Cross-border remittances are increasingly essential in a globalised world. With the influx in mobile wallet usage, cross-border payments can become easier, less expensive, and more inclusive to those needing to move money abroad.
Payments giant
Revolut launched its Mobile Wallets service to ease cross-border remittances using IDs alongside only phone numbers or email addresses. The offering will allow users in the UK and EEA to send money to Bangladesh using bKash and Kenya through M-Pesa, with
other countries to be announced.
The move marks the demand for international remittances to be eased through digital payments and a move for the digital ecosystem to become more global and financially inclusive.
What are the benefits of digitised cross-border payments?
Two-thirds of adults worldwide make or receive digital payments, according to the 2021
Global Findex Database, which found that the surge of mobile payments increased financial inclusion globally – from expanding the amount of people in developing countries that had financial accounts, to the gender gap in account ownership shrinking. This
was a direct result of the boost in digital payments and online transaction during the COVID-19 pandemic, which restricted the use of cash and demanded further online financial activity due to limitations of mobility.
While the growth in global digital payment usage has increased, there are still over a billion people in the world who are underbanked or unbanked. The access to mobile wallets can reduce poverty by enabling financial access to the underserved.
Payments companies providing wallet-to-wallet cross-border payments allow immigrant and migrant workers to send money home in a more affordable and accessible manner. By making mobile wallets more accessible worldwide, they can serve as a point of entry
for those who are unbanked or underbanked.
Mobile wallets are a gateway point for access to financial products through mobile banking, which will generate financial equity
that bank accounts cannot always offer. Through mobile wallets, users can access
super-apps, such as Revolut, which open up access to a variety of online services including financial products.
Mobile payments growth in emerging markets can foster digital ecosystems that will allow instant transfers and enable further interconnectivity. By making mobile wallets more accessible, more financial products will be able to be adopted that can allow lower
income individuals to build savings and credit, allowing more financial independence and promoting the importance of financial literacy.
What is the demand for international mobile payments?
The highest amount of mobile wallet usage is in Europe with 72% of respondents having adopted digital wallets, according to
research by Visa, with the highest adoption rates coming from Scandinavian countries, whose usage ranged from 83-94%.
Gen Z and Millennials are also significant contributors to the adoption of mobile wallets, with Gen Z taking the lead in digital payments and key factors to the changing digital landscape. The rapid adoption of digital wallets is no small part due to the
popularity of cross-border payments and the need for a convenient and reliable method to make overseas transactions.
The World Bank’s
Migration and Development Brief 2023 found that remittance flows to low and middle-income countries was on the rise, with the countries that received the most remittances were India, Mexico, China, the Philippines, and Pakistan. The penetration in remittance
markets is significant, and accelerating international transactions is a major opportunity for digital payments companies.
Dilip Ratha, lead author of the brief on migration and remittances and head of KNOMAD, a World Bank migration and development initiative,
commented in the report:
“Remittances have become a financial lifeline in many economies through the pandemic and will become even more so in the foreseeable future. We have stepped up collaborations with source and recipient countries to improve data and
leverage remittances to mobilise private sector capital through diaspora bonds and improved sovereign ratings.”
Future of digital wallets and financial inclusion
Alongside the moves being made by Revolut to extend digital wallet payments and financial inclusion for remittances to South Asia and Africa,
Visa has collaborated with Thunes, Paysend, and TerraPay to expand reach of digital wallets.
Migrants and immigrants need to be able to access financial services, partnerships such as Visa’s with Thunes facilitates Visa Direct, allowing users to send payments directly to wallets. Partnerships allows the expansion of digital wallet endpoints to Africa,
Asia, Latin America, the Middle East, and Europe.
Financial inclusion must be prioritised by financial organisations, and digital wallets are a clear-cut step towards promoting financial accessibility worldwide and taking down the barriers between cross-border payments for the unbanked and underbanked who
need it the most.