By Karen Jordaan, Head of UK at WorldRemit
A combination of rapidly evolving technology and the restrictions imposed by the COVID-19 pandemic have seen what is nothing short of a revolution in the online money transfer sector.
With harsh social distancing governing people’s movements and warnings from the World Health Organisation (WHO) that cash is potentially a petri dish for the virus, it’s no wonder that those from all walks of life have been making a move towards the new contactless methods of payment.
According to ReportLinker, this movement has been truly significant at all levels of society, with users taking advantage of the rapidly evolving technologies of mobile wallets and contactless cards to make payments and move their money around the globe. This consumer behaviour is not just because of the disruption caused by the pandemic but also a result of the simplified user experience these new devices provide.
For many in western society, the acceleration in technology makes for an easier and more convenient experience when dealing with digital remittances. However, for those citizens of emerging countries, the innovation and growth surrounding the global payments sector is resulting in a range of widespread benefits.
Digital Remittances Are A Lifeline
The world relies on migration to keep its workforces populated. In turn, the working migrant community relies on international remittances in order to provide financial aid to their families and friends back home.
These digital money transfers are a lifeline for the recipients, but on a wider level they contribute to the economic buoyancy of many regions globally. In 2019, remittance flows to low- and middle-income countries topped £403 billion ($554 billion). Notably, flows in Central Asia and Europe (Ukraine in particular) all demonstrated strength.
Examples of this trickle-down effect can be seen at the United Nations, where international remittances have contributed to achieving 12 out of the 17 Sustainable Development Goals. It is also argued that a 10% increase in per capita remittances leads to a 3.5% reduction in poverty.
With statistics like that, it is essential that adequate systems are in place to make sending money abroad a secure and simple procedure. Online money transfers help countries gain financial inclusion in emerging markets, thus improving economic development and alleviating poverty.
Banking For The Unbanked
Until very recently, migrant communities faced a number of stressful challenges when sending money abroad. Long queues, unfamiliar paperwork, and sky-high fees were normal hurdles at the beginning of a transfer that could end up taking weeks to process. Once the money had finally reached its destination, the recipients would then need access to banks or shops to collect their cash.
Today, with digital payment services like WorldRemit, people can receive money in a matter of minutes in the form of bank transfers, airtime top-up, cash pick up and transfers to their mobile wallets.
These options that allow people to choose how to receive their money are particularly important in sub-Saharan Africa, where a big proportion of the population remains unbanked.
Fortunately, this choice is facilitated by a boom in cheap and widely available smartphones that allow consumers and small enterprises to seamlessly transfer money at the touch of a button. Aided by FinTech vision and investment, Africa has been transformed into a world leader in mobile money. Again, the economic upshift facilitated by the new technology has contributed to a drop in the number of households living in poverty.
A Safe and Convenient Service
WorldRemit uses industry-leading technology to enhance protection for online money transfers. This technology is also swift, meaning that the majority of transfers are ready within minutes.
The increase in secure digital remittances, especially mobile-to-mobile transfers, has lowered the need for cash transactions. As a consequence, opportunistic crime in many cash-heavy markets has been reduced, however cybercrime remains a very present threat, which money transfer companies must work hard to combat.
Moving Forward Together
The transition to digital payments and online money transfers has already had a positive impact on migrant communities and emerging countries. This transition has made the process of sending remittances easier and more secure. It has also lowered the barriers for financial inclusion in emerging countries by allowing people without bank accounts to receive money with ease.
By offering flexible ways of sending and receiving money, more people around the world will be able to access financial services and ultimately free themselves from the manacles of poverty.
Find out how WorldRemit can help you move your money around with online digital payments.