2023 is the first year that digital remittances have overtaken offline remittances as the preferred way to send money abroad, a survey by Statista has revealed.
Based on the data, 2020 was a turning point as with 90% of all remittances leaving the sender as cash and reaching the recipient as cash in 2019. But in 2020 40.2% of remittances that were previously made in cash suddenly went digital.
Taken together, remittances are believed to directly touch the lives of 1 billion people on earth. pic.twitter.com/asfR7mcluU
— BitKE (@BitcoinKE) May 23, 2023
A separate survey by Visa shows digital remittances have surpassed non-digital remittances as the preferred method for transfers across the world’s regions, though African countries are not mentioned.
The survey indicates that between 60-70% of surveyed remittance users in North America, Saudi Arabia, and the United Arab Emirates have used app-based digital payments to send or receive money internationally.
Digital solutions remain the preferred choice for remittance transactions in the Asia Pacific region as well. The survey reveals that:
- A significant percentage of Filipino remittance receivers (57%) are inclined to use digital transfers for sending money in the future
- Additionally, 36% of Filipino respondents expressed their preference for receiving money internationally through digital channels
The growth of Remittances between 2007 and 2016 (IFAD, invesing in rural people)An analysis by IFAD (investing in rural people) highlights the significant growth of the remittances economy in Africa, which expanded from 44.3$ billion in 2007 to $60.5 billion in 2016. Eastern Africa experienced impressive growth, with total remittance value growing by 117% over that 10-year period.
A recent World Bank report said remittances to Sub-Saharan Africa, a region most highly exposed to the effects of global crisis, grew an estimated 5.2% to $53 billion in 2022, compared with 16.4% in 2021 (due mainly to strong flows to Nigeria and Kenya).
Remittances as a share of GDP are significant in:
- The Gambia (28%)
- Lesotho (21%)
- Comoros (20%)
Sending $200 to the region cost 7.8% on average in the second quarter of 2022, down from 8.7% a year ago.
Globally, the Visa survey reveals that 53% of consumers prefer to use digital methods for sending money internationally. The second-largest group of consumers, comprising 34% of respondents, still rely on physical banks or branches to send money overseas.
“Bank payments are subject to high international transfer fees, and also tend to offer less favourable exchange rates. It’s no wonder that more people are moving towards digital remittances, which are more competitive and offer much better value for money,” says Jonathan Merry, CEO of Money Transfers
Digital payments are also considered the most secure method by a strong proportion of remittance users across countries.
The availability of digital apps for remittances has led to an increase in both the frequency and the amount of money being sent overseas. The data suggests that in 2023, the total amount of worldwide remittances is projected to reach $750 billion, which represents a significant increase of $152 billion compared to the data from 2014 when tracking began.
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