In an interconnected world where people constantly migrate searching for better opportunities, remittances have become a vital component of the global economy. These financial flows, often sent by expats to their home countries, contribute significantly to the socio-economic development of nations and support the livelihoods of millions of individuals and families worldwide. With the release of the latest World Bank report on remittances, we delve into the most significant insights on remittances around the world and in Lebanon.
The global average and the progress towards UN Sustainable Development Goals
The UN Sustainable Development Goals (SDGs) provide a comprehensive framework for global action and collaboration towards achieving a sustainable and equitable future. The SDGs have set a target of 3% for the Global Average to be reached by 2030. According to the World Bank Report, the Global Average cost for sending $200 slightly decreased from Q3 2022 (6.30%) to Q4 2022 (6.24%), keeping it at 3.24 percentage points above the SDG objective. Notably, the report highlights that the global average for digital remittances was recorded at 4.71%, accounting for 31% of all services RPW collected in Q4 2022. In contrast, the global average for non-digital remittances was higher at 6.91%. Moreover, the Global Average cost for sending $500 in Q4 2022 was 4.37%.
International MTO Index
The International MTO Index for the cost of sending $200 increased to 6.34% in Q4 2022 from 5.93% in Q3 2022. However, the digital-only MTO Index decreased to 4.06% in Q4 2022 from 4.38% in the previous quarter. It’s worth noting that the digital-only MTO Index has consistently remained below both the Global Average and the International MTO Index since Q1 2011.
The International MTO Index for the cost of sending $500 also recorded a moderate increase to 4.84% in Q4 2022 from 4.52% in the previous quarter. However, over the preceding 5-year period (Q4 2017 – Q4 2022), the total cost of sending $500 has decreased by 1.0 percentage point, indicating a downward trend.
Cash vs. Digital, which is cheaper?
The report compares the average cost of remittances by region between two main factors: digital and non-digital, while considering the division of costs between fees and Fx margin. The difference in cost between digital and non-digital services is significant in most regions, with non-digitally services consistently being higher regardless of the region. For example, in the MENA area, the cost of sending $200 non-digitally is 6.64% (2.93% in FX and 3.71% in fees) compared to 4.39% digitally (2.5% in FX and 1.89% in fees). The report also highlights that fees account for the major portion of the costs for remittance services.
Where does sending money to Lebanon stand?
According to this report, here’s the cost of sending $200 to Lebanon from 8 main countries. This data does not take into account sending money to Lebanon to Purpl:
Purpl: a game-changer digital remittance service in Lebanon
At Purpl, we understand the significance of affordable remittance services and have positioned ourselves as a digital player that prioritizes cost savings for our users. Compared to traditional channels, such as banks and money transfer agents, Purpl offers a compelling solution that can help you save significant amounts of money on your transactions to Lebanon. While the fees associated with traditional methods tend to be high, digital players like Paysend and Remitly have emerged as game-changers in the remittance industry, providing more affordable options. Purpl stands proudly alongside these industry leaders, offering a seamless and cost-effective way to receive money sent by your loved ones to Lebanon.
By leveraging our aggregator model, Purpl reduces overhead costs traditionally associated with money transfers. This allows us to pass on the savings to our users in the form of lower fees for the sender and zero fees for the beneficiary.
In conclusion, the latest World Bank report on remittances underscores the crucial role these financial flows play in global economies. The findings highlight the growing significance of digital platforms, which offer cost-effective solutions and contribute to the affordability and accessibility of remittance services. By embracing digital innovations, we can foster an inclusive ecosystem that maximizes the positive impact of remittances on individuals, families, and economies worldwide. In a world where every dollar counts, choosing Purpl for your money transfers to Lebanon means you can save significantly on fees while benefiting from the convenience of digital transactions.
Written by: Mayssa Abillama
