The Nature & Scope of the Market for Immigrants Remittances from Ireland, including Mechanisms, Providers, Risks & Costs
Migrants send money home through a wide range of formal and informal channels. International surveys suggest that the majority of immigrants who send remittances do so through formal means. Remittances to Europe total over US$50 billion and are sent to countries such as Albania, Poland and the Republic of Moldova where remittances are particularly significant. Annual transfers to Europe amount to some US$1,600 per migrant and represent 4 percent of GDP and 11 percent of exports. Reports of world remittance flows suggest that the market was valued rather conservatively at US$260 billion in 2005 and is expected to increase by 30 percent in 2009 (World Bank, 2007). Migrant remittances are an important source of external finance for countries. Yet, high costs (i.e. charges) of sending remittances are often in the range of 10 to 20 percent and is a major drain on resources particularly in developing countries. The significant players in the remittance markets are traditionally companies which specialise in remittances, as opposed to banks, who offer remittances as part of their product portfolio.
This brief also reviews the business environment for remittance service providers. It finds that the largest obstacles to carrying out business are within areas that can be influenced by public policies, such as licensing and removing disincentives that may prevent for example banks and telecoms from entering the market. By tapping into this market, financial services and mobile operators have an enormous potential to service the unbanked and providing existing banking customers with next generation banking facilities. In addition to the risk of an un-standardised transfer of money banks are at risk of not facilitating such a market in developing countries from new competitors siphoning potential customers through emerging mechanisms.
This brief is structured to give the reader a broad overview of the global context but adding detail and perspective around emerging mechanisms that might be of interest to xxxx.