by Rebecca Oi
June 18, 2024
In today’s interconnected world, digital remittance in Asia and the movement of money across borders have become essential aspects of global finance.
Billions of dollars traverse the globe every second, with a significant portion of these transactions originating from individuals, particularly migrant workers sending funds to their loved ones in their native countries.
These remittances serve as a lifeline for families on every continent, providing crucial support for daily needs and significant life events.
In 2023, remittances to low- and middle-income countries grew by an estimated 3.8 percent, reaching an impressive US$669 billion, highlighting the growing importance of these cross-border transactions.
Regional trends in remittance flows
The growth of remittance inflows varied across regions, with Latin America, the Caribbean, South Asia, East Asia, and the Pacific experiencing positive growth.
Latin America and the Caribbean saw an 8 percent increase, while South Asia, East Asia, and the Pacific witnessed growth rates of 7.2 percent and 3 percent, respectively.
Visa Money Travels: 2024 Digital Remittance Adoption Report – Digital remittance in Asia on the rise
However, not all regions experienced growth in remittance flows. The Middle East and North Africa saw a decline for the second consecutive year, with a 5.3 percent decrease primarily due to a sharp drop in flows to Egypt.
Similarly, Europe and Central Asia experienced a 1.4 percent decrease after significant gains of over 18 percent in 2022.
Visa’s Money Travels: 2024 Digital Remittances Adoption Report
To gain a deeper understanding of the progress and challenges in the remittance landscape, Visa conducted a comprehensive survey of nearly 45,000 remittance senders and receivers across 20 countries, including the United States, Canada, Mexico, Peru, Brazil, France, Poland, the United Kingdom, Germany, Denmark, Sweden, Norway, the Philippines, Singapore, Australia, Japan, China, India, the United Arab Emirates, and Saudi Arabia.
The Money Travels: 2024 Digital Remittances Adoption Report delves into remittance patterns, digital app adoption, and barriers to frictionless payments, providing valuable insights into the industry’s current state.
Interestingly, the report found that personal, unexpected needs were sometimes outweighed by humanitarian needs, emphasising the human-to-human impact of digital transactions.
Key findings and trends
The Visa report highlights several key findings and trends in the digital remittance space. One of the most prominent trends is the continued rise of digital app adoption, with digital remittances emerging as the preferred method among surveyed consumers in all countries.
This shift towards digital platforms is driven by several factors, with security being a key benefit. App-based digital payments are perceived as more secure than other payment methods, providing users with greater peace of mind when sending and receiving funds.
The report also sheds light on the primary reasons behind remittance transactions. Helping those in need, covering educational costs, and supporting healthcare expenses rank among the top motivations for sending remittances.
However, the remittance landscape is not without its challenges. Remitters often face pain points such as high fees or hidden charges that catch both senders and receivers off guard.
Additionally, the rates of sending and receiving remittances vary widely by country, with a surprising overall slowdown due to various economic factors.
The growing prevalence of digital remittances in Asia
The Visa report underscores the growing prevalence of digital remittances, with money traveling digitally more than ever.
Person-to-person money movements have the potential to make a profound difference for families, communities, and economies worldwide.
However, cross-border money transfers often come with various pain points that can hinder the smooth flow of funds. In addition to the financial aspects, the Visa report delves into the humanitarian impact of digital remittances.
For the first time, the 2024 edition of the report examines remittance payments sent for humanitarian needs, underscoring the human-to-human impact of these digital transactions.
Helping those in need emerged as a leading motivation for many respondents, improving prospects, supporting the lives of people in crisis, and covering educational and health costs. This finding highlights remittances’ crucial role in uplifting communities and providing support during challenging times.
Vira Platonova, Visa’s Chief Revenue Officer and SVP of Global Money Movements, emphasises the personal nature of money movement and Visa Direct’s vision to create new opportunities for financial inclusion and wealth building by simplifying cross-border payments and streamlining how money travels.
While the research shows an incredible acceleration of digital payments, Platonova acknowledges that there is still more the industry can do to bring streamlined remittances within reach for more migrant workers and their families who rely on these lifeline payments.
This statement underscores Visa’s commitment to continuously improving the remittance landscape and making cross-border transactions more accessible and efficient for all.
A closer look at Asia Pacific
The Visa report also provides a detailed analysis of remittance trends in the Asia Pacific region. Some participating countries in this region, such as China, India, and Singapore, have led the world in the remittance money movement.
The frequency of sending and receiving remittances at least once yearly is highest among respondents in China, followed closely by India and Singapore. Singapore respondents actively participate in cross-border transactions with China, Malaysia, and Australia.
Visa Money Travels: 2024 Digital Remittance Adoption Report – Top reasons for remittances
At the same time, the top countries for outgoing remittances by those surveyed in India include the United States, Australia, Canada, and the United Kingdom.
Interestingly, while the frequency of remittances remains high in the Asia Pacific region, the report found that digital remittance users surveyed in previous surveys have decreased year-over-year in the Philippines and Singapore.
This finding suggests that while remittances continue to play a vital role, the volume of transactions may fluctuate due to various factors.
Digital apps leading the way
Throughout the Asia Pacific region, digital apps have emerged as the leading method for sending and receiving remittances abroad among those surveyed, followed by digital remittances from physical locations.
The adoption of digital methods is moderately high in this region, with approximately three-quarters of remittance user respondents in India, the Philippines, China, and Singapore using an app-based digital payment method to send or receive money internationally.
The high usage of digital apps is primarily attributed to ease of use and safety. Respondents from the Philippines, India, and Singapore ranked ease of sending and receiving as the highest reason for using digital apps.
Safety was also a top concern, with respondents from India, the Philippines, and Singapore scoring it as the highest reason for choosing digital platforms.
While those surveyed in China didn’t score safety as high for sending and receiving, it was followed closely by “peace of mind,” indicating the importance of secure transactions.
Barriers and challenges digital remittance in Asia
Despite the growing popularity of digital remittances, the Asia Pacific region still faces specific barriers and challenges. High fees emerged as the main pain point for digital remittance users surveyed in all Asia Pacific markets measured.
In most countries in the region, a significant portion of respondents indicated that they had been offered a free transfer when sending cash, checks, or money orders, only to discover hidden fees later on.
In China, respondents believe receiving a cheque in the mail or a money order is the safest way to receive money. They perceive it to be safer than cash due to traceability and the ability to replace the money order if it goes missing.
This finding highlights the need for further education and awareness about digital remittance platforms’ security features and benefits.
Remittance reasons
The top reasons for sending or receiving remittances vary considerably across Asia. Most respondents surveyed in India, Australia, and Singapore cited humanitarian needs as the primary motivation for remittances.
In China and India, respondents indicated that they sent money to improve prospects, a reason that ranked higher than in other Asian markets.
China also stood out regarding sending and receiving remittances for accounts and investments, with a significant portion of respondents citing this as a top reason. Interestingly, a top reason for accepting money from overseas among respondents in Australia is sending money to themselves from their accounts or investments.
The way forward for digital remittance in Asia
The Visa Money Travels: 2024 Digital Remittances Adoption Report highlights the growing adoption of digital platforms, the key motivations behind remittance transactions, and the challenges that must be addressed to ensure a seamless and secure cross-border money transfer experience.
As the world becomes increasingly interconnected, digital remittances will continue to play a vital role in connecting families across borders and providing crucial support to needy communities, especially in Asia Pacific.
The insights and findings from the Visa report serve as a valuable resource for industry stakeholders, policymakers, and consumers alike as they work together to shape the future of the remittance landscape and unlock the full potential of digital platforms to drive financial inclusion and economic growth.
Featured image credit: Edited from Freepik
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