Remittances to low and middle-income countries reached a record high in 2021, forecasted to have increased to $589 billion or 7.3% more than in 2020. Remittance inflows to Sub-Saharan Africa returned to growth in 2021, increasing by 6.2% to $45 billion.
In Rwanda, the remittance inflows for 2021 were estimated to increase by $5 million to around $246 million following a 7.7% (or $20 million) drop in 2020. Electronic transactions increased 400% over the period, spurred by the limitation of movement directives and lockdowns.
With widespread efforts to increase Covid-19 vaccination rates and stabilize the global economy, all eyes are now on what 2022 will bring for millions of families dependent on remittances each year.
With these factors in mind, Carine Umurerwa, Country Manager, Rwanda at digital payments company WorldRemit, shares her predictions for market trends in 2022.
1. Remittance growth expected to continue
The World Bank projects a 2.6% growth in global remittances in 2022. This prediction holds true as the recovery work in Europe, the Americas, and Asia takes effect. The countries in these three regions, which make up the biggest source of remittances into the developing world, have been quick in their response to the pandemic by setting up unemployment support for the people on the furlough. Despite the circumstances, the diaspora showed resilience as many continued to send money to their families in Africa.
WorldRemit processed nearly 10 billion dollars in transactions in 2020. Given people’s increasing preference for digital tools and services to send money overseas, remittances will continue to grow steadily into 2022, perhaps at a slightly slower rate as economies around the world stabilize in the aftermath of the pandemic.
The shift towards digital, deeply accentuated by the pandemic, will also continue its course as a growing number of tech-savvy consumers opt for lower costs and greater convenience.
2. Mobile wallets surge in popularity
Mobile wallets, which allow users to store, send and receive money using their mobile phones, are expected to continue gaining popularity due to the greater flexibility and convenience they offer users. The pandemic has fueled the $2.4 trillion growth as the use of contactless mobile payments boomed in 2020.
The adoption of mobile wallets in Rwanda has been supercharged by a rising mobile penetration. The country boasts 10.6 million mobile connections, of which is more than 80% of its population.
As Rwanda is among the African countries increasingly drawn to innovation, more mobile-based transactions can be expected. WorldRemit cross-border transactions have been sustained during the Covid-19 period through our advanced mobile-to-mobile service, which allows for a safe and seamless transfer of funds to mobile wallets.
When it comes to remittances, in 2020, $12.7 billion in cross-border transactions worldwide were processed via mobile money. The security and simplicity of electronic payments make mobile money a popular alternative to bank accounts, in a country where 36% (2.6 million individuals) of adults are banked or are using banking services and an overwhelming majority is unbanked. Among many advantages are lower management costs, wide access- given the significant penetration of mobile services in Africa, and the construction of an ecosystem around mobile wallets allowing for direct purchases and the easy payment of services.
3. Safety comes first
Understanding that safety concerns surrounding money transfers and sharing personal information online, money transfer companies will continue to prioritize safety measures above all else.
On the sending side, more companies will integrate additional features that allow them to validate the identification of their customers from phone’s IP addresses to the validation of identity documents. On the receiving side, more deposits will be made directly to bank accounts or electronic wallets, as an increasing number of people will adopt it for its convenience.
In the case of WorldRemit, all connections through our website and mobile app are secure and encrypted end-to-end; we have built a sophisticated automated machine learning system for fraud detection but ultimately call on users to stay aware as well.
4. Speed is of the essence
While customers are used to waiting hours or even days for a bank wire transfer to arrive at its destination, the expectations for money transfer apps and platforms are much different. Due to new advancements in the digital landscape, users expect their money to be sent and received within minutes.
In order to deliver the best and quickest customer service, companies will continue to invest in enhancing their technology systems so that data exchange with financial institutions is more seamless and the flow of remittances is uninterrupted.
At WorldRemit, our technology
allows for 95% of transfers to be ready within minutes.
Money sending services that work with API technology, which generates the confirmation that the receiving account or wallet is ready to receive the money, will be able to ensure transfers in almost real-time. In addition, increased communication and tracking features will be integrated at a global scale for users’ peace of mind.
5. The simpler the better
There will be a strong tendency to decrease the number of steps for each money transfer, from downloading the application and creating the user profile to adding the beneficiary. The trend is towards more efficiency and effectiveness so that sending money becomes as easy as sending a text message and companies will focus on making things as simple as possible.
Digital remittances eliminate the need to go to a fixed point to do the operation, saving users time and money. And in these uncertain times of pandemic, senders and receivers are prioritizing safety and looking for a simple, straightforward solution to do their transactions.
Technology has gained a more prominent role in people’s lives and money transfers have not been the exception. A relatively new industry about ten years ago, digital money transfers/remittances are not only here to stay, but they are slowly becoming the method of choice for customers. They have proven that they are just as safe as a bank transfer, only much faster, affordable, and more convenient.
Carine Umurerwa, Country Manager, Rwanda at WorldRemit