Last year, people sent $860billion back home to low- and middle-income countries. That’s not governments. That’s not big corporations. That’s people. Migrant workers. Parents. Brothers. Sisters. Ordinary people sending money to their loved ones. Together, they moved more money than all the world’s foreign aid and foreign investment combined.
For decades, sending that money was slow and expensive. Traditional banks dominated the industry. They controlled the process. They set the fees. For many families and businesses alike, that meant watching a chunk of their payment disappear just to get money across borders.
Fintechs are changing that. They’re making it faster, cheaper and easier. What used to take days now takes minutes. What used to cost 10 per cent now costs a fraction. In many places, people no longer need a bank account at all, just a phone.
That shift is massive because, when remittances become more efficient, entire markets open up. Small businesses gain access to liquidity. Merchants can trade more easily across borders. Entrepreneurs can reinvest faster. Economies that were excluded from the financial system start to participate.
So today, I want to talk about how fintechs are transforming remittances in emerging markets and why that matters not only for communities, but for businesses, investors, and the global economy.
Why remittances matter
Remittances aren’t just about helping families make ends meet. They play a much bigger role in the global economy as a whole. In fact, they often rise during times of crisis. We saw this during the pandemic, when migrants sent even more money home to support loved ones through this hardship.
For many fragile economies, countries like Lebanon or El Salvador, remittances make up more than 10 per cent of GDP. That makes them more than just a financial service. They’re a stabilizing force for entire nations.
So the question is, as new technologies reshape the industry, which platforms and payment rails will carry these flows? The answer will determine not only how hundreds of billions of dollars move across borders, but also who captures the value along the way.
Traditional rails under pressure
For a long time, remittances were ruled by the big players like Western Union or MoneyGram. They built networks of agents everywhere, and that was their power. In cash-based economies, people needed a local place to pick up their money. But those networks can often be seen as expensive to run.
Then the challengers showed up. Digital-first companies like Wise and Remitly. They said: ‘We don’t need a physical agent on every corner. We can use bank accounts, mobile wallets, and smarter FX to cut costs.’ And they did. Fees dropped to two to three per cent in many corridors.
However, most still rely on correspondent banks, so transfers can take days. Plus, if you don’t have a bank account, you’re often left out. The old system isn’t gone. The new system isn’t perfect. And that tension is exactly where the opportunity (and the disruption) lives.
How are fintechs transforming remittances
In recent years we’ve seen fintechs embedding remittances into the apps people and businesses already use. PayPal. Venmo. You can now send money abroad as easily as sending a text.
In Southeast Asia, Grab and GCash let migrant workers pay bills back home directly.
This is referred to as ‘remittances as an embedded service’ and it’s quietly changing how people expect money to move, making seamless the new standard.
Competition and innovation accelerated by the pandemic
The pandemic accelerated this shift. Suddenly, the market became far more competitive. New technologies and dozens of domestic and regional startups entered the scene or gained market share, pushing costs down.
Take Nigeria’s Kuda Bank, a digital-only bank launched in 2019, tripled its daily adoption of customers during the pandemic. More competition forced companies that once charged high fees to rethink their business models. In Kenya, a country with high digital finance adoption, average international remittance costs fell from 13 per cent in 2011 to eight per cent in 2021.
Government support and policy adaptation
Governments also stepped in to support the shift to digital transfers. In Fiji, Vodafone and the UN Pacific Financial Inclusion Program offered free remittances on the M-PAiSA platform for two months, helping families affected by the pandemic and Tropical Cyclone Harold.
Regulators in several countries relaxed Know-Your-Customer requirements to make it easier for people to access financial services. In Guinea, mobile operators were authorized to open special entry-level accounts with simplified checks. In Ghana, existing mobile phone registration details could be used for low-value accounts. Many of these temporary measures have now become permanent, including Ghana’s flexible KYC policy.
Crypto as a new rail for remittances
Crypto is adding another layer of disruption. Stablecoins like USDT and USDC are being used in markets from Nigeria to Argentina to provide instant, low-cost transfers without banks. Some fintechs advertise: ‘Send dollars in stablecoin, cash out in pesos’.
Even incumbents are experimenting like MoneyGram with Stellar, PayPal with PYUSD, and Ripple offering full-stack solutions, stablecoin issuance, blockchain settlement, and cash-out.
However governments still remain cautious with most countries still favouring mobile money over crypto. El Salvador is the exception though. It made bitcoin legal in 2021 to reduce remittance costs.
Implications for businesses
For businesses, these shifts are significant because digital-first fintechs, embedded services, and stablecoins are creating new rails for remittances. Governments are experimenting with policies and regulations. Competition is driving costs down and expanding access.
Companies that adapt can gain a major advantage in emerging markets. Here’s how:
- Integrate remittance services into existing platforms: embed cross-border payments into apps or services your customers already use.
- Adopt digital-first payment rails: move away from costly correspondent banking and leverage mobile wallets, APIs, and fintech partnerships.
- Explore stablecoins or digital currencies: pilot low-cost, near-instant transfer solutions to reduce fees and settlement times.
- Simplify compliance processes: implement proactive KYC/AML strategies to meet regulatory requirements efficiently.
- Partner with local fintechs or mobile money providers: leverage established networks and customer bases to expand reach quickly.
So, what does all of this mean?
Well, we’ve seen fintechs embedding remittances into everyday apps. We’ve seen competition spike during the pandemic. Governments have adapted, relaxing KYC requirements and supporting digital transfers. Crypto and stablecoins are creating entirely new rails for instant, low-cost remittances, even as regulators cautiously explore their role.
For businesses, this is an opportunity. The rules are changing. The rails are evolving. Companies that act now can gain a real advantage in emerging markets.
So as we think about remittances, let’s think bigger. Let’s think about how technology, regulation, and innovation can work together to move money easier and in doing so, create a more connected and inclusive world.
The post How Fintechs are Transforming Remittances in Emerging Markets appeared first on The Fintech Times.
