What is a Remittance?
In its most simple form, a remittance is a transfer of money, and is derived from the word remit which means ‘to send back’. In today’s terms, a remittance refers to funds sent by a person working abroad back to family or friends in their home country, though technically these funds can be sent both domestically and internationally. Remittance payments can be received as gifts or in exchange for goods or services provided.
The average profile of a remittance sender is a migrant worker living in a different country from their intended receiver. These senders often work abroad with the intent of earning and sending funds back to support their loved ones. Remittances are usually sourced from the private savings of these workers, and emerging economies heavily rely on foreign remittances.
The Impact of Remittances Across the Globe
In some cases, remittances make up a large portion of a nation’s gross domestic product (GDP). Remittances can help raise local standards of living, creating positive impacts on “human development outcomes across a number of areas such as health, education, and gender equality.” Since the 1990s remittances have exceeded development aid, direct investment, and official development assistance in many nations around the globe, according to Investopedia.
As of 2018, the combined volume of global remittances were at approximately $689 billion dollars. The top recipients of foreign remittances were India ($79 billion), China ($67 billion), Mexico ($36 billion), and the Philippines ($34 billion).
The same year, growth in remittances reached a record high, with the increases in remittances ranging from almost seven percent in East Asia and the Pacific to 12 percent in South Asia, according to the World Bank. However, the bank projected a sharp downturn for foreign remittances due to COVID-19, with declines totalling nearly 20 percent.
How Is a Remittance Sent?
The data is clear: remittances have a big impact on the lives of individuals, families, communities and even whole countries. But, how does an individual send a remittance?
There are many ways to send a remittance, and some offer greater savings and benefits than others. Remittances can be sent via:
- Wire transfer: A wire transfer is a transfer of funds done electronically across a network of banks or transfer agencies around the world.
- Electronic payment systems: Sometimes called an e-payment or online payment system, this method allows users to make transactions through an electronic medium, without the use of checks or cash.
- Prepaid cards – Like a debit card system, prepaid remittance cards allow for receivers to withdraw cash and pay for goods and services using point-of-service transactions.
- Check or money order: While most people know what a check is (and if you don’t, a check is a written and dated paper instrument that instructs a bank to direct funds to a payee), a money order is similar in form. Like a check, a money order is a paper instrument completed by the payor, but goes a step further in its security as it is bank-issued and prepaid so funds are guaranteed to be directed to the payee.
- A dedicated remittance app: Apps like Pangea Money Transfer allow users to send and receive money quickly at a low, fixed cost.
A money transfer app like Pangea makes sending a remittance easier than ever. With Pangea, you can send funds directly to your chosen recipient’s bank account or debit card, or schedule a cash-pick up at a location of your choice.
When sending a remittance to a bank account, it is important to consider the transfer requirements for the country in which your recipient resides. If you are sending funds to a receiver in Mexico, for example, you will need your receiver’s CLABE number to complete the transaction. The CLABE must correspond to the unique account to which they want the money deposited.
If you cannot locate your receiver’s CLABE or country-specific routing number equivalent, you can still send a remittance for cash pick-up. Using the Pangea app, users can select the branch of the retailer of their choosing for pick-up of the cash by their receiver. Receivers just need to provide a transfer code and a valid I.D. to get their cash.
How Much Money Can Be Sent In A Remittance?
Each remittance service has their own minimum and maximum limits. It’s important for users to check maximum transfer amounts with the remittance service provider of their choice.
Regardless of the amount of money sent in a remittance, all money transfer providers have rigorous safeguards in place to prevent fraud and money laundering. Federally-regulated remittance transfer providers offer well-defined consumer protections and are the best option if you’re concerned about safety. In addition to disclosure requirements, they’re required to resolve problems raised by consumers should they arise.
How Much Does It Cost to Send a Remittance?
With the global average cost of sending a $200 remittance hovering around 7% of the amount transferred, the traditional wire transfer agencies are often expensive options. Online and app-based money transfer services, offering lower fees and a more convenient means of transferring money, have grown rapidly in recent years.
Sending a Remittance Through Pangea Money Transfer
Pangea Money Transferoffers its remittance service at a low, fixed cost. The app also makes it easy for users to check the current day’s exchange rate and calculate exactly how much money they are sending in both USD and the recipient’s country’s currency.
With Pangea, money is sent securely to over a dozen different countries across Latin America and Asia in as little as 30 seconds. Senders can either remit a specific amount of money, and set up remittances for automatic, scheduled transfers in the frequency of their choosing.
Pangea is a top-rated money transfer app, and won“Best User Experience” and “Fastest Transfer” from the Finder Money Transfer Awards. The app was named to FXC Intelligence’s top 150 global payment companies to watch list. If you’re looking for a great remittance transfer option, consider Pangea today.