Mon, 23 Jul 2018 by Kantesh

Prices

The remittance industry is a big business, according to the latest figures published on the World Bank website, global remittances are expected to increase by 4.6% to $642 billion in 2018. Remittance inflows improved in all regions and the top remittance recipients were India with $69 billion, followed by China ($64 billion), the Philippines ($33 billion), Mexico ($31 billion),Nigeria ($22 billion), and Egypt ($20 billion). India had in 2016 received remittance of 62.7 billion.

 

The Global Average Cost:

According to the report, the global average cost for sending money recorded a slight increase from 7.09 in Q4 2017 to 7.13% in Q1 2018. An over year decrease compared to Q1 2017, when this figure was recorded at 7.45%.

Banks remainthe most expensive type of service provider, with an average cost of 10.57%.

 

International MTO Index:

The International MTO Index tracks the prices of MTOs that are present in at lease 85% of the corridors covered in the RPW (Remittance Prices World-wide)database. In 2018, the International MTO Index remained stable, recording a slight decrease to 8.16% from the previous value of 8.23% in Q4 2017.   

 

Global Weighted Average:

In addition to the global average, a weighted average total cost is calculated, which accounts for the relative size of the flows in each remittance corridors. The global weighted average in Q1 2018 has remained stable, recorded at 5.23 percent. This marks the fourth consecutive quarterly decrease of this figure recorded at 5.65 percent in Q1 2017.

 

Technology

The Block-Chain Technology:

With theadvent of digital currency and blockchain technology, remittance companies arenot holding back in adopting currencies like bitcoin to enable remittanceservices. With these adoption companies are trying to solve multiple issuessuch as high transfer cost, limited money distribution methods, limited brandoptions, limited ways to deal with money, etc.

Anelectronic decentralized ledger would enable all participants in aninternational trade finance transaction ? the bank, the importer, and exporterto access data in real-time. Documentation and record of authenticableownership, along with the transfer of assets would be streamlined digitally, inreal-time, on a tamper-proof ledger.




Blockchain-based settlements can reduce the friction of domestic and cross-border transfers between banks. Using the blockchain in this fashion will not only lead to morevalue accretion to remitting customers, but it will also be the kind of radical value proposition improvement that will be required to attract customers and break them from established habits around sending and receiving money.Similarly, the blockchain can be used in remittances to enhance pricing transparency and provide better transfer security, as well as be used as anon-ramp for other technology-driven financial services.

Fri, 8 Jun 2018 by Praveen Kotian

The process of transfer of Money from one wallet to another has rapidly revolutionized during recent times and more rapidly have transformed the ways of embracing this phenomenon by even the common man.

Long gone are the archaic ways when common man wanting to send the money, used to resort to Post Office Money Orders or to still more civilized way of queuing up in banks, waiting patiently for his turn, to process his own saved money. 

Technology has, however, like many other spheres of life, come to the rescue of the civilization, in money-transfer operations. The technology involved may be supremely complex, in terms of devising the configuration & infrastructure but fortunately the interface of the technology with the user is very simple and no wonder, as mentioned above, on-line money transfer has become very pervasive & a routine thing to do.

On-line, as the name suggests, pre-supposes the availability of internet facility for the money-transfer to take place effectively. This in normal sense & in Indian context particularly, could have become a very restrictive thing. But the government agencies have been ensuring, through their various programs with huge capital outlays, data connectivity through high-speed internet highways. It is the ambitious aim of the current government to bring about 100% tele-density and thereby making the availability of internet absolutely citizen-oriented. This removes the very first obstacle that ?online money transfer? could have faced in becoming popular with masses, at grass-root level.

There are ample reasons why people have been preferring the on-line ways of dealing with money:

  • In comparison with traditional banking service, one can carry out the transaction sitting at his home or work-place. It hardly takes a few minutes compared to the time lost in commuting to & waiting at the bank.
  • There is collateral advantage in avoiding the risk of losing the money or getting robbed. Such cases are happening rampantly in crowded places. We always hear of some unscrupulous people, present in the crowds, confusing the customer & in the process, getting away with his money. This all is avoided when cash transfers are done from the peaceful place, away from the prying eyes of strangers.
  • Of course, the internet is also fraught with risks of cyberspace scammers. But there are established ways to make the internet account very safe and secure by means of strong passwords, 4-digit pins, CAPTCHA & visiting only secured web-browsers & websites.
  • In fact, it is not difficult to identify the cyberspace thieves as the currency systems like banks, credit card companies etc. never ask the customers to share any sensitive & personal information. A little customer-education will go a long way in keeping the cyberspace fraudsters at bay.
  • On-line transaction is very cost-effective and is extremely convenient as you can carry out the same at any hour of the day.
  • It?s very user-friendly once you have understood the minimal basics. Moreover you invariably get an instant acknowledgement as a proof of the transaction carried out.
  • Can you imagine how hassle-free you are when you do not have to personally visit the offices of all the utility companies to pay their periodic bills! 
  • Most importantly, in a country like India, where half the population might be working at locations away from their places of Birth, it?s a boon to have the facility of on-line money transfer. We can understand the enormity & magnitude of the facility, when we know that any person from any part of this continent-sized country, can send money to his family, residing in remote places, within a few minutes or a few hours. This can be done through banking systems like RTGS (Real Time Gross Settlement), NEFT (National Electronic Fund Transfer) and such similar methods.

Let alone the domestic situations, money can be transferred online, beyond the borders to overseas locations, through global payment service providers like Western Union and RemitGuru. These are the facilities at some costs which will have to be researched & availed of depending upon the emergency on hand. There is invariably more cost, the faster is the remittance service.

All in all, on-line money transfer has become very pervasive, a day-to-day routine thing, will become more & more flexible, safe & secure. All that one requires is deep wallets!

Mon, 26 Mar 2018 by Praveen Kotian

Remittance simply means payment of money from one point or entity to the other. History indicates that when it became difficult for the head of the family to earn basic livelihood at a place where he was born, he had to leave his hometown and explore other more developed locations where he could find work, earn money, save a bit for the family and send the savings home periodically. This private savings of worker is spent in his home on basic necessities. This process of money-transfer is called remittance.

We have been witnessing this phenomenon in India since migrant labour first started re-locating to nearby developed towns/ cities and 'remit' money home. Over a period of time this primitive form of migration got evolved into migration of families, migration of extended families as well as migration from less developed cities to metros and finally migration abroad.  

It has since long become a complex economical subject. So much so that organizations are being built around these services of remitting money. Newer & newer products are being designed to render this process simpler for the stakeholders. As a matter of fact,economies of certain countries are having a direct bearing on the remittances received.

The level of remittances received in certain countries is astronomically high, to the extent that the remittances are quantified in terms of percentage of GDP of these countries.

The core parameters of this process of remitting money, however are very basic and revolve around:

Time taken to deliver the money to the intended recipient

The safety factor, the assurance that money would reach in the hands of the recipient in a secured way.

The ease with which money could be remitted, that is the paperwork involved. The lesser and simpler the paperwork or smoother the mechanism (without compromising the safety), the better.

Fees for rendering this service. Obviously lesser the commission charged by the service-provider, the preferable he is from the point of view of sender and/or recipient.

During the initial stages Post Offices, money orders were holding monopoly in sending remittances. Thereafter& even today Banks are playing a stellar role in remitting money. There are formal & informal couriers handling remittances effectively.

The Banking products have got transformed in their nature and speed and complexity of mechanism. Starting from age-old Demand drafts, banks now offer ATM cards, facilities like online money transfer (subject to availability of internet), NEFT (National Electronic Funds Transfer), RTGS (Real Time Gross Settlement) to name a popular few.

There are international organizations like PayPal, Western Union, Remitguru etc. offering services in International as well as domestic sector with a relevant fee for their services. The Fees structure depends upon the location of recipient, quantum of money to be remitted and the speed with which the transfer takes place. In respect of international transfers, even the exchange rates among various currencies are accounted for.

Remittances thus serve as a basic lifeline for survival & development of modern work-force & even countries where human capital is a major factor governing their economy.

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