Every month, millions of migrant workers send a portion of their earnings home to support their families — often providing the most reliable source of income those families have. These transfers are among the most personal financial acts in the global economy — a parent paying school fees, a family repairing a roof, a household keeping the lights on. But remittances can also do more than help families get by.
Their importance is also macroeconomic. Global remittance flows reached an estimated $856 billion in 2024, with $653 billion flowing to low- and middle-income countries. In many developing economies, remittances now exceed both foreign direct investment and official development assistance. When they are affordable, reliable, and connected to broader financial services, they can help households save, invest, and support small businesses – creating pathways not only to greater resilience and prosperity, but also to local job creation.
But this potential is not yet available to everyone, and the operating environment has become more complex. Geopolitical developments, economic fragmentations, and disruptions to cross-border payment arrangements can affect not only the cost of sending money, but also whether migrants and their families can access reliable digital channels at all. For households that depend on remittances, resilience increasingly depends on payment ecosystems that remain connected, accessible and functional.
The cost of sending remittances has continued to decline from more than 9% in 2009 to around 6% today.
A decade ago, digital remittances were more expensive than cash-based services. Today, that relationship has reversed with the cost of digital remittances averaging around 4%, compared with around 7% for cash-based services. While nearly half of all corridors now record average costs below 5%, progress remains uneven, with Sub-Saharan Africa continuing to record the highest regional average costs.
Digital providers have leveraged scale, data, automation and more efficient foreign exchange pricing to lower end-user costs. The trajectory demonstrates that affordable remittances are achievable when competition, digitalization and enabling infrastructure align. The challenge now is to scale these conditions across a wider set of corridors, ensuring that the benefits reach more people.
Additionally, senders with a smartphone, a verified digital identity, and a linked account can often access services at a more affordable rate. Those who continue to rely on cash, whether because of limited connectivity, documentation constraints, or lack of familiarity with digital tools, often face significantly higher costs.
Closing this intra-corridor digital divide is now as important as reducing differences across corridors themselves.
Three interventions stand out as high-impact and underexploited.
1. Ensure digital remittance providers can access domestic fast payment systems. New research shows that the mere existence of a domestic Fast Payment System (FPS) in a sending or receiving country reduces the cost of a $200 remittance by between 0.3 and 1 percentage point primarily through the competitive dynamics that domestic FPS unlocks. By lowering barriers to entry, FPS enables non-bank providers such as money transfer operators or mobile money providers, to route the final leg of a transfer through fast domestic infrastructure, bypassing the costly correspondent banking chain. Governments and regulators do not need to wait for complex cross-border interlinking agreements to capture these gains. Ensuring that digital remittance companies have fair access to domestic FPS, directly or through a partner bank, is sufficient to generate meaningful and immediate cost reductions for families at both ends of the corridor. Interlinking remains a worthy long-term goal; broadening access to what already exists is the faster win.
2. Invest in financial literacy. In many corridors, affordable digital options already exist. Yet some users continue to rely on higher-cost channels because of information gaps, trust concerns, onboarding challenges, or limited familiarity with digital services. Financial education can help address these barriers, but literacy alone cannot overcome structural constraints. Rigid customer due diligence requirements that lock undocumented migrants into cash channels must be addressed.
3. Increase competition in remittance markets. Much of the recent decline in costs has been driven by digital providers and new business models. Extending this progress more broadly requires regulatory frameworks that allow banks and non-bank providers to compete on a more level playing field.
For most receiving families, consistency creates an opportunity that remains largely untapped: using the remittance relationship as an entry point for broader financial services — and a pathway to lasting prosperity. Remittance history, as a documented record of regular income, could serve as the basis for credit scoring in markets where recipients have no formal credit history to unlock access to small loans for productive investment. Savings products linked to remittance accounts could help families build buffers against the next shock. Health and life insurance bundled at the point of remittance could extend protection to family members who would otherwise have none.
None of these products is new in concept. What is new is the digital infrastructure to deliver them affordably and at scale, embedded in the same platform the sender already uses every month.
Behind every transfer is a migrant worker who left home in search of a better life. The gains of the past decade prove what is possible. The goal now is to ensure that the money they send home unlocks opportunities for the families they left behind — transforming remittances from a financial lifeline into a gateway to prosperity. Remittances also hold untapped potential as a catalyst for local job creation. When regular transfers can be linked to savings products, credit histories, and small business financing, they become more than a household lifeline: startup capital. For the 1.2 billion young people entering the workforce in developing countries over the next decade, harnessing remittance flows to seed entrepreneurship and grow micro and small enterprises could be part of the answer.
Source : World Bank
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