Every year, billions of dollars are sent by Immigrants living abroad to their home countries. According to the World Bank, in 2020, total value of remittances sent back home reached a record >$500 billion. For many countries, remittances add up a sizable share of GDP. This is a huge number! It is bigger than the GDP of dozens of countries. Yet, migrant workers continue to suffer from the misuse of funds and a lack of transparency when it comes to remittance sending and tracking.
How do remittances serve, and what are some of the pitfalls that progressing countries face when bartering with such large cash inflows?
Remittances are funds transferred by Immigrants living abroad back to their home country. They are the hard-earned incomes of blue-collar and white-collar workers, who send these funds back home to support their families. These remittances sent to emerging markets from developed countries also help drive the home economy. It is estimated that more than 800 million people in emerging markets are supported by remittances sent back home by their family members. For a lot of progressing nations, remittances from citizens working abroad present an important source of much-needed funds.
Currently, various countries around the world continue to observe remittance inflows. In Pakistan, remittances equaled $7.3 billion in the last three months, 37 percent higher than the same period the previous year, a spike that the country’s central bank has attributed to the gradual re-opening of business countries across the Middle East, Europe, and the U.S.
The GCC is the world’s most significant source of outbound remittances, overseas Pakistanis typically send 80% of their earnings back to their countries, and industrial decline in this region will have broader implications on the economies of low to medium-income countries.
This is just one example of how people are using services that provide international transfers. There are tons of other reasons too, like;
Digital Remittances – with Purpose
Frequently, this money is being sent digitally. During the lockdown limits, banks and exchange houses were either close or had their working hours decreased, making it tough for people to send money abroad as quickly as before.
This led many to digital assistance, and the remittance houses managed to make their services available online. But hampered by legacy, traditional remittance houses have struggled to create a seamless transition to the digital world.
In their place, fintech businesses offering peer-to-peer money orders are thriving.
Problems with International Transfers
- Payments of industry services to the public have been relatively constant during the year with a slight upward trend, even though the game in every channel is fierce, more so in the exchange range than in the fees. U.S. dollar estimate has influenced markets.
- Mobile money co-operations continue to expand across the developing society with new cross-border functionalities, systems alliances, partnerships, and regulatory proposals for the industry.
- Sending money to a friend’s or family member’s account every month to be given to plumbers, electricians, payment of bills, etc., is what causes fraud or mishandling of funds.
- Bank-to-bank transfers in traditional remittances go at a snail’s speed. It can take five days or even more than that for the completion of the transfer. Moreover, the acquiring banks can further limit the transaction by holding up the release of funds for 2-4 days.
Solution? InstaKin – the Future of Purpose Driven Transparent Remittances!
As remittances grow more digital, especially on the drawing side, it will lead to remittance for purpose. Typically, remitters send a gross sum, which is taken out in cash by the recipient and distributed/spent accordingly.
Why bare the trouble of having the remittance documentarian or sending bulks in to save time and money?
Sending money straight into a digital wallet allows remitters to send more modest amounts and provides them with more authority over what the money is used for, be it airtime, data bundles, real estate in Pakistan, gift vouchers, and more recently, bill payments on InstaKin’s infrastructure.
This is a remittance for a purpose where, alternately, sending $100, they send $20 in airtime, pay a bill, or pay credit to an account for a local pharmacy. The payment is going to the service it will be used for.
InstaKin is introducing purpose-driven remittances through its Fintech platform. Their upcoming app solves this problem for millions of overseas Pakistanis, and it is being made keeping troubles with technology a layperson might have in mind.
All vendors registered on Instakin are pre-vetted; this eliminates the problems immigrants have, such as fraud, misuse of funds, excessive transfer fee, etc.
Based on Market Research and InstaKin’s surveys, more than 90% of immigrants transferring remittances have no command over how the money is used, which has led to tensions between senders and spenders in more than 70% of the cases. This is one of the major reasons for the international money transfer services to be setting up their businesses online, hassle-free, and transparent, just as the services InstaKin provides to its users.