Advancing Digital Solutions to Maximize Remittances in Asia and the Pacific

Digital remittance service options have increased significantly since the beginning of the pandemic. Photo credit: ADB.

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Digital financial services like mobile money can reduce transfer prices and improve transparency, efficiency, and access.


Remittances are a lifeline for many people in Asia and the Pacific. The money sent by migrant workers to their families from abroad cover their day-today costs and investments. In countries with a high rate of emigration, remittances are a major source of foreign exchange earnings.

Several challenges limit the growth of remittances, such as the high cost of sending money, high levels of informal money transfers, and restrictive regulations. Digital services, including mobile money and online and bank account credits, have long been recognized as one of the key solutions to these pain points. However, while there has been an increase in digital transactions because of the coronavirus disease (COVID-19) pandemic, cash remains the predominant method of money transfer in the region. 

This policy brief is adapted from a report published by the Asian Development Bank (ADB). It recommends that the public and private sectors establish a comprehensive and efficient digital remittance environment to transition people from cash to digital transfers and maximize the economic impact of remittances.

Economic Importance of Remittances

In 2018, one in three migrants is from Asia. The most common reason for migration is to work to support families back home. In 2019, Asia received $315 billion in remittances, which makes it the largest remittance-receiving region. By country, India is the largest receiver, totaling close to $80 billion in remittances, followed by the People’s Republic of China (PRC), Pakistan, the Philippines, and Viet Nam.

Remittances comprise a significant percentage of the gross domestic product (GDP) of countries in the region. This is true for Pacific developing member countries, for example, Tonga with 40% of GDP. Some Central Asian countries also rely on remittances, such as Tajikistan (26%) and the Kyrgyz Republic (25%).


While the importance of remittances has been recognized globally, several challenges remain.

High price of remittances means that beneficiaries do not receive as much as they could. For example, if a Tongan migrant were to send home $200 (equivalent), and the price was 9.4% of the transaction, the receiver would be losing nearly $19.

Several factors contribute to the high price of remittances. These include the lack of competition; high operational costs, particularly if it is a cash-to-cash service needing agents at both ends; compliance and know-your-customer (KYC) costs; de-risking; and the sheer number of entities in the value chain, who all need to earn something and can include up to five different parties (e.g., sub-agents).

Banks terminate or restrict business relationships with a whole category of businesses, for example, money transfer operators, without considering their individual circumstances. De-risking is practiced to mitigate such risks as money laundering.

However, without their own business bank account, it is hard for money transfer operators to operate or to protect their customers’ money. De-risking threatens financial inclusion and reverses progress in reducing remittance prices and fees.

Cash is still king in most markets because it makes remittance senders and receivers feel in control of the transaction by giving the money to an agent or picking it up in person. Trust in the agent is a key factor in the remittance transaction; it is often easier to trust a person than a digital device. There is still strong concern over privacy issues, particularly providing personal details online.

Informal remittances are transactions outside the formal financial system and could include friends or family traveling with cash, bus drivers transporting cash across borders, or an organized informal provider (such as hawala or hundi operators). This also includes sending goods or services, for example, a television or white goods that a family can sell to get the money in local currency.

The time it takes to approve license applications varies significantly across countries. Most countries have licensing regimes and processes, but applications may take a long time to be approved. Only a few countries publish timescales for decisions on applications.

Consistent and reliable data on remittance inflows and outflows, the method of sending or receiving, demographics (including gender, age, and location), among other things, would be useful. Accurate data is crucial to understanding the importance of remittances to a home country.

Impact of COVID-19

COVID-19 has catalyzed change in the remittance market. Digital remittance services have become more important during the pandemic for many senders and receivers. For example, annual returns of Western Union, MoneyGram, and Ria Money show a doubling volume of digital remittances. Several central banks recorded an increase from the 2019 in the use of digital services.

In Asia, the use of apps and online sending services increased. Central banks actively encouraged people to use digital payments. Money transfer operators offered incentives or shared information to their customers to switch to digital.

How Digital Services Facilitate Remittances

Digital financial services can boost the resilience of the financial sector, especially during crises, by providing easy access to low-cost, convenient, and fast money transfers. People do not need to leave home to send or receive money.

Mobile money is uniquely positioned to transform formal remittance markets and to advance financial inclusion because of its reach and growing use among underserved people. Its providers are at the forefront of domestic payment services in many emerging markets, enabling the recipients of international remittances to pay for goods and services digitally, in turn creating a payments history that could enable them to access credit or insurance in the future. Mobile money has thus established itself as a critical tool for facilitating international remittances, while reducing remittance prices and maximizing the impact of remittances on development.

Policy Recommendations

Digital data technology can help alleviate many of the pain points in the remittances industry. Regulators, financial institutions, and money transfer operators should work together to safeguard digital remittances and promote competition and innovation.

Increase financial education in digital services

An important way to increase digital transactions is to educate people on their benefits. Regulators can ensure that pre-departure training is offered to migrants or made compulsory before they leave. National financial education strategies can be expanded to include digital remittances.

Leverage technology to support anti-money laundering and countering financing of terrorism regulations (AML/CFT)

AML/CFT is critical for the long-term benefit of the economy and finance. There is concern, however, that some risk mitigation measures may limit access to financial services for certain individuals (e.g., those with limited or no identification documents). Or these may lead to higher remittance costs as remittance service providers need to implement expensive controls to manage risks. Judicious use of technology could be a suitable solution to AML/CFT concerns, and solutions should be examined.

Integrate payment infrastructures

Interoperability would mean that remittance service providers, banks, and mobile money can send and receive remittances across different networks. Having an integrated payments infrastructure leads to fair access to market players. This, in turn, will create more affordable, efficient, secure, and transparent transactions.

Develop digital identification solutions

Electronic national identification (ID) cards can reduce the threat of identity fraud and save time for authentication, thereby increasing efficiency. A digital ID could enable verification and authentication from a device.

Incentivize digital transactions

Both regulators and money transfer operators have been offering incentives to send remittances digitally throughout the pandemic, which contributed to the uptake. Demand-side studies show that once customers try digital services, they are unlikely to go back to their previous method of money transfer.

Simplify on-boarding while reassuring that it is secure

Signing up to digital services can be daunting because of security and privacy concerns, such as over online fraud and scams. It requires providing personal information, such as bank account information and ID number. Making the on-boarding process simple and secure will be essential to converting people to digital services.


Asian Development Bank (ADB). 2021. Harnessing Digitization for Remittances in Asia and the Pacific. Manila.

Lisette Cipriano
Senior Digital Technology Specialist (Financial Technology Services) Sector Services Advisory Cluster, SDCC

Lisette Cipriano currently works as a Senior Digital Technology Specialist in Financial Technology Services with ADB. Prior to her current role, she worked for Vodafone Group in the UK, as Commercial Country Manager for Ghana and DRC, providing support and consultancy services for Vodafone Cash/M-Pesa. Her areas of expertise include payments, financial inclusion, mobile money, and financial services in the EMEA region.

Asian Development Bank (ADB)

The Asian Development Bank is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.

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