Remittances

Remittance

Remittance can be defined as the act of transmitting money to a distant location to fulfill an obligation. As globalization is taking place, so is the migration of people from one country to another for employment opportunities and for a better standard of living. There are certain social economic factors surrounding the migrant sending country, some of the important factors are:

• Low employment opportunities

• A low standard of living

• Very low wages

• Political instability along with security issues within a country

• A poor economy

All of these factors can be considered as the sole reasons for which migration is taking place. According to the World Bank (2014) International migrants from developing countries are expected to send around $436 Billion to their home countries in the form of remittances. The number is an increase from 2013, which was $404 Billion; a projected figure of 515 Billion is also give for the year 2015. The World Bank has also given the top 10 remittance receiving countries:

Source: World Bank 2013

All the countries mentioned above are developing countries or Low-Income countries and the socio economic factors mentioned above can be related to all the countries given in the bar chart. It can also be deduced that these are the countries from where migrants are coming the most.

In a similar way there are developed countries where migrants preferred to go, these countries could provide them with opportunities that their native country cannot provide them. The positive socioeconomic factors that make the migration receiving countries so appealing are:

• Availability of employment opportunities

• High standard of living

• Good/healthy migration polices

• High wages

• Requirement of skille...

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...their respective country of origin. The modern age of technology and globalization has made it much more easier for the transfer of funds from one location to another. Migrants can use the following services for the transfer of their funds:

• Banks

• Money Transfer Operators

• Indirect sources

Cognizant report states, the most preferred way of sending remittance is through Money Transfer Operators. In the recent years the Money Transfer Operators (MTO’s) have flourished exceedingly, and the two companies that have made a name for them in the business are Western Union and Money Gram. According to the report one in five dollars remitted globally pass through either Western Union or Money Gram. The two companies can be declared as the giants of the remittance business in terms of Money transfer Operators.

Banks are also in the business of transferring remittances