The Economic Times daily newspaper is available online now.

    Make remittances cheaper, WTO

    Synopsis

    Digital money transfers are pulling down cost of remittances. The global average cost of sending $200 in Q3 2023 was 6.18%, a marginal decline from the preceding quarter, with digital remittances costing almost 2 percentage points less than cash transfers. This is still 1.18 percentage points higher than the G20 target of 5%. Lower average cost of remittances in G8 economies than in G20 is partly attributable to the larger share of digital transfers.

    Make Remittances Cheaper, WTO
    India has the loudest voice in seeking to lower the global average cost of money transfer, being the largest contributor to the international migrant workforce, as well as recipient of the biggest remittance inflow. This will be a key area of interest for New Delhi at the WTO ministerial meet that starts today in Abu Dhabi. India's concern over the slow decline in cross-border payment levels, which average over twice the 3% target, is guided by its own proactivity in creating cheap facilitating digital infrastructure. It is offering its publicly-funded instant real-time payments system UPI as a viable means to bring down remittance costs.

    Digital money transfers are pulling down cost of remittances. The global average cost of sending $200 in Q3 2023 was 6.18%, a marginal decline from the preceding quarter, with digital remittances costing almost 2 percentage points less than cash transfers. This is still 1.18 percentage points higher than the G20 target of 5%. Lower average cost of remittances in G8 economies than in G20 is partly attributable to the larger share of digital transfers. Mobile wallets remain the cheapest method of funding and disbursing a transfer, although funding costs are gaining on alternative means such as bank transfers, cash, and credit or debit cards.

    Every percentage point decline in the global average remittance cost saves the global economy a little over $3 billion a year. Digital adoption offers a way out, and the agenda can be better implemented through multilateral agency than by offers of free infra. India has to be proactive at MC13 on lowering remittance costs across pathways and along all corridors. Alongside, it will need persuasive bilateral negotiations to increase flows in local currencies to pull down the forex margin in remittance transfer. Interlinked systems for digital payments in local currency is the cheapest solution available for transferring remittances.

    (Catch all the Business News, Breaking News, Budget 2024 Events and Latest News Updates on The Economic Times.)

    Subscribe to The Economic Times Prime and read the ET ePaper online.

    ...more

    (Catch all the Business News, Breaking News, Budget 2024 Events and Latest News Updates on The Economic Times.)

    Subscribe to The Economic Times Prime and read the ET ePaper online.

    ...more
    The Economic Times

    Stories you might be interested in