Home Slider How eCash Makes Remittances More Accessible Across the Globe

How eCash Makes Remittances More Accessible Across the Globe

by internationalbanker

By Sebastian Seifert, SVP Sales & Business Development, Paysafe





There are about one billion people around the world who depend on remittances to make ends meet and have a chance of improving their economic situations. Rapidly spreading digitalisation, however, has made it harder for migrants, who often earn money in cash, to send funds to their loved ones back home. At the same time, recipients, who often rely heavily on cash, find it difficult to access and use these funds. eCash can help bridge the gap and make remittance services more accessible to everyone.

Today’s remittance market

The global digital remittance market is expected to continue growing, reaching $60.05 billion by 2030.1 Currently, the money received by recipients in the migrants’ home countries accounts for as much as 60 percent of their household incomes.2

But while the volume of money migrants send home is expected to increase further—remittance flows hit $589 billion3 in 2021, up 7.3 percent over 2020—remittance services are becoming increasingly inaccessible. While 90 percent of remittances4 were sent and received in cash in 2019, this has changed significantly in the past few years. Fast forward to 2021, and $295 billion5—representing around 50 percent of worldwide remittance flows—was sent through digital means.

This trend does not come as a surprise with the ongoing digitalisation of services, which continues to rise. However, since significant numbers of people in migrant communities and recipient countries rely heavily on cash, this shift toward digital remittances creates a real risk of financial exclusion and worsening economic hardship. Clearly, it is high time that banks, neobanks and other providers of remittance services consider this dynamic and look at adding eCash6 to their capabilities to better service these at-risk communities.

A question of relevance

With recipients predominantly reliant on cash funds, the most obvious problem posed by digital remittances is that the money arrives in a format that isn’t convenient or relevant to the day-to-day lives of the recipients in many cases.

India, China, Mexico, the Philippines and Egypt were the top five countries7 to receive remittances in 2021. And one thing they all have in common is that they have a significant number of people who are underbanked or unbanked. And these communities traditionally depend on cash to cover their expenses.

In fact, three of these five countries—Egypt, the Philippines and Mexico—are among the most unbanked countries in the world, with 67 percent, 66 percent and 63 percent of their respective populations8 having no access to banking facilities at all. And while India and China, at 22 percent9 and 20 percent,10 respectively, have lower proportions of unbanked citizens, these percentages still represent large numbers of people.

Even recipients of remittances who have bank accounts often find it challenging to access and use money that has been sent digitally. Traditionally, almost half of all remittances11 go to recipients in rural areas, where economies are known to be predominantly cash-based, and the networks of bank branches and/or ATMs (automated teller machines) are usually quite dispersed.

Another crucial factor is that the cost of sending money digitally—particularly in areas of the world deemed to be at high risk of fraud—can be astronomical. The average fee hovers at 6.4 percent,12 rising to as much as 8 percent in Sub-Saharan Africa.

That means that even less money is going into recipients’ pockets. At a time when more and more people are being forced into economic hardship13 due to the precarious state of the world economy, this poses a serious threat.

The challenge of proper identification

The challenge of accessing money that has been sent digitally represents only one side of the coin. Senders of remittances, just like recipients, are also adversely impacted by digitalisation.

Immigrants in the United States, which is the world’s top source of remittances,14 are not only more likely to work in low-income jobs15 that are paid at least partly in cash, but they are also frequently unbanked or underbanked. And the same holds true elsewhere in the world.

Proper identification is an important piece of the puzzle. Getting the necessary documentation to open a bank account is a considerable challenge in many countries. It often ends up being a chicken-and-egg situation, where you typically need a document to prove your identity alongside a document to prove your address. Utility bills, rental agreements and credit-card statements, which generally make up the proof-of-address documents accepted by banks, are, however, extremely difficult to obtain when you’re new to a country and don’t have a bank account.

Furthermore, even producing proof of identity is often an issue for undocumented migrants, refugees and other vulnerable groups. The World Bank estimates that there are around one billion people globally16 who face challenges in proving who they are, which leaves them struggling to access any number of basic services, including banking. In fact, without proper proof of identity, it is almost impossible for them to open bank accounts, obtain jobs in the mainstream economy or send money to their families back in their home countries.

eCash bridges traditional and digital remittances.

Around 75 percent of global remittance flows are estimated to go towards food, rent, utility bills and other essential expenses, according to a report by the United Nations.17 That leaves 25 percent typically saved, invested or used in other ways that help recipients improve their lives.

As such, remittances are not just a lifeline but also critical to breaking the cycle of poverty and financial hardship. It follows that bridging traditional and digital remittances is a moral imperative to ensure a financially inclusive solution for the most vulnerable in society.

eCash is an ideal tool for fighting financial exclusion and provides an easy solution for making remittance services more accessible. It allows people to send and receive cash through digital means, even if they don’t have access to bank accounts.

Senders of remittances can use eCash to transfer cash funds by logging on to their provider of choice (a bank, neobank or another remittance service), choosing eCash and downloading a barcode. They can then scan the barcode at a participating Paysafecash service location and deposit cash to complete the transaction.

Recipients, on the other end, can similarly turn digital funds into cash. They simply scan the received barcode at their closest Paysafecash service location and withdraw the money in cash.

This accounts for the practical realities of both senders and recipients by enabling them to complete transactions using cash—representing the means on which they rely for all their other day-to-day needs. The process couldn’t be simpler.

Digitalisation doesn’t have to come at the cost of inclusion.

The remittance market is expected to be predominantly digital18 by 2025. While for most, that means that remittances will be more user-friendly, safe and transparent, with lower overheads for service providers, this is not good news for everyone. Digitalisation undoubtedly has compelling benefits, but the risk of further marginalising vulnerable people, who account for a large portion of the global population, and putting them in even greater difficulty by making it impossible for them to send or receive money cannot go unanswered.

While most of us might prefer making digital transfers, convenience isn’t a one-size-fits-all situation. There are many people for whom using physical cash is not just the simplest option but often the only realistic means of payment.

But there is a solution. Banks, neobanks and other providers of remittance services can reach and serve these customers by adding eCash to their services, thereby broadening their market and supporting financial inclusion. That way, nobody is left behind.


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