The pandemic had a huge impact on the world, but it also had a huge impact on remittances. Keep reading to learn about how the pandemic affected remittances and how you can keep remittances flowing during the pandemic.
How Did the Pandemic Affect Remittances?
The pandemic caused a sharp decline in global remittances and secure payment to the middle-income and low-income countries. There was about a 20% projected slump in remittances for 2020, which is roughly $110 billion. It was especially troublesome for a lot of more vulnerable households.
Make Remittances an Essential Financial Service
Depending on the current laws in your country about the pandemic, you can try to make remittances an essential financial service. Some countries like the United Kingdom and Switzerland stated that money transfer agents were an essential financial service. That way, they could continue their operations during the pandemic and allow migrants to keep sending funds.
To make it an essential financial service, you would need the help of service providers, regulators, and policymakers. Additionally, you need to consider the health risks. Therefore, agent outlets should follow social distancing measures and hygienic protocol to avoid compromising the public’s health.
Get into Digital Solutions
Online payment services are more crucial in a pandemic; it allows people to safely send and receive money without worrying about their health. Therefore, getting a digital account, like a mobile wallet or setting up an electronic payment system, could be beneficial. Plus, digital payments can help you save cost and time while keeping everyone as safe as possible because it will rarely or never require in-person visits since they can send and receive money by using their phones or computers.
It is important to know your customer before you choose which online payment method you want to use. You need to figure out which options would be the most convenient for your market. For instance, offering credit card payment systems may be convenient if your target demographic is 30 years old and above. However, you may offer alternatives like Paypal if you have a younger demographic.
Create a Conducive Regulatory and Remittance Policy Environment
Remittance services can survive when the remittance costs are lowered, there is more use of digital solutions, improved formal channels for cross-border payments, and lower remittance costs. However, this will rely heavily on the government. The government ought to impose temporary waivers or tax breaks on their fees and operating expenses, and they should offer concessional credit lines.
Increase the Remittance Industry’s Market Competition
Opening partnerships between money transfer operators, banks, and national post offices can be very helpful. Having exclusive partnerships causes a de facto tax on the remittance recipients and senders and it stifles the market competition. Encouraging remittance technologies interoperability could also reduce costs and increase scale.
The pandemic has made it difficult for most industries to stay afloat, and the remittance industry is no exception It is crucial to keep remittances flowing for the livelihood of many people, especially during a time of crisis.