Digital Beats Legacy in Sending Remittances to Remote, Rural Recipients

An essential part of migrant workers’ lives is sending money abroad to recipients who often depend on funds for critical expenses such as housing, food and healthcare.

This is why, according to Jose Ivars-Lopez, Ria’s U.K. and Ireland country manager, helping migrants to send money back home quickly and seamlessly is a necessity, not a luxury, as delays in the transaction process could be potentially crippling for those at the receiving end.

In countries like the U.K. where there is a large migrant population, he said demand for money transfer services spiked in the wake of the pandemic as people were able to save about 30% more of their income by working from home.

Related: UK Muslims Say Eid Mubarak With International Remittances

And that large migrant population, coupled with the wide range of different ethnicities and nationalities, continues to form an “an excellent combination” for a global company like Ria, he added.

“It’s very [basic] for one company to send money to a particular country, but when you are a global player like Ria and you can cover 155-plus countries and territories across the world, that’s a real value for our customers,” Ivars-Lopez told PYMNTS in an interview.

Read more: Ria Money Transfer, Swedish Telecom Rebtel Team on Cross-Border Payments

To create customer stickiness and remain competitive in the crowded remittance space, Ivars-Lopez said they’ve digitized their processes and made it easy for customers to transfer funds in a relatively short amount of time, while investing in nonbank payout locations such as independent outlets and small grocery stores and supermarkets in multiple locations around the world.

Read also: PayPal’s Xoom, Euronet’s Ria Pair on Remittances

“[Customers can send money in] five minutes from the U.K. to a cash pickup location [in pretty much any corner of the world] or have funds deposited into a beneficiary’s bank account,” he noted.

He further said that by enabling instant and seamless money transfers for remote and rural recipients in key remittance markets like Africa, Ria has been able to set itself apart from the widely available traditional cross-border payment channels offering extremely commoditized solutions.

Africa: The Next Big Thing

Moving forward, Ivars-Lopez pointed to the African continent as the “next big thing” in the global remittance market, due in part to the increasingly large populations receiving money from peers abroad and money transfers between countries.

“Take Ghana for example. What we can see now is that when we send money to Ghana, the recipient of the funds sends the money to Benin. This basically means that it’s [no longer about sending money from] rich to poor or developed countries [but between] neighboring countries,” he said. “That’s going to be the value of this global offering that we have here at Ria.”

To help develop the infrastructure in these developing markets, he said Ria works closely with several telecommunication companies across the region, leveraging data to reach small, remote and rural areas that lack internet connectivity or bank branches to facilitate money transfers.

Recipients in these markets also rely heavily on mobile wallets to retrieve funds — more than 50% of people in most markets, he said — which is why democratizing the process will be important to driving growth.

As Ivars-Lopez said: “Rather than a [different] mobile wallet for every provider or bank or independent financial institution in the beneficiary country, it will be interesting to see how recipient countries [can create] a single wallet for customers to receive and dispose of money from it.”

Crypto-Based Remittances

Given the low-cost, faster and flexible alternative they provide to traditional cross-border transfers, digital currencies are increasingly viewed as a viable method to send money abroad.

According to a PYMNTS study, nearly a quarter (23%) of consumers surveyed who made online cross-border peer-to-peer (P2P) payments sent funds using at least one kind of cryptocurrency, while 13% of consumers said cryptocurrencies were their most used payment method for online cross-border remittances.

Read the report: The Digital Currency Shift: The Cross-Border Remittances Report

Read also: Crypto-Based Remittances on the Rise; Nigeria Leads the African Pack

But while virtual currencies are gaining traction in cross-border P2P transfers, Ivars-Lopez pointed to El Salvador’s struggling bitcoin experiment as a cautionary tale. “Everyone saw the articles about El Salvador adopting new crypto policies [but it’s unclear] how that’s going to play out [in the long run],” he said.

He acknowledged, however, that blockchain is “one of the most interesting things” to keep an eye on in the industry moving forward, as the ability to cut out intermediaries from the funds transfer process would be a huge win for consumers.

“But I think we are talking about probably another 10 years [for it to become mainstream] — it’s going to take a lot more time,” he said.

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