As the world becomes increasingly more connected internationally, more and more often people are finding a need to send money abroad. This can be for any number of reasons, but the act of transferring money from one country to another is not necessarily a simple task. There are the ever-fluctuating exchange rates between various currencies, as well as fees for transference, but remittance has become a huge part of the global economy.
What is a Remittance?
The definition of “remittance” is the transfer of money to a person or place. Most often remittances are money transfers from one country to another, often from a foreign worker sending money to their home country. If an immigrant moves to another country seeking economic opportunities, it only makes sense that they would want to send some of their earnings back to their country of origin, to financially support their family even from thousands of miles away.
How Does Remittance Affect the Global Economy?
The number of remittances in recent years has increased exponentially. Until the late 1990s, international aid was the largest financial inflow to many developing countries, but remittance has since exceeded that. Money sent home by foreign migrant workers has become the largest financial influx to developing countries. In some cases, the amount of remittance flowing into a developing country may actually comprise a large portion of the country’s gross domestic product (GDP).
In 2016 alone, an estimated $574 billion (USD) was sent abroad in remittances. Included in this figure is $136 billion sent from the United States.
The top ten countries that received remittances in 2016:
1. Mexico
2. China
3. India
4. Philippines
5. Guatemala
6. Vietnam
7. Nigeria
8. El Salvador
9. Dominican Republic
10. Honduras
Remittance can play a crucial role in a developing country’s economy. A prime example is how remittance serves as important disaster relief aid, often far exceeding the amount of aid disbursed as official development assistance (ODA) from foreign governments or the United Nations.
How Can I Send a Remittance?
There are many ways and companies through which to transfer funds abroad, but some of these methods are more costly than others. You have to be aware of currency exchange rates, transfer fees, and remittance float – the time it takes to process the transfer. Sending money via cash or check can cause serious delays before the money is officially transferred between parties.
Other companies such as Western Union and Moneygram may be preferred by some because they do not require a bank account to send a money transfer. Unfortunately, the downside is that these methods come at a steep cost due to added fees. Another option is PayPal, which allows online money transfers between 25 countries. If you’re transferring small amounts of money, this is a viable option. However, if you’re transferring a larger sum of money, this option can rack up some serious fees.
If you’re looking for the best option to send money abroad, Remitly can help you get the best rates with low fees, no matter which country you’re trying to send money to. Remitly guarantees that your money will be transferred on time, with little remittance float, to ensure that your loved ones receive funds as soon possible. We deliver on time or your money back. If you’re looking for a secure, low-cost alternative to send a remittance abroad, sign up with Remitly to start sending money today.
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