Fintech Can Cut Costs of Remittances to Latin America
For Latin Americans living abroad, sometimes sending money back home can be a complicated and costly ordeal. Most people rely on traditional banking methods and money transfer operators to send their remittances. But using these financial services for cross-border payments is costly—about a 6 percent charge on the total amount—and these fees are typically paid by the sender. This means less money left over for the family or friends receiving the money.
A more cost-effective approach for Latin American countries relies on using fintech, like mobile banking, to send money across borders, according to a recent IMF staff Working Paper.
Our chart of the week shows Latin America’s share of remittances transmitted with mobile money along with its overall share of remittances on a global scale. As the chart shows, Latin America’s use of mobile money both to send and receive remittances is relatively low—despite the region’s high share in total world remittances, which was about $80.5 billion in 2017.
Photo courtesy of Juanedc.