Cutting Remittance Costs in a Click

A money changer services customers at Changi Airport. Photo credit:  Lester Ledesma/ADB.
A money changer services customers at Changi Airport. Photo credit: Lester Ledesma/ADB.

Digital technology is a game changer in reducing remittance costs between overseas workers and developing countries in Asia.


Remittances are the hard-earned product of workers whose migration is usually driven by poverty and lack of job opportunities in their home countries. And, with over 240 million people living outside their countries of birth, remittances are the saving grace for many economies.

But the costs associated with transferring money are steep. Globally, the average cost of sending remittances stands at 7.6% of the amount sent as of the second quarter of 2016.1 On average, remittances to East Asia cost 8.5%, while fees to South Asia are less expensive at 5.6%.

Reducing remittance costs would have a huge impact on migrants and their families as well as a multiplying effect in terms of financing health, education and other spending beneficial to society.

Bringing down the cost of remittances has emerged as one of the sustainability goals of global policy leaders who recognized the importance of remittances both as a foreign exchange source and an economic lifeline. At the G-20 Leaders' Summit in Brisbane, Australia in November 2014, a commitment was forged to reduce the global average cost of transferring remittances to 5%.

This is where technology has become a game changer.

Through digital technology, money transfer operators are now able to offer remittance services at significantly lower costs than traditional over-the-counter services. Digital service providers are also able to pass on the benefit of being subjected to less stringent anti-money laundering and counter-terrorism financing regulations than those imposed on formal channels such as banks.

1 "Remittance Prices Worldwide," June 2016 issue, The World Bank.

Continue reading

Meet the experts

  • Sabine Spohn    
    Senior Investment Specialist, Private Sector Operations Department, Asian Development Bank

    Sabine Spohn works in ADB’s Private Sector Operations Department and is primarily responsible for managing the regional microfinance risk participation and guarantee program.

  • Jonathan Capal    
    Director, Developing Markets Associates - Asia Pacific

    Jonathan Capal is a specialist in the field of international remittances with a background in managing remittances, financial literacy, migration and development projects, and foreign investments forums. He launched DMA’s Asia Pacific operation in Sydney, Australia and is involved in major remittances projects, including the World Bank’s ongoing global remittance prices database.

   Finance sector development, Information and communication technology
   Last updated: September 2016



The views expressed in these articles are those of the authors and do not necessarily reflect the views of the Asian Development Bank, its management, its Board of Directors, or its members.

Was this article useful?


Log in or register to post comments.