Money sent through remittances or Dollars wrapped with love, as referred by economist Dilip Ratha, make up more than a quarter of national income in some poor countries. Sending money abroad is not that easy and can be a very stressful situation when our loved ones are not financially taken care of.
A recent study by CLOVR, surveyed 707 people who have sent money abroad to find out the ways used to transfer the funds including cryptos, the newest form of money. In addition, general information like who they are sending funds to as well as what the money is being used for, are mentioned in the research. Keep reading to find out all about it.
Which countries receive remittances from the U.S.?
According to the CLOVR survey, most remittances went to Mexico in 2017. A little over $30 billion was sent to Mexico whereas only a little over $6 billion combined went to Europe including Germany, Italy and France as can be seen from the figure shown below.
It is quite obvious that remittances are huge business since over $148 billion in total was sent abroad from the U.S. just in 2017 alone according to world bank data. Most of the funds are transferred into the Asia-Pacific region of the world as the rest top five countries are China, India, Philippines and Vietnam.
Who are the recipients and what are the reasons?
According to the CLOVR survey, most remittance recipients are usually family members, 76.8% to be exact. The single most intended purpose for sending funds is food related. This means that most people choose to either help or make sure that their friends and family members are well taken care of and have sufficient funds when it comes to food.
As can be seen from the figure below, savings comes just below the middle of the list and amounts for only 14.9% of all the transfers made. This means that most people send funds for general household items, housing, medical supplies and even clothing and education a lot more than they do for savings.
How much does it cost to send money?
Sending money abroad via regular methods costs quite a lot. Just for sending $500 the fees can be as high as $52.05 which is more than 10% of the actual amount for traditional transfers via a bank. Digital ways are cheaper and more preferable by people.
As explained by the study, 93.3% of the participants are satisfied with the online service whereas only 73.3% are satisfied with the traditional wire transfer as shown in the figure below. This shows that people started to shift towards the digital way of doing things instead of the traditional money and time-consuming ways.
Who uses Cryptocurrency to send money abroad?
Based on the results of the CLOVR study, the percentage of men who prefer cryptos to send money abroad is 18.9%, which is almost twice as much as the percentage of women who use cryptocurrency to transfer funds to friends and family.
This might be directly related to the fact that 12.1% of the male participants stated that are extremely familiar with cryptocurrencies whereas only 3.1% of the female participants stated the same. This can either be true simply because men are usually drawn to something new or just because men like to take more risks as explained by this study.
In general, 85.7% of the participants stated that they prefer using cryptos over traditional ways of sending funds abroad as shown in the figure below. This is quite a large percentage in favor of the newest form of moneyand proves that people are sick of the costly traditional ways and want a change in the way they send money abroad.
What holds people back from using Cryptocurrency?
The study showed that people do not use cryptos as much as they would like to simply because they do not know enough about the technology behind it, as 41.2% of the non-user participants stated. In addition, worry is the second most important factor keeping people back from using cryptocurrencies; the worry of not being able to buy the stuff they want, the worry about losing access to the cryptos as well as the worry of the crypto service getting hacked.
This is quite normal since people worry about things that they do not fully understand. As a result, getting people informed about cryptocurrency and the technology behind it will enable them to test the waters and understand how this new form of money works. Thus, make their lives easier.