Cross-border remittance

Cross-border remittance refers to the transfer of money from individuals working or residing in one country to recipients in another, often for household support, education, or basic living expenses. These transactions are a key financial flow for many developing economies."Migration and Development Brief 39". World Bank. June 2023. Retrieved 2025-07-01.

Background

Remittance flows have historically occurred alongside patterns of international migration. Informal systems such as hawala have been used for centuries to transfer value, but in recent decades, formal financial systems and regulated money transfer providers have become the primary channels. According to World Bank data, remittances to low- and middle-income countries reached approximately US$669 billion in 2023."Remittances Remain Resilient". World Bank. Retrieved 2025-07-01.

Common channels

Bank transfers: Used when both sender and recipient have access to banking infrastructure; generally reliable but costly.

Money transfer operators: Services such as Western Union and MoneyGram that operate agent networks and enable cash pickup.

Mobile money platforms: Widely used in regions such as East Africa; enable transfers directly to mobile wallets.

Digital apps and wallets: Online providers like Wise or Remitly that facilitate remittances via smartphone or desktop.

Cryptocurrency and stablecoins: Emerging channels with growing interest, especially in corridors with banking limitations.

Barriers and costs

Cross-border remittances are frequently associated with the following challenges:

Cost of sending: The average global cost of sending $200 was 6.2% in 2023, exceeding international targets for affordability."Remittance Prices Worldwide". World Bank. Retrieved 2025-07-01.

Access to services: Rural and unbanked populations may face limited access to formal remittance channels.

Foreign exchange rates and spreads: Hidden costs due to unfavourable exchange rates can reduce the amount received.

Regulatory compliance: Requirements related to anti-money laundering (AML) and customer verification (KYC) can increase processing times.

Improvement efforts

Governments, international institutions, and private companies have introduced reforms and innovations to reduce costs and increase efficiency:

Price transparency platforms: Initiatives such as the World Bank’s Remittance Prices Worldwide database help users compare costs.

Regulatory cooperation: Efforts to align licensing and reporting standards across jurisdictions.

Digital innovation: Fintech applications and mobile-first remittance platforms enable faster and cheaper transactions.

Blockchain experiments: Some cross-border pilots use blockchain for settlement efficiency and reduced intermediary costs."Remittances and Crypto: Emerging Use Cases" (PDF). Bank for International Settlements. Retrieved 2025-07-01.

Oversight and regulation

Remittance providers must comply with regulations based on the country of operation:

Licensing and registration: Entities often need to register as remittance service providers or money service businesses.

AML/KYC standards: Enforced under guidelines from bodies such as the Financial Action Task Force (FATF)."The FATF Recommendations". FATF. Retrieved 2025-07-01.

Data protection and disclosure: Requirements may include informing users of fees and protecting their personal data.

References

External links

Remittance Prices Worldwide – World Bank

Global Knowledge Partnership on Migration and Development (KNOMAD)

Financial Stability Board – G20 Payments Report

Draft:Cross-Boarder Remittance