Migrant Money: Financial Infrastructures for Remittances

Every year, millions of migrants send money to family and friends in their home countries. By 2022, these remittances have reached more than $647 billion - three times the amount of official development assistance. To send money, migrants use either informal channels or channels provided by private companies, such as banks and money transfer companies, which charge high fees or require long waiting times. Remittances are also often considered risky or suspicious by countries and companies because of the lack of traceability of transaction channels, or because migrants themselves and their money transactions are perceived as suspicious.

Digital technologies promise to make international payments, including remittances, more convenient, cheaper and faster through borderless communication channels. Although fees for digital transaction services are now cheaper than those for cash, the extent to which digital services actually lead to greater inclusion and reduce social inequalities in remittances is questionable. Due to the concentration of power and the lack of a global payment infrastructure, remittances remain costly, opaque and slow. To understand remittances, I argue that cross-border monetary transactions involve inequalities that are more akin to the mobility of people or goods than to the transfer of communication data.

Using annual reports and qualitative interviews with companies—money transfer operators such as Western Union and Money Gram, FinTechs, banks and remittance experts, as well as remittance senders and receivers—the suggested paper pursues two main objectives: First, to provide an overview of the technical and (geo)political difficulties and barriers that can arise in the digital transfer of remittances. Second, to identify which challenges related to remittances can be addressed by technological/digital solutions, private companies or by state and supranational actors.