Trends in the cross-border remittance business tend to correlate with immigration trends, notes International Money Express.
They are also linked to global economic opportunities and related employment levels in certain industries such as construction, information technology, manufacturing, agriculture and hospitality, as well as other service industries.
According to the latest available information from the World Bank’s Remittance Matrix, the remittance corridor from the United States to Mexico was the largest in the world in 2021.
International Money Express says a significant trend affecting the remittance industry is the increasing regulation of banks, which makes it difficult for remittance companies to have strong banking relationships.
Regulation in the U.S. and other countries focuses, in part, on cybersecurity and consumer protection.
Remittance business
Remittances are a prominent type of cross-border financial transfer, and often, these payments are made between immigrant families.
The United States has more immigrants than any other country in the world: immigrants account for 14.1% of the U.S. population and are the world’s largest source of remittances.
Remittance transactions typically involve a sender in one country, a receiver in another country, financial intermediaries in both countries, and a payment system used by the intermediaries.
According to a U.S. congressional analysis, the financial institutions involved in the $540 billion remittance market may be banks or credit unions, but they are often money transmitters, such as MoneyGram, Western Union or PayPal.
Remittances have increased steadily over the past three decades and are the largest source of external financing for low- and middle-income countries, surpassing Foreign Direct Investment (FDI), portfolio investment and Official Development Assistance (ODA).
In 2022, remittances to low- and middle-income countries are estimated at $626 billion, up from $597 billion in 2021 and up from $75 billion in 1990.
The World Bank notes that, in 2022, India was the largest recipient country of remittances ($100 billion), followed by Mexico ($60 billion), China ($51 billion) and the Philippines ($38 billion).
