Money transfer usually refers to money sent from international migrants to their home country and vice-versa. They play an essential role as a source of external finance for several developing countries. In the 19th century, certain countries like Spain, Italy, and Ireland, received income from their citizens living in foreign countries.
Remittance services allow you to remit money back home to your loved ones who require financial support in your absence. You pay a sum to the money transfer service provider to remit money to them within a specified period. Every company has distinguished rules and transfer limits for sending money. Here are some tips to keep them flowing:
Tax credit
Countries can offer tax credits to international money transfer providers equal to the reduction in fees paid by senders and recipients. Easing the regulations is one of the solutions to increase foreign income flow and help the economy prosper.
Increased market competition
Many countries have partnerships with others, stifling market competition and imposing taxes on senders and recipients. As an alternative, you need to open partnerships among national post offices, banks, and Outward Remittance providers and encourage the interoperability of technologies to increase scale and decrease costs.
Digital technologies
Digital technologies like the international money transfer app address de-risking practices by correspondent banks and offer adequate and appropriate KYC requirements. It also increases access in smaller and poorer corridors, especially if you want to money transfer from the USA to India.
Innovation and credit enhancement
Diasporas from several developing countries tend to have a favourable perception of country risk than institutional investors. The savings of diaspora members, especially those kept as low-interest bank deposits, can be mobilised by issuing diaspora bonds. Several countries have raised billions of dollars of financing by these.
Collateral
Using future flows, including inflows as collateral, facilitates bond issuances during financial crises. Banks can give you collateral to send money abroad and fulfil your family’s desires without hesitation. These bonds have a lower borrowing cost and save lots of money.
Data improvisation
Data on bilateral flows of Foreign Remittance among countries and flows through various channels and instruments require improvisation. Data on income flows are now a key consideration in assessing developing nations’ debt and financial sustainability from access to development financing. Countries should work within an effective, coherent policy and institutional framework to implement these actionable measures and broader calls to action.
The framework should reduce transfer costs and increase the volume of flows. It should also support the broader agenda, including innovation in the global market and leverage for improving consumer and business lending, micro-saving, and micro-Insurance, improving country risk ratings, and access to international capital markets through securitisation and issuance of diaspora bonds.