Cross-border remittances (CBR) – A significant player in the financial landscape, are projected to reach a staggering $0.8 trillion USD. With the increasing accessibility of the Internet and mobile phones worldwide, the shift towards digital transactions in remittances is imminent. As technology continues to streamline these processes, the convenience and efficiency of digital remittances are set to transform the financial realm, making them the preferred mode of international money transfer in the foreseeable future. Open banking initiatives are already a happy collaboration between banks and FinTech startups for enhanced financial services.

Cross Border Remittances & Mobile Payments

In today’s interconnected world, the flow of money across borders has never been more critical. International remittances, the funds sent by expatriates and immigrants to their families and loved ones back home, represent a financial lifeline for countless individuals and communities. As the digital revolution transforms the financial industry, international remittances have found a new home within the domain of FinTech Value-Added Services.

This paradigm shift not only enhances the convenience and security of cross-border money transfers but also presents significant revenue-generating opportunities for FinTech companies. As a revenue-generating service within the FinTech VAS domain, cross-border remittances often operate discreetly, attracting limited attention beyond the user base. While the remittance business significantly impacts both individuals and recipient countries, it faces challenges in competing with emerging retail payment innovations.

Despite its critical role in the economies of numerous African and Asian nations, the remittance industry struggles to gain prominence compared to other financial services. In short its easy to say that:

  • Cash remittances contribute to increasing the money supply and stimulating consumption and investment demand.
  • Innovative competitors are introducing alternative remittance models, diversifying the market landscape.
  • Emerging channels like the Internet, mobile money wallets, mobile banking, and social networks are gaining traction for remittance transactions, fostering greater convenience and accessibility. Additionally, as reported by internet sources, in 2015, $582 billion in cash remittances was sent by migrants to their home countries, with $133.5 billion originating in the United States of America.

The new digital business models encompass the benefits of cost, customer experience, and convenience. These emerging trends are poised to put consumers back in control of their money. Innovative ways of remittances have shown the opportunity of remitting beyond money or cash.

Blockchain – A Diva for Cross Border Remittances

Blockchain can reduce cost, increase speed, provide much better security, and have an extremely low loss of exchange. Remittances play a very important role in eliminating poverty in a nation. Below is a description of some of the fundamental beliefs that determine the shape of the industry in different markets.

The real success of international remittances depends upon product excellence, affordability, and convenience, i.e., ease of use, reliability, customer trust, and speed. Remitting goods, services, and professional services is now on the mind and a necessity.

Cross Border remittances

The high rate of economic growth leads to a sustained increase in the productive capacity of the economy through productive policies, which in turn leads to increased employment opportunities in the country. This process allows the progressive absorption and integration of the unemployed and underemployed, including skilled and unskilled workers, into expanding economic activities with high levels of productivity.

In the process, the poor may be able to achieve an increment in their incomes through existing employment or shift to new jobs involving higher skills at higher wages. Money transfers are one product in a larger customer relationship. Successful financial institutions have a real commitment to this customer relationship.

The Impact of FinTech VAS – Remittances

The emergence of FinTech Value-Added Services (VAS) has revolutionized the international remittance landscape. FinTech companies have harnessed the power of technology to streamline and enhance the remittance process. They have introduced innovative platforms and services that provide numerous benefits to both senders and recipients. These benefits include:

  1. Cost Efficiency: FinTech VAS companies often offer lower transaction fees compared to traditional banks and remittance service providers. This cost-efficiency is especially crucial for migrants, as it allows them to send more funds to their families.
  2. Speed: Through digital channels and blockchain technology, FinTech companies have significantly reduced transaction processing times. Funds can now be transferred across borders in a matter of minutes, ensuring that recipients receive the money they need promptly.
  3. Transparency: Traditional remittance methods are plagued by hidden fees and unfavorable exchange rates. FinTech VAS companies prioritize transparency, providing senders and recipients with a clear understanding of the costs involved and the exact amount that will be received.
  4. Accessibility: The rise of mobile banking and digital wallets has made international remittances more accessible to a broader audience. Senders can initiate transactions using their smartphones, eliminating the need to visit a physical location.
  5. Security: FinTech VAS companies implement state-of-the-art security measures to protect sensitive financial information. These security protocols ensure that funds are transferred safely and that personal data remains confidential.
  6. Financial Inclusion: FinTech VAS companies are extending their services to underserved populations in developing countries, where traditional banks may be less accessible. This financial inclusion empowers more individuals to participate in the global economy.

Domestic remittances also exist; they are recurrent but typically made by individual transfers. Remittance service providers (RSPs) are often indistinguishable from any other retail cross-border transfer. Success in the remittance business is measured by our ability to attract the customer’s wallet share over his lifecycle. Safe alternative to mailing a cashier’s check or money order. Funds in the remittance account are FDIC-insured until transferred to a Remittance Network member bank.

Regulatory Framework – A hurdle for CBR

The FinTech industry’s foray into international remittances has not gone unnoticed by regulators. Governments and international organizations have sought to establish guidelines and regulations to ensure the safety and security of cross-border money transfers. Compliance with these regulations is paramount for FinTech companies. They must adhere to anti-money laundering (AML) and know your customer (KYC) requirements, among others, to maintain the integrity of the remittance process.

FinTech companies have responded by implementing sophisticated compliance mechanisms. They use data analytics, artificial intelligence, and machine learning to screen transactions for signs of fraud or illicit activity. Compliance is integrated into the digital platforms, ensuring that regulatory standards are met with each transaction. The remittance business fundamentals cover different scenarios at the macro level.

Scenarios are used as planning tools to map the macro-environment: fundamental beliefs, industry drivers, signposts, and red flags. Market-level fundamentals to cover strategic benchmarking, i.e., business architecture, and street-level fundamentals to balance scorecard indicators

  • The ability of banks to match the cost and features of informal hawala and non-bank payment businesses is a key determinant for the remittance industry’s development, both domestically and internationally.
  • Remittance services have the potential to transform a zero-balance overnight sweep account, enabling senders to transfer funds to their families and friends, who can access the funds through various channels like checks, ATMs, mobile, or online, without the need for a checking or savings account.
  • In the present landscape, having a bank account is not obligatory, and customers are not subject to monthly or annual account maintenance fees. Monthly remittance limits are flexible, and there is no mandatory initial deposit requirement.

Remittances are part of an individual’s access to financial services. A good remittance product improves value for the user in the short term and access to other financial products in the long term. It also increases competition and could move transactions to the formal sector. Remittance is a cost-driven business that emulates the transfer of cash across borders.


Conclusion –Remittances are an increasingly important part of the economy, from which we can build further programs for our citizens overseas to grow their assets at home. The extraordinary thing about last week was what the second important piece of remittance-related news had to offer: Ant Financial Services Group of China will pay $880 million to buy MoneyGram, the second-largest global remittance firm, based in Dallas, Texas. As research has shown to be the case with cross-border remittances, even total amounts remitted are sensitive to price. An efficient domestic payment system infrastructure is key to reducing the costs of remittance services, especially in receiving countries.

Points to Note:

All credits, if any, remain with the original contributor only. We have covered all the basics around domestic and international remittances, their working models, and the importance of quality financial services to the masses. In the next upcoming post, we will talk about implementation, usage, and practice experience for markets.

Books + Other readings Referred

  • Research through the open internet, news portals, white papers, and imparted knowledge via live conferences and lectures.
  • Lab and hands-on experience of  @AILabPage (Self-taught learners group) members.

Feedback & Further Question

Do you have any questions about telecom, fintech, or their new enablers, i.e., AI, machine learning, data science, or big data analytics? Leave a question in the comment section or ask via email. I will try my best to answer it.

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Posted by V Sharma

A Technology Specialist boasting 22+ years of exposure to Fintech, Insuretech, and Investtech with proficiency in Data Science, Advanced Analytics, AI (Machine Learning, Neural Networks, Deep Learning), and Blockchain (Trust Assessment, Tokenization, Digital Assets). Demonstrated effectiveness in Mobile Financial Services (Cross Border Remittances, Mobile Money, Mobile Banking, Payments), IT Service Management, Software Engineering, and Mobile Telecom (Mobile Data, Billing, Prepaid Charging Services). Proven success in launching start-ups and new business units - domestically and internationally - with hands-on exposure to engineering and business strategy. "A fervent Physics enthusiast with a self-proclaimed avocation for photography" in my spare time.

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  1. […] the financial sector, such as lending, insurance, wealth management, global payments, and international remittances, serve as primary sources of income for financial institutions. These services involve facilitating […]


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