The Rise of Digital Remittance: Why Digital Remittance is Overtaking Traditional Money Transfer?
The rise of digital remittance has been a game-changer in the world of money transfer. The traditional way of sending money across the border, which were once the norm, is slowly losing its relevance. Not only the digital remittance has introduced a new way of money transfer but it has also brought a better way of sending money for many reasons. People who migrated years ago have probably found and drawn attention to their preferred method of sending money to their family members back home. When traditionally sending money, the receiver would need to visit and queue at a bank or an exchange agent to receive funds sent by their relatives overseas.
Not only this but during the time of the global pandemic, sending money the traditional way has been so difficult. Many exchange agencies and banks have found it difficult to operate under lockdown restrictions. Moreover, people were not able to leave their homes to either send or receive money due to the travel restrictions made during the pandemic caused due to COVID-19. Thus, the people that have been using traditional channels had to switch to alternative ways of sending money. In this article, we will explore the reasons behind the rise of digital remittance and why it is overtaking traditional money transfers.
What is Digital Remittance?
In the simplest term, Digital remittance is a form of money transfer that allows individuals to send money from one country to another using digital channels such as online platforms and mobile applications. However, digital remittance doesn’t involve sending cash funds directly. Instead, the money is sent using a digital wallet and a bank account. It eliminates the need for physical visits to a brick-and-mortar money transfer operator, and the recipient can receive funds directly into their bank account or mobile wallet.
The Rise of Digital Remittance
Over the past decade, digital remittance has experienced significant growth, and its popularity continues to rise. According to the reports from The World Bank reported in 2020, remittances to low and middle-income countries reached a record high of $540 billion. The prior reason for this massive growth is due to the Covid-19 pandemic which has accelerated the shift toward digital remittance. During lockdowns and travel restrictions, people have faced difficulties to transfer money through traditional money transfer and have to opt for another reliable process.
In the context of Nepal, the inflow of remittance stood at Rs. 1.007 trillion in 2022 according to the reports from Nepal Rastra Bank. With a significant rise in remittance earnings, it has contributed 20.8% of the country’s GDP.
Likewise, in the first five months of the current fiscal year, migrant workers have already sent home Rs. 480.5 billion in remittances. The number increased by 23% compared to the same period of the previous year. Over 2.1 million Nepali citizens which is equal to 7.4% of the country's total population, are thought to be living abroad, according to the Central Bureau of Statistics. In addition to this, 347,340 new and re-entry labor permits were issued in the first five months of the current fiscal year which is a daily average of 2,315. With these numbers increasing massively, there is no doubt that the inflow of remittance through the digital channel will grow parallelly.
Reasons for the Rise of Digital Remittance
For millions of families around the world, remittances are a crucial source of income. Without remittance, families in a developing country would face serious difficulties. While using traditional bank-to-bank remittance, is a very slow process. It may take up to five business days to complete the process or even longer. Apart from this, the receiving banks can sometimes delay the transaction by 2-4 days for funds to be released to customers. Also, you will only have limited access while sending money through the traditional process as exchange agencies, and banks usually have limited opening hours. On another hand, sending money in the traditional way is time-consuming. Both sender and receiver have to wait and stand in line while sending and receiving money. Due to this reason, there are greater benefits to using digital remittance. Below are some reasons for using digital remittance over traditional.
Digital remittance is convenient as it allows individuals to send money from the comfort of their homes or offices. The recipient can also receive the funds directly into their bank account or mobile wallet, eliminating the need for physical visits to money transfer operators.
Digital remittance is more affordable compared to traditional money transfer methods. The fees charged by digital remittance providers are significantly lower than those charged by brick-and-mortar money transfer operators. This is because digital remittance providers have lower operating costs, and these cost savings are passed on to the customers in the form of lower fees.
Digital remittance is faster compared to traditional money transfer methods. It takes only a few minutes for the sender to initiate a transaction, and the recipient can receive the funds within minutes or hours, depending on the provider and the receiving country.
Digital remittance is more secure compared to traditional money transfer methods. The use of digital channels reduces the risk of loss or theft of cash, which is a common problem with traditional money transfer methods. Digital remittance providers also have robust security measures in place to protect customer data and transactions.
Accessibility & Competitive Advantage
Digital remittance is more accessible compared to traditional money transfer methods. The availability of online platforms and mobile applications makes it easier for individuals to access digital remittance services, regardless of their location or time zone. Likewise, digital remittance providers are leveraging technology to gain a competitive advantage over traditional money transfer operators. They are constantly innovating and improving their services to meet the evolving needs of their customers.
eSewa Money Transfer: Reliable Digital Remittance in Nepal
To revolutionize the money transfer industry, eSewa Money Transfer, a leading remittance company in Nepal has made it more convenient. It is the one-stop remittance solution providing convenient, affordable, faster, secure, and accessible international money transfer compared to traditional money transfer methods. Discover a seamless platform for international money transfers that gives you the freedom to select the most appropriate options for sending money. With eSewa Money Transfer, you can send money to Nepal from over 200+ countries. One can receive the fund sent by the sender directly into their bank account or eSewa wallet. In addition to this, you can also receive funds from the nearest cash pickup point.