According to the Market Statsville Group (MSG), the global Remittance Market size is expected to grow from USD 866.2 billion in 2022 to USD 4,964.0 billion by 2033, at a CAGR of 5.3% from 2023 to 2033.
A remittance is a non-commercial mode of money transfer by foreign workers, a member of a diaspora community, or a citizen of other countries for household income in their home country or homeland. A major source of financial inflow to developing countries is money sent home by migrant workers.
Remittance transactions typically involve three simple steps:
The COVID-19 pandemic has negatively impacted the remittance market, owing to large job losses in the first quarter of the COVID-19 pandemic and decreasing employment rates of employers living in other countries. The demand for remittances has fallen due to migrant workers sending less money home because of the COVID-19 pandemic and the ongoing global economic crisis. In addition, it is projected to decline by a decent percentage in 2021 compared to the pre-COVID-19 levels in 2019. Remittances go to Low and Low Middle-Income Countries (LMICs) like Bangladesh, Nepal, and other low- and middle-income nations. Weak economic growth and job levels in migrant-hosting nations, low oil prices, and devaluation of the currencies of remittance-source nations relative to the U.S. dollar are the main issues affecting the remittance industry.
Cross-border payment flows are expected to increase because of the large population of migrated workers living away from their homes. The term "cross-border payment" refers to a financial transaction in which the payer and recipient are based in different countries. Cross-border payments can be made in several ways, such as bank transfers, credit card payments, and e-money wallets. In recent decades, cross-border payments have become increasingly important due to increased international mobility of goods and services, capital, and people. As a result of these trends, cross-border payments are becoming more prevalent, and they have access to cross-border payment services that are just as safe and efficient as domestic ones. Growth and revenue expansion are other factors driving this market's competitive interest. All the aforementioned factors drive the market for the upcoming forecasting period.
For remittances, the transaction costs are often high in relative terms. Remittance service providers in the formal sector generally charge fees of 10% to 15% of the principal amount to handle the small transfers typically sent by poor migrants. This expense places a financial strain on both the migrants who remit and the recipient, who, as a result, reaps less financial rewards from the work of their distant relative. On the supplier side, major international banks tend to focus on high-value remittance services rather than those tailored to migrant workers. Poor immigrants may not feel comfortable using banks for remittances, preferring smaller financial institutions, money transfer operators (MTOs), or informal methods, such as hawala, relatives, friends, and other transportation companies.
Digitalization and payment automation are likely to drive the corporate growth of this market. Many technology-savvy consumers around the world are adopting digital remittances. The clients prefer digital remittances due to the shorter transfer time. Urbanization and industrialization are attracting residents from countless rural and semi-rural areas to urban areas. Several people are relocating to different regions in pursuit of jobs or education. Rise in mobile-based payment and mobile banking solutions dominate payment, augmenting the growth of the remittance market.
The study categorizes the remittance market based on application, channel, and end user at the regional and global levels.
Personal segment accounted for the largest market share in 2022. Due to the global expansion of banks and financial services, an increase in the personal sector is also anticipated. Further, the immigrants who work in several nations do a large number of financial transactions. It is anticipated that the personal end-use sector will continue to rule during the projection period. Companies are indulging in creating innovative services to make using financial client accounts more practical and simple. Globalization will probably push workers to use remittance services to send money home.
Most of the remittances have gone to Asian Pacific nations like Bangladesh, Pakistan, the Philippines, India, China, and more. Among the nations that depend on remittances the most annually are Asian nations like Tajikistan and Nepal. Most remittances are sent using a traditional agent, such as Ria Money Transfer, Western Union, UAE Exchange, MoneyGram, and similar services. Nevertheless, online and mobile money transfers have seen a substantial increase due to the expanding financial services and the increasing significance and reach of the Internet. With more than 12% of global remittances, India is the leading recipient of remittances. The largest diaspora in the world is made up of Indians. According to the Ministry of Overseas Indian Affairs, the roughly 34 million members send money home.
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