Mobile money halves overseas remittance costs

The average cost of sending international remittances with mobile money is less than half that of using global money transfer operators (MTOs), a new GSMA report reveals.

Such lower prices contribute directly toward achieving targets within United Nations sustainable development goal (SDG) 102. Lower transaction fees also translate directly into additional income for remittance recipients.

“Through mobile money services, the industry is directly supporting the goal of expanded financial inclusion for migrants and their families by reducing international remittance costs,” GSMA Chief Regulatory Officet John Giusti said. “The potential gains of achieving this target could be as high as $20 billion in additional income for remittance recipients.”

The report noted that if people were able to send remittances from a mobile money account, the average cost of sending $200 was 2.7%, compared to 6% when using global MTOs.

GSMA estimates that there are more than 400 million registered consumer accounts for mobile money across over 90 countries.

“While today mobile money services are largely used for domestic transactions, international transfers represent the fastest-growing segment of mobile money services. In just a few years’ time, mobile money has moved from a purely domestic service to one that allows migrants to send remittances between more than 20 countries globally,” Giusti explained.

World Bank data shows that more than 250 million people live outside their country of birth and regularly send money home, providing a financial lifeline to their families and contributing to the economies of their home countries.

In 2015, global remittances totalled $581.6 billion, of which $431.6 billion, or nearly 75%, was sent to the developing world. However, the cost of international transfers remains high and directly impacts the income of remittance recipients.