Global remittances make up a significant portion of cross-border money flows. Globally, nearly 25 countries rely on remittances for over 10% of their gross domestic product (GDP). Billions in international money transfers flow through remittance systems. These systems can be fast, fair, and transparent—or they can be slow, expensive, and complicated.

Below, you’ll learn how global remittance works, the challenges that keep costs high, and the technology and infrastructure that can improve international payments.

What’s in this article?

• What are global remittances?
  
• How do traditional remittance flows operate?
  
• What challenges reduce remittance efficiency?
  
• What technologies are reshaping cross-border payments?
  
• How does remittance activity affect households?
  
• How can businesses improve remittance services?
  
• How Stripe Payments can help
  

What are global remittances?

Global remittances are the steady flow of money sent across borders, typically by those working outside of their home country. In 2024, these flows reached an estimated $905 billion worldwide, of which $685 billion went to low- and middle-income countries.

What sets remittances apart from other forms of global capital is their stability. When countries face downturns, conflict, or natural disasters, remittances typically rise. This consistency has helped many communities stay afloat when other funding suddenly stalls or is depleted.

How do traditional remittance flows operate?

Traditional remittance systems were designed for a slower, more manual financial environment. They are built around cash, physical agents, and long chains of intermediaries.

Here’s what a traditional remittance flow looks like:

• Sender visits an agent or bank: The sender pays with cash or initiates a transfer, completes paperwork, and pays fees and foreign exchange (FX) margins. Manual checks and branch hours might slow the process.

• Funds move through correspondent banks: Money doesn’t travel directly. Instead, the sender’s institution instructs partners abroad to pay out the equivalent amount. These obligations get reconciled later, often through several intermediaries.

• Each intermediary adds cost and delay: Every bank or partner takes a portion of the funds or imposes its own processing rules.

• Tracking and transparency are limited: Senders receive a reference number, but they do not get insight into where the money is or when the recipient will receive it.

What challenges reduce remittance efficiency?

Despite the large scale of global remittances, users can still face familiar hurdles. If you’re interested in adopting modern approaches to cross-border payments for your business, it’s worth first understanding the challenges.

Here’s where the system can slow down.

High costs

The United Nations has set a target of reducing average remittance transaction costs to less than 3% globally. But in sub-Saharan Africa, for example, fees regularly exceed 7%.

Slow movement

A single transfer can pass through multiple institutions that operate on limited hours or batch-based systems. Weekends and holidays can further delay settlement.

Limited access for recipients

Some recipients depend on cash pickup because they lack bank accounts or digital wallets. It can mean traveling to an agent, waiting in queues, and experiencing uncertainty about cash availability.

Regulatory friction

Compliance can vary across jurisdictions. Screening, reporting, and identity verification raise provider costs. And global banks often protect against presumed risk by choosing not to operate in smaller corridors, which reduces competition.

Opaque pricing

Many senders still struggle to determine what they’re really paying. A transaction labeled “zero-fee” might hide weaker FX rates. Inconsistent information can make it difficult to compare options or know what the recipient will actually get.

Infrastructure barriers

Currency controls, incompatible payment systems, and uneven digital infrastructure can force transfers through slower, more expensive pathways that no provider can entirely avoid.

What technologies are reshaping cross-border payments?

Modern remittance technology is reshaping cross-border payments to make them faster, more transparent, and less dependent on legacy banking systems. Understanding the technologies involved can help you choose the right option for your business.

Here are some of the remittance technologies:

• Digital platforms: Mobile and web-based services reduce the need for agent visits and often deliver funds within minutes rather than days.

• Application programming interfaces (APIs) and cloud-based payout networks: API-based systems let businesses access global payment corridors without stitching together individual banking partnerships.

• Real-time payment systems: As instant domestic payment systems become interoperable across borders, multiday settlement is gradually being replaced by near-immediate transfers.

• Blockchain and stablecoin settlement: In expensive and slow corridors, stablecoins offer fast, low-cost transfers. Adoption still depends on reliable and regulated on- and off-ramps for recipients.

• AI-driven compliance: Automated identity checks and smarter transaction screening reduce manual reviews and false positives. Compliance checks can be cleared quickly, and transfers can move faster without sacrificing security.

How does remittance activity affect households?

Remittances are evident at the household level. The money might move across borders, but its impact is local.

Here’s how remittance reshapes daily life and long-term opportunities:

• Strengthens essential spending: Families use remittances for necessities such as food, rent, school fees, and healthcare, which can stabilize their budgets and improve living conditions.

• Acts as a buffer during crises: Because remittances tend to rise when local economies suffer, they serve as an informal safety net. They can often surpass formal aid after disasters or political upheaval.

• Improves long-term outcomes: Regular remittance income is linked to improved school attendance, reduced child mortality rates, and more substantial human capital over time.

• Provides emotional and social trade-offs: The stories behind transfers can often involve separation and sacrifice. Migrants can work demanding jobs and spend years away from home to support their households from a distance.

How can businesses improve remittance services?

Businesses that facilitate cross-border payments can reduce costs and wasted time. Adopting a modernized remittance service requires several steps.

Consider the following:

• Adopt modern payments infrastructure: API-based, cloud-native platforms shorten settlement chains and plug directly into local networks. Tools such as Stripe’s Global Payouts simplify access to more than 50 countries with 1 integration.

• Optimize routing and FX: Intelligent routing avoids unnecessary intermediaries, while bulk or negotiated FX rates reduce the funds that recipients lose.

• Improve transparency: Clear, up-front information on fees, exchange rates, and delivery times can help senders determine precisely what they’re paying for and enables them to choose providers with confidence.

• Expand digital access: Integrating with digital wallets, local banks, and debit or prepaid card solutions lets more recipients receive funds digitally instead of relying on cash pickup.

• Adopt compliance: Modern ID verification, account validation, and screening tools can help minimize false positives and reduce the burden for your business.

• Design for real user behavior: Simple interfaces, local language support, and predictable flows can keep users from returning to high-cost, in-person services. Features such as scheduled or recurring transfers can help senders manage obligations.

• Collaborate across the ecosystem: Partnering with regional payment networks or participating in interoperability pilots can accelerate innovation and expand corridor coverage without building everything in-house.

Como o Stripe Payments pode ajudar

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