presence in Latin America.

The Middle East and Africa are significant markets for digital remittance because of factors like a sizable population of expatriate workers, cross-border trade, and the expanding use of digital financial services. Countries like the United Arab Emirates, Saudi Arabia, Nigeria, and Kenya are important regional players. Mobile money services and digital wallets have gained popularity in various Middle Eastern and African countries, offering the potential for businesses that offer secure and useful digital remittance services. Compliance with regulations, addressing infrastructure and financial inclusion challenges, and adapting to local preferences and laws determine success in the Middle East and Africa markets.

Segmental Analysis

The global digital remittance market is bifurcated into type, channel, and end-user.

Based on the type, the global digital remittance market is bifurcated into inward and outward digital remittance. 

The outward digital remittance segment dominates the global market and is projected to exhibit a CAGR of 12.4% over the forecast period. Numerous platforms for financial services provide advantages for money transfers, including 24/7 accessibility, instantaneous cash transfers, real-time tracking of the funds, transparency, low transfer fee rates, and high security. Companies like Ria Financial Services, Transfer Go, Wise Payments Limited, and PayPal Holdings, Inc., for instance, provide real-time tracking of the funds, enabling the sender and recipient to get updates in real-time. International residents send money home to support their relatives. Banks and financial organizations are assisting these people in securely and quickly moving money home. Low fees and expanding their clientele are priorities for international banks and financial organizations. International outgoing remittances are carried out across a secure banking network, minimizing the possibility of fraud and financial loss for both the sender and the recipient.

Based on channel, the global digital remittance market is segmented into banks, money transfer operators, online platforms, and others. 

The money transfer operators segment owns the highest market share and is predicted to exhibit a CAGR of 13.0% over the forecast period. The expenses that money transfer providers assess are significantly lower when compared to the fees that banks pay for international fund transfers. Additionally, they offer the same level of dependability and security for transferring funds as banks do, in addition to additional perks, such as the capacity to transfer funds instantaneously. This also provides the same level of dependability and security for transferring funds. Some of the most well-known companies in the money transfer industry, such as Western Union Holdings Inc., MoneyGram International, and Ria Financial Services, have formed strategic alliances with regional financial institutions, retail outlets, and postal networks to provide their customers all over the world with services that are both prompt and transparent. These consumers can now access these services through Western Union, MoneyGram International, and Ria Financial Services.

Based on end-users, the global digital remittance market is divided into migrant labor workforce, personnel, small businesses, and others. 

The personal segment is the most significant contributor to the market and is estimated to exhibit a CAGR of 14.0% over the forecast period. Customers can now send cash worldwide in a shorter amount of time as a direct result of suppliers of financial services developing new goods and introducing novel services, such as improved currency exchange rates. These developments allow for faster international money transfers. For instance, fintech businesses like NIUM Pte. Ltd. and Transfer Go offer consumers the convenience of knowing the initial setup expenses required for transferring an international fund to their home country at a larger exchange rate and with no fluctuations associated with the currency. Clients pay the service provider a charge in exchange for receiving this service. NIUM Pte. Ltd. and Transfer Go are the only two enterprises under this category. As a result of the spread of mobile payment technology and the overall digitization of financial transactions, consumers now have an easier time transmitting money from their mobile devices.

Recent Developments

• October 2023- Mbank partnered with LuLu Exchange to offer its customers digital remittances and account deposits. The partnership taps into LuLu Exchange’s remittance-as-a-service and open banking platforms.
• September 2023- Esewa Money Transfer continued with “Mero Digital Desh,” which aims to promote digital remittance. Through this initiative, the remittance service company, being operated under the stewardship of Fintech company F1Soft Group, aims to promote formal remittance and make people aware of the advantages of sending money through digital channels.