The remittance industry is a rapidly growing market, with an estimated $689 billion sent globally in 2020, according to the World Bank. This represents a significant increase from 2015, when the total amount of remittances sent was $470 billion.
One of the key factors driving this growth is the increasing use of digital technology in the remittance industry. Remittance startups such as TransferWise, Remitly, and WorldRemit have made it easier and cheaper for individuals to send money abroad quickly and at a lower cost than traditional money transfer providers. These startups have also been able to reach new customers in underbanked or unbanked regions.
According to a report by Y Combinator, the remittance industry is also experiencing a shift towards mobile-based solutions, with an increasing number of people using their smartphones to send money. This is particularly true in developing countries, where mobile penetration is high and traditional banking infrastructure is lacking.
Another trend in the industry is the increasing use of cryptocurrency and blockchain technology in remittances. Companies such as BitPesa and Abra are using these technologies to offer fast, low-cost and secure money transfer services.
Despite these advancements, however, the remittance industry still faces challenges such as high fees and lack of regulation. The World Bank estimates that the average cost of sending $200 globally is 7.1%, well above the Sustainable Development Goals target of 3%.
Overall, the remittance industry is evolving rapidly, with new technologies and business models emerging to make sending money abroad more efficient and affordable. As the industry continues to grow, it will be important to address these challenges and ensure that the benefits of remittances are accessible to all.