The rise of remittances: “dollars wrapped with care.”

Remittances are dollars wrapped with care.”

This is what Dilip Ratha, a remittances expert and economist with the World Bank, said during a TED talk this year.

We think this is a compelling analogy and one which symbolises the importance of the millions of dollars in remittances sent by migrant workers every month to their loved ones.

 

The video above is also perhaps one of the most compelling pieces of content produced on remittances in 2014. It gives an excellent overview of the macro trends of the remittances industry, which continues to grow each year.

Today there are 232 million international migrants in the world and some 180 million come from poor, or developing, countries. And many of them regularly send money home to support the family that supported them.

In 2013, US $412 billion was sent in remittances to developing countries. And this is a figure that is projected to reach US $435 billion by the end of 2014. Meanwhile global remittance flows, including flows to higher-income countries, are expected to rise from US $582 billion in 2014 to US $608 billion in 2015.

According to Dilip Ratha, as the average amount of $200 sent appears low, remittances have been considered “small change” by some; but when combined, they add up to “rivers” of foreign currency “three times the size of the total of development aid money.

 

The real cost of remittances

Today, World Bank data shows that sending remittances costs an average of 7.90 per cent of the total amount sent. This has dropped from around 10 per cent in the past five years, but we still think this average amount is too high. And so do those who set the 5×5 objective (to reduce the average cost of sending remittances from 10 per cent to five per cent in five years), which was adopted by the G8 in 2009 and endorsed by the G20 in 2010.

While the five per cent target hasn’t been reached globally, Ria is doing its part. In fact, our average cost is around 5 per cent or under in the more than 130 countries that we serve. We will do more in 2015 to offer a wider variety of affordable services to under-served migrant workers, and continue to be a worldwide force pushing for the reduction of remittance prices.

Ria’s company ethos is also aligned with the World Bank’s primary objective, which is the reduction of poverty. One simple way we help to unlock more money and allow it to flow to developing countries, is by offering low-cost remittances that give more to our customers.

 

Putting more in our customers’ hands

In 2014, Walmart launched a domestic money transfer service powered by Ria, which provides a much cheaper option for people to send money within the US, a country with many migrant workers. As part of this, we reduced costs by as much as 50 per cent for customers, and received the Walmart Price category award, as well as Supplier of the Year Award.

Remittances pay for many things; including healthcare, education, funding for the elderly, weddings and business investment.

Just as Dilip Ratha recounts his own personal journey as a migrant worker, who left his home country in search of something better for himself and his family, Ria exists thanks to the dreams of millions of people worldwide who left their homes in search of something more for themselves and their families. He  speaks about the many who “risk their lives to realise a dream; and that dream is as simple as having a decent job somewhere, so they can send money home and help the family – which has helped them before.” We understand that many household incomes truly depend on the accuracy that our service provides. And it’s something we don’t take lightly.

In 2015 we expect to continue on the path we have this year: increasing our network to extend opportunities which serve more people – including  those in hard-to-reach places – while applying the Ria philosophy to every business decision and action that we take. Through promoting healthy competition and open markets, by driving remittance prices down and offering our low-cost money transfer services worldwide, we hope to contribute to more positive changes in 2015.

No matter where you are in the world, Ria wishes you and your family very happy holidays!