The importance of improvement in systems required for cross-border money transfers cannot be overstressed, as remittances are essential to the development of a country’s economy, especially so when it is impoverished. These cash inflows reduce poverty, increase financial inclusion and dramatically benefit the quality of life of its recipients. They also indirectly add to the national economy of the countries that these recipients occupy. According to the World Bank, as of late 2016, money which migrants are sending back home to their dependants totalled around $440 billion, which is about three times higher than total official aid flows. While the progress of the remittance systems is a staggering one, it is believed that these transfers would have been higher in the absence of high transaction fees and a variety of other charges that plague the market and reduce the positive impact of sending these funds across borders.
As current trends go, the average cost of sending cross border remittances through money-transfer services like those by MoneyGram or Western Union is around 7.5% on the amount being transferred. For example, a customer will have to pay a fee of $7.5 for a transfer of $100. While it is not an amount which is too expensive for a convenience, on a large scale these funds add up to huge amounts when considering remittances done all over the world.
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