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Digital remittance in today’s changing world

Digital remittance in today’s changing world
Over the past few decades, technology has advanced at an unparalleled pace, transforming the way we live and work. With the introduction of digitalization, we have seen a significant shift toward a digital world which has brought an important influence on many areas of our lives. The rise of the internet has made it possible for people to connect with each other regardless of geographical boundaries. Moreover, technology has revolutionized the way we conduct business. The rise of e-commerce has made it possible for businesses to reach customers beyond their physical location. Unlike other business industries, it has brought a massive change to the remittance industry. It has transformed the way people send and receive money across borders. The impact of technology has made remittance faster, more secure, cheaper, and more accessible. Thus, it has made it easier for migrant workers to support their families back home.

With the latest digital technologies being introduced, people can send and receive money instantly. Traditional methods of sending money take several days to complete. Thus, it may cause inconvenience for the recipients who might need urgent funds.

In addition to this, the fees associated with sending and receiving money across borders through traditional methods are relatively high. Digital remittance has made it more accessible and affordable for people, as it can be accessed from anywhere, at any time, through mobile phones, computers, and other digital devices. Moreover, digital remittance has made it easier for people living in remote areas, where traditional brick-and-mortar banks or money transfer agents may not be available. Likewise, digital remittance uses the latest technology which has improved security and transparency making it difficult for fraudsters to carry out illegal activities. History of remittance in Nepal Remittance has become an essential source of income for many families in Nepal. According to World Bank reports, extreme poverty has decreased from almost 70 percent  to 25 percent in the last 15 years in Nepal as the country receives additional billions directly to Nepalese households through remittance. The history of remittance in Nepal dated back to the 1980s when people started to migrate to other countries in search of employment opportunities. The primary destinations for Nepali migrant workers were India and Tibet initially. Later, they started to migrate to other countries like the United States, Canada, the United Kingdom, and the Gulf countries. In the 1980s, the Nepali government began to recognize the importance of remittances and started to encourage the formalization of remittance transactions. The Nepal Rastra Bank established a mechanism for formalizing remittance transactions and created Foreign Employment Act in 1985, which regulated the process of foreign employment. Since then, remittance has become a significant contributor to Nepal’s economy. According to the report from the Ministry of Finance, remittance inflows to Nepal were around Rs 42.77bn in 2001, and by the fiscal year 2009/10, it has reached Rs 231.73bn. Despite the Covid-19 pandemic’s disruptions, Nepal received Rs 875bn in remittance inflows, in 2019/20, which accounted for approximately 24.3 percent of the country’s GDP. With an average of 2,315 daily labor permits, the Nepali migrant workers have sent Rs. 480.50bn in remittances in the first five months of the current fiscal year. Thus, remittance has significantly impacted the country’s economic growth. The necessity of digital remittance  In today’s globalized world, digital remittance has become a significant solution for migrant workers. As digital remittance is easily accessible, people can send and receive money from anywhere in the world eliminating the need for physical visits to banks or money transfer agents. Thus, it makes it easy for people living in remote areas where they need to travel miles to reach banks or money transfer agents. While using digital remittance, the receiver will get the money in real-time. It only takes a few minutes to send money through digital remittance, thus it is particularly useful for people who need funds immediately. Another crucial aspect of digital remittance is security.  As digital remittance platforms use encryption technology, it protects the transfer of funds, making it difficult for unauthorized individuals to access and steal money. Similarly, traditional money transfer methods often charge high fees for international money transfers making it costly for people to send and receive money. On other hand, digital remittance charges lower fees and offers a cost-effective and secure way to send money. Thus, digital remittance is very important in today’s digital world. The author is brand manager at eSewa Money Transfer