In previous articles we discussed the basics of remittances, including the use of airtime top-ups as a form of remittance. Remittances are primarily sent from developed countries and received in developing countries, and are familiar to migrants in the diaspora who use them as a means to send money to their family back in their home country. Most people would be familiar with the bricks and mortar method of making cash remittance transactions, by visiting a Money Transfer Office e.g. A Western Union, Moneygram or Ria branch, a bank or post office.
With high fees associated with these types of transactions and in many cases physical access to one of these outlets prohibitive in remote areas, more methods of sending cross border remittances have become available.
Why Make Remittances Mobile?
Mobile cellular subscriptions have achieved almost complete market saturation with nearly as many mobile phones in the world as people. The number of users being able to access the Internet is experiencing high growth, with developing countries leading the charge with approx. 77% in developed countries and 31% in developing countries already connected to the Internet*.
Combine the penetration of the mobile device access with the growth of access to the Internet and a great opportunity presents itself for the development and provision of mobile applications that make all types financial transactions more efficient. Mobile apps taking advantage of this opportunity and addressing this need allow you to perform your banking, pay bills, parking meters, transport fees, and of course can even allow you to send remittances to any country.
Some of the traditional bricks and mortar outlets have also introduced electronic methods requiring Internet access, (generally a website) to enable users to send remittances, however, fees have remained high and the recipient still generally needs to visit a bricks and mortar outlet to receive / accept the funds.
Benefits of Mobile Remittances
The major benefit for the sender is convenience, and for the receiver is that the speed of the transfer is greatly increased. Although an intermediary (e.g. a Bank, or a Bitcoin broker) is still required for the actual settlement, the added convenience of managing the process from a mobile device speeds up the entire process for both parties. For example, if a young woman sends money from the United States to her family in Africa, she will be able to send it directly from her account to the account of her family within minutes, rather than days. The funds can be deposited directly into the recipient’s bank account, mobile money account, or collected as cash from an authorised agent.
This provides more certainty in the overall remittance process and means that recipients can be more certain of when they will receive the money.
All in all, mobilizing remittances results in a cheaper, efficient and secure method to send money across borders, especially to those who need it most.
Stay tuned for our next 101 article:
• Remittances are more than just sending cash