Global Remittances Research 2013


  1. What are Remittances

  2. Quantum of Remittances

  3. Remittance Growth Forecast

  4. Remittance Inflows 2010

By Region

By Country

  1. Remittance Inflows by Country 2012

  2. Remittances Outflows from USA

  3. Method of Remittances Inflows to Latin America

  4. Purpose & Use of Remittances in Latin America

  5. Mexico – Remittance Inflows

  6. Mexico – Banking Penetration

  7. Mexico – Method of Payment

  8. Analysis & Conclusions

  9. Appendix A – Remittances from UK

  10. Appendix B – Remittances from European Union

  11. Appendix C – Remittances Fee Structure

1. What are Remittances

Although the term has been used to refer to a variety of transactions, “remittances” generally refers to money and goods sent from foreign-born individuals in one country to others abroad.  BEA’s estimate of such remittances, called “personal transfers” includes money and goods sent from the foreign-born residents in one country to their family and others abroad, primarily in their country of origin.

Other definitions of remittances also include items such as the income earned by temporary foreign workers (sometimes net of their taxes and expenditures in the country where they are employed) sent back home for the migrant’s own personal savings or family support.

Other organizations define remittances more broadly. The World Bank includes not only personal transfers but also earnings of temporary workers and the accumulated wealth of foreign-born individuals who return to their country of origin. It can also include transfers sent through non-profit institutions rather than directly to households abroad.

According to the United Nations, more than 215 million people live outside their countries of birth, and over 700 million migrate within their countries. In the coming decades, demographic forces, globalization and climate change will increase migration pressures both within and across borders.

International migration boosts world incomes, by allowing workers to move to where they are more productive. More than 3% of the world’s population lives outside their countries of birth.

Remittances sent home by migrants to developing countries are equivalent to more than three times the size of official development assistance and can have profound implications for development and human welfare.

Remittances generally reduce the level and severity of poverty, typically leading to: higher human capital accumulation; greater health and education expenditures; better access to information and communication technologies; improved access to formal financial sector services; enhanced small business investment; more entrepreneurship; better preparedness for adverse shocks such as droughts, earthquakes, and cyclones; and reduced child labor.

Diasporas can also be an important source of trade, capital, technology, and knowledge for countries of origin and destination.

2. Quantum of Remittances

Remittances to developing countries are estimated to have reached $372 billion in 2011 and $401 billion in 2012, an increase of 5.3% over the previous year.

Total global remittance flows, including those to high-income countries, were an estimated $529 billion in 2012.

Remittances by Source Country

United States




Saudi Arabia












































                   US$ Millions per annum


3. Remittances Growth Forecast

Despite the current global economic weakness, remittance flows are expected to continue growing, with global remittances expected to reach $608 billion by 2014, of which $468 billion will flow to developing countries.

The focus of this report is the person-to-person or person-to-family remittances from residents and temporary workers remitting funds across international borders to the country of origin.

All statistics quoted in the report are drawn from World Bank and OECD reporting and sources.

4. Remittance inflows by Region in 2010, est. (US$ billions)

East Asia and Pacific              92.5

South Asia              81.2

Latin America and Caribbean  57.6

Middle-East and North Africa  35.6

Europe and Central Asia              34.9

Sub-Saharan Africa  21.9

4.1 Remittance inflows by Country in 2010, est. (US$ billions)

India               53.1

China               51.3

Mexico   22.0

Philippines   21.4

Bangladesh   10.8

Nigeria               10.0

Pakistan     9.7

Lebanon     8.4

Vietnam     8.0

Egypt          7.7


5. Remittance inflows by Country in 2012, est. (US$ billions)

The top recipients of officially recorded remittances in 2012 were:-

India ($69 billion),

China ($60 billion),

Philippines ($24 billion),

Mexico ($23 billion)

Other large recipient countries included Nigeria, Egypt, Pakistan, Bangladesh, Vietnam and Lebanon.

However, as a share of GDP, remittances were larger in smaller and lower income countries; top recipients relative to GDP were

Tajikistan (47%),

Liberia (31%),

Kyrgyz Republic (29%),

Lesotho (27%),

Moldova (23%) and

Nepal (22%).

6. Remittances Outflows from USA:-

Recipient countries for remittances in US$ millions per month are:-








El Salvador









USA Remittance Growth 9% per annum


USA Remittances by Job Type:-


  1. Wholesale & Retail Trades


  1. Manufacturing


  1. Restaurants, Hotels & Hospitality


  1. Construction


Summary:-  USA remittances are mainly to Latin America with Mexico the major recipient by far, receiving 60% of monthly transfers.



7. Method of Remittances Inflows to Latin America

Mexico: 81% Cash, 14% Bank account, 2% by Credit card

Dominica Rep: 100% Cash

El Salvador: 79% Cash,  20% Bank account

Ecuador: 90% Cash, 9% Bank account

Summary:- Cash is the main form by which remittance/transfers are made:

8. Purpose & Use of Remittances to Latin America

Make payments

Mexico 32%

Dominican Republic 47%

El Salvador 31%

Ecuador 44%

Take money home and keep it there

Mexico            35%

Dominican Rep 26%

El Salvador 34%

Ecuador 34%

Make a deposit in a Bank

Mexico            17%

Dominican Rep  3%

El Salvador 20%

Ecuador 11%

Take money home and bank later

Mexico            10%

Dominican Rep  9%

El Salvador 10%

Ecuador  4%

Buy things

Mexico              4%

Dominican Rep 13%

El Salvador  5%

Ecuador  6%

Summary:-  45% of Mexicans take money home and keep it there.

Source: VISA

9. Mexico – Remittances Inflows

Remittances into Mexico are averaging US$1.85 billions per month.


10. Mexico – Banking Penetration

Adults with an active banking account

USA 74%

Mexico 19%

Retail sales made in cash

USA 30%

Mexico 74%

Summary:- The penetration of banking products in the Mexican population is significantly lower compared to the United States.

Source: VISA

11. Mexico – Method of Payment

Debit Card 6%

Credit Card 13%

ATM 81%


  • 74% of all retail sales are made by cash
  • 81% of the transactions with debit or credit cards are through ATM’s.
  • There are 0.5 debit/credit cards per capita in Mexico vs 2.5 cards in USA.

Source: VISA

12. Analysis & Conclusions

The USA is the largest source of international remittances in the world, with over US$52 billions of remittances in 2012.

USA remittances are expected to grow at 9% per annum over the next 5 years

Over US$40 billions or 77.5% of total remittances from the USA flow to Latin American countries.

Over US$25 billions or 48% of total remittances from the USA flow to Mexico.

Pew Centre for Research estimates that the annual remittance to a country from the USA for example Mexico is directly proportional to the number of illegal Mexicans living in the USA.

Pew Center for Research estimated there were some 16.25 million illegal Mexican nationals in USA in 2005

This may account for why 81% of remittances to Mexico are cash transactions through intermediaries such as Western Union.

Mexico is not alone as 100% of remittances to Dominican Rep, 90% to Ecuador and 80% to El Salvador are also cash transactions.

Meanwhile only 19% of adult Mexicans have a bank account.

Consequently 80% of Mexicans keep money in cash at home

74% of all retail sales in Mexico are made by cash

From this we can conclude:-

There is distrust or obstacles to establishing a banking relationship with 80% of Mexicans without regular banking facilities.

There is a very high likelihood that a high proportion of all remittance Mexico and other Latin American countries is black or undeclared income.

With the lack of banking facilities on both sides of the border it has meant remittances are through non-bank intermediaries such as Western Union and are subject to very high transfer fees in the order of 10% of funds remitted.

Because of the above factors remittances from the USA to Mexico appears to be a very large market in terms of US$ value, number of transactions and operating/transfer fees to remitters and recipients.

Therefore we can conclude that Mexico is a market of great potential to provide an alternative more flexible, user friendly, secure remittance and banking system in Mexico

Beyond Mexico there is are equally large and fertile markets in adjacent regions of Latin America with similar transfers issues as Mexico

PJM – 10th July 2013 13.

Appendix A – Remittances from UK

World Bank data suggest that the UK is a net remittance-receiver as inflows of remittances are higher than outflows

The UK is a receiver as well as a sender of remittances. As shown in Figure 1, the World Bank estimates suggest that since the mid-1990s the UK has been a net-remittance receiver.

The main source countries from which remittances are sent to the UK include Australia, the United States and Canada (World Bank 2010).

Real remittance inflows (inflation adjusted) for the UK have increased by an annual average of 6% since 1989, reaching close to GBP 4,647 million in 2009. However, these inflows represent a small share of the UK GDP (about 0.3% in 2009). The UK occupies the fourteenth place in the world in value of remittances received and the sixth place in Europe.

Figure 1




The major beneficiaries of remittances outflows from the UK in 2010 are:-


Bangladesh with around 7% of annual remittances (about GBP 533 million)


Pakistan with around 10% of annual remittances (about GBP 627 million) 14. Appendix B – Remittances from European Union



Top 5 Countries of Destination of Migrants in the EU 2010


  1. Germany    10.25 million

  2. UK   7.0 million

  3. Spain 7.0 million

  4. France 6.5 million

  5. Italy 4.25 million


Top 5 Countries of Origin of Migrants in the EU 2010


  1. Turkey 3.75 million

  2. Morocco 2.6 million

  3. Albania 1.25 million

  4. Russia 1.15 million

  5. Algeria 1.1 million


Remittances by Source in European Union:-


1. UK

2. Spain

3. Italy


Remittances by Destination in European Union:-


1. Poland

2. Bosnia- Herzegovina

3. Romania


Source:- The migration estimates is the World Bank 2010 Migration Bilateral Matrix.



15. Appendix C – Remittance Fee Structure



Although remittance costs have fallen steadily in recent years, they remain high, especially in Africa and in small nations where remittances provide a lifeline to the poor.


In 2009 the average price for sending remittances from the EU is estimated at 10.6% of the sent amount, higher than the global average of 9.1% and a little lower than the EU average of 11.71% in Q3 2008.


Remittance prices vary considerably within the EU depending on the countries they are being sent from and to, the method that is used, and the speed of the transfer.


Prices range from an average of around 7% to around12% of the sent amount in the major markets. In general Money Transfer Operators (MTOs) charge lower prices than banks for remittances.


This is because banks frequently have a fixed minimum price level that is used for all cross-border payments. The minimum price is set at too high a level to be competitive for relatively low value transactions (less than € 750).


Globally, migrants pay an average cost of 9% to send money home. Reducing the average remittance price to 5 percent, in line with G8 and G20 targets, could save migrants up to $16 billion a year.


Transfer amount – $200



Transfer Amount – $500