Raynor de Best
Content expert covering payments and (crypto)currencies
Remittances worldwide - statistics & facts
Remittances increased so much that by 2024 they have become a major theme in both finance and macroeconomics. But what is a remittance to begin with, and who gains the most from them? Remittances are complex, but they are fundamentally an international transfer of income. This can be a foreign worker in the United States who sends cash to family and friends back home in Mexico via a service like Western Union. The United States was the country with the highest value of such outward migrant remittances in the world. There are other examples of remittances, though:
Because of this variety, the overall market size of these international transfers is often merely an estimate. Remittance data in 2024 exclusively consists of calculations based on historical data covering the number of migrant stock per country. Sources hope to improve the overall data quality soon. Despite these data issues, what trends can one observe already?
- An elderly couple who withdraws pension income from their UK bank account while living in Spain;
- Parents who gift money earned in Portugal to a relative in Brazil, who then uses that money to buy goods and services in Brazil;
- Someone doing holiday work in Japan, buying a smartwatch there, and then bringing that item back home to Germany;
- Unregulated or even illegal remittances, like when money changes hands in human trafficking between the borders of two countries.
Because of this variety, the overall market size of these international transfers is often merely an estimate. Remittance data in 2024 exclusively consists of calculations based on historical data covering the number of migrant stock per country. Sources hope to improve the overall data quality soon. Despite these data issues, what trends can one observe already?
Remittances are an economic lifeline for several countries
The overall market size of remittance inflow - remittances received - grew noticeably in 2020 and 2021, by 10 percent and five percent, respectively. As of 2024, countries in South Asia and Latin America received the most remittances. One of the main draws of such cross-border income transfers is that they regularly exceed the value of incoming foreign direct investments (FDI) or even international aid. This makes them an important source of economic support, especially for emerging countries. Nearly 25 countries worldwide rely on remittances for more than 10 percent of their GDP.Emerging countries to increasingly focus on remittance digitalization
Digital remittances are estimated to make up nearly half of all remittances worldwide in 2023, with a growing market share being exclusively performed online. This is attributed to two developments. Digital options like cards or mobile money tend to be cheaper than cash or traditional bank account transfers. Second, emerging countries hope remittance digitalization can help strengthen financial inclusion. This is because cheap (digital) remittances could replace the formal, expensive financial sector in those countries. To this end, especially emerging countries hope the development of digital currency can help remove some of the operational and regulatory inconsistencies between international jurisdictions. As this improves, this complex payment method may prove to become increasingly important as time goes by.
