When the COVID-19 pandemic started rapidly spreading in early 2020, many of the world’s largest remittance-sending nations, including the United Kingdom, United States, France and Italy, gradually imposed nationwide stay-at-home orders to slow the infection rate within their borders.
But while these measures may have slowed the spread of the coronavirus by forcing businesses to stop work, they had major implications for foreign workers who relied on wages to provide financial support to families and loved ones abroad. As a result, the World Bank projected that 2020 remittance flows to low- and middle-income countries would decline by 20% year-over-year.
However, contrary to the World Bank’s prediction, certain digital money transfer services have actually seen a sizable uptick in global money transfers. At Paysend, for instance, we saw a 15% increase in both users and transfer activity during March and early April. The CEO of MoneyTransfers.com surmised this industry-wide trend in a recent report on the coronavirus’ impact on transfers, saying, “as COVID-19 doesn’t seem to be going away any time soon, the need for digital transfers is unlikely to fall, and it’s possible that as more people have access to these platforms the remittance industry could be saved from falling as much as the World Bank predicts.”
Unfortunately it took a pandemic to catalyze consumer behaviors, but the pivot from in-person transactions to digital transfers is long overdue. By digitizing the essential process of international money exchange, our industry is breaking down borders and reducing yet another friction point to financial inclusion for the world’s 164 million migrant workers.
A safer, cheaper and more seamless way to send money abroad
The evolution of money transfers from traditional to modern methods adds safety, cost-effectiveness and efficiency at nearly every stage of the money transfer process for two key reasons:
1) Contactless Payments. Traditional money transfers require traveling to the branch, waiting in a line, and speaking with the cashier, all of which are potentially hazardous and carry risks of coronavirus infection spread. The transfer recipient will also encounter these risks if required to physically visit a branch in his/her locale in order to access a money transfer.
2) Lower Fees. Faster Times. Aside from COVID-19, the traditional way of sending remittances incurs the following friction points that can make money transfers expensive and slow:
- Poor exchange rates and high transfer fees
- Slow transfers due to banks’ processing times
- Inflexibility over the method of receiving funds
As an alternative, digital money transfers sent via online platforms provide a fast and easy way for people to send money across borders from the comfort of their own homes. By reducing the number of steps in the money transfer process, improving cost efficiency and allowing users to conduct transfers autonomously, digital solutions can give foreign workers greater levels of safety, convenience and control when sending money transfers in the current pandemic and in years to come.