The Mobile Money Revolution in International Remittances

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For those living in poverty or in fragile countries, remittances are a lifeline that far surpasses international aid as a source of income. If properly harnessed, the proliferation of mobile technology can help strengthen and sustain these vital cross-border flows.
Global remittance flows exceeded $580 billion in 20141 and the World Bank Group estimates that Sub-Saharan Africa will receive $34 billion in 2016. Despite being the world’s poorest region, Sub-Saharan Africa remains the most expensive place to send money.
As a result, Sustainable Development Goal 10.c aims to reduce the average transaction cost of migrant remittances by 2030 to less than three percent of the amount transferred, and ensure that no individual remittance corridor requires charges higher than five percent by 2030.
The GSMA research report, Mobile Money in International Remittances, indicates that mobile money is driving a price revolution in international remittances. Highlights from the research include:

  • Cheaper: Sending international remittance using mobile money is, on average, more than 50 percent cheaper than using global money transfer operators. Lower transaction costs can directly translate into additional income for remittance recipients, many of whom are underserved.
  • Relevant: Mobile money is well positioned to cater to the needs of low-income migrants, as it is particularly compelling for low-value remittances. In fact, the average value of international transfers sent using mobile money is relatively low ($82 in June 2015) compared to the average size of international transfers across all channels (around $500).
  • Impactful: Mobile money is an important tool for achieving the SDG target to reduce the cost of sending remittances. GSMA research shows that in 34 country corridors, the average cost of sending USD 200 using mobile money is 2.7 percent (compared to six percent using global MTOs).
  • Competitive: Mobile money is increasing competition, which is driving down the price of remittance services. Our research shows that global MTOs tend to offer their services at lower prices in markets where they are in competition with mobile money providers (6.0 percent compared to 8.2 percent).
  • Inclusive: Mobile money can also act as a gateway to financial inclusion for both remittance senders and recipients, allowing them to join the digital financial ecosystem and to access a broad range of digital financial services beyond remittances, such as storing money in a secured account or performing digital payments.

A Call to Action for Mobile Money Remittances
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Today, mobile money users can initiate international remittances directly from their mobile phones in only 16 of 93 countries where mobile money is available. This is partly because regulation in many countries prevents mobile money providers from sending, and, in some cases, also receiving international money transfers.
Bold reforms are needed to facilitate greater competition and lower prices to expedite the achievement of UN SDG 10.c.
The international community should to include mobile money as a key component of any policy initiative aiming at reducing the cost of remittances and regulators need to adopt an open and level playing field in the international money transfer space. Non-traditional service providers, such as mobile money providers, should be able to compete with traditional remittance service providers.
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