Remittance can be defined as a cross-border, person-to-person payment. Migrants who find employment in other countries often send part of their wages to their families who reside in their home countries. The amounts sent might traditionally be small but usually, account for a good percentage of their families fixed monthly expense. Remittance also helps in improving the families’ standard of living, improving health, and sometimes acts as a critical lifeline when there is need of money.
This could be seen in the recent inward remittance statistics (2018), where USD 78.6 billion was sent to India by the Non-Resident Indians (over 31 million in 2019 as per the data from UN Department of Economic & Social Affairs), and one major reason for such high numbers was the natural disaster that struck India (Kerala floods). As per the World Bank, a trend could be witnessed where there is an increase in the financial help that has been sent by migrant workers to their families over that period. The remittances to low and middle-income countries rose 9.6% from 2017 and recorded a high of $529 billion in 2018. In the below graph, the top 10 recipients of remittance globally in 2018 are pictured.
The World Bank estimates that the global average cost for sending remittance was 6.94%[1] in Q1 2019, although this figure has declined by 2.73% since Q1 2009 (9.67%), it is still twice as high as the United Nations Sustainable Development Goal (SDG) target of 3%. The reason for such high remittance costs is because banks consider the remittance sector as high-risk. Cross-border remittance requires multiple credits and debits across multiple transactions before the amount reaches the final
