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What is a remittance transfer?

A remittance transfer occurs when immigrants send money back to their home country. The money can be sent a variety of ways, including through a bank (either online or in person), by a specialized online transfer service, through the post office, at a Western Union or other brick-and-mortar facility, or by an online foreign exchange (FOREX) service.

It is a common way for migrant workers to help support their families abroad by sending home their earnings. This is referred to as a worker or migrant remittance.

Remittance transfers account for a large portion of some countries’ Gross Domestic Product (GDP).

Remittance Transfers are also known as:

  • International wire transfers
  • International wires
  • Remittances

How it works

Decide how much you want to send back home.

Choose a qualified “Remittance Transfer Provider” by comparing fees and interest rates online.

Complete the online forms. Input your information, the amount of the transfer, and information about the recipient.

Review and agree to the taxes, interest rate, and fees that may be applied to the transfer.

Be sure you know exactly how much it will cost you, when the money will be received, and what information and identification the recipient will need.

Submit your remittance request.

Funds travel from your local bank to the Remittance Transfer Provider, which sends it to the recipient’s bank overseas.

Your family back home receives the funds within a few days to a week, depending on which provider you use.


Support For Families

Remittance transfers are an important way for people who emigrate to other countries to continue to help support their families back home. This is especially important for those who come from poorer countries, such as Mexico, India, and Nigeria.

Economic Benefits

Remittance transfers can be important in a developing country’s economy. Some developing countries even offer tax incentives to attract remittances.

Many developing nations have high poverty rates, and residents struggle to pay for basic goods and services. Citizens who have moved to wealthier nations to obtain gainful employment can help alleviate some of these issues by sending money back home.

Disaster Relief

For some countries, the amount of money received through remittances exceeds the amount received in official aid after natural disasters, making remittance funds absolutely crucial for disaster recovery efforts. In fact, remittances have exceeded global development aid since the late 1990s.

Education Funding

Many immigrants send money back home to fund education for their families. These contributions make up a large portion of total remittances.

Though total remittance transfers have slipped a bit since 2014, they are still important in the economies of many developing nations:

  • In 2016, more than $69 billion in remittances was sent to countries in Latin America and the Caribbean, of which a whopping 40% went to Mexico, mostly from migrant workers in the United States. This is an 8% increase over 2015.
  • Of those sending money back home to Mexico, the majority send about $300 at a time, 14 times a year.
  • Globally, 2016 saw a decrease in total remittances, but the total still amounted to $575 billion.
  • Of that amount, $429 billion went to developing countries, which is more than three times the amount of official aid distributed by wealthier countries to aid development in the same year.


The cost of sending money back home can be a burden to those trying to help their families in poorer countries. Depending on the countries of origin and receipt, the fee for a remittance transfer can be 10% or more of the transfer amount.

Because of the economic importance of remittance funds, there has been a lot of discussion among world leaders about keeping these costs low to facilitate the flow of money globally.

  • According to the World Bank, the average global cost of a remittance transfer is 5.68%, based on a transfer of $200. Sending money from Russia can cost as little as 2.12%, while sending from South Africa can cost nearly 18%.
  • This global average is much lower than it was just ten years ago, when it hovered around 10%. This reduction was the result of cooperative efforts around the globe:
  • In 2008, the World Bank established a database that allows people to compare the cost of sending remittance transfers through various providers. This was meant to help people make educated financial decisions and make the remittance transfer process more accessible.
  • In 2009, members of the G8 Summit moved to lower the cost of remittance transfers by 5% over five years.
  • In 2011, Bill Gates spoke at the G20 Summit in favor of the 2009 G8 move to reduce remittance costs from 10% to 5% to “unlock” up to $15 billion in remittance funds for poor and developing countries. He encouraged G20 members to continue the work toward this reduction, bringing the average cost to 5% by 2015.

Biggest remittance “flows”

Some countries send more remittance funds to certain other countries every year. Mexico, for example, receives a lot of money annually from people who have emigrated to the United States. This movement of money from the U.S. to Mexico is called a “Remittance Flow.”

The five biggest remittance flows in the world (as of 2015) are:

  • United States to Mexico
  • United States to China
  • Hong Kong to China
  • United Arab Emirates to India
  • United States to India

Popular remittance transfer sites

Most large banks offer remittance transfer services as do common transfer companies, such as Western Union. In addition, several websites have emerged specially to serve this function, such as:

  • Remit2India
  • WorldRemit
  • TransferFast
  • TransferWise
  • OFX
  • Remitly

The website was created to help consumers compare the cost and transfer times across these sites and many others.


  • A remittance transfer is when immigrants send money back to their country of origin.
  • Remittance transfers can be sent through banks, online transfer websites, foreign exchange sites, at post offices, or using in-person services, such as Western Union.
  • Remittances make up a large portion of many countries’ GDP and far exceed funds received as official aid from wealthier nations.
  • Besides helping family members in poorer countries afford basic necessities, remittances are important in providing funding for disaster relief and educational services.
  • The average cost of sending a remittance transfer is 5.68%. This rate was reduced from 10% between 2010 and 2015 to make transferring money between nations more affordable.

Fun facts

  • Remittance funds make up almost 30% of the economies of Liberia and Nepal and more than a third of the economy of Kyrgyzstan.
  • India received the most remittance transfers in 2016, totalling $62.7 billion globally.
  • Analysts anticipate that remittance transfers will top $615 billion in 2018, hitting an all-time high.




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