Remittance

Remittance refers to money sent by a migrant or foreign worker to individuals or communities in their country of origin. Remittances may be international, crossing borders, or domestic, within the same country from non-residents to residents. They are among the most important sources of external financing for many developing economies and can supplement or, in some cases, exceed official development assistance.

Transfers are carried out through formal channels such as banks, money transfer operators, or mobile money services, or through informal routes. Formal services aim to provide price transparency, protection against fraud, and regulatory compliance, including anti-money-laundering and know-your-customer controls. Costs and exchange-rate margins vary widely by corridor and provider, affecting the net amount received.

Remittance flows influence household welfare by enabling consumption, education, and health spending and can contribute to poverty reduction and financial inclusion. At the macro level, large remittance inflows can affect exchange rates and balance of payments, and in some countries they represent a stable, countercyclical source of foreign currency.

Trends include growing digitization, which lowers costs and widens access, especially for low-income migrants. Policy considerations focus on reducing transfer costs, expanding access to formal financial services, and ensuring proper oversight to prevent illicit financing.