Remittances are one of the most tangible contributions of migrants to their countries of origin and represent a growing financial flow for developing countries. Over the past few years, remittances have emerged as a key item on the global development agenda. Remittances are cross-border, person-to-person payments of relatively low value. Remittances also act as an important source of foreign exchange, which can help countries support the balance of payments. Remittance in the UK is a relatively competitive market with reliable players and participation of both banks and money transfer operators. The regulatory environment for remittance services in the UK has been geared towards encouraging competition.
The report highlights the UK’s remittance market size, popular players in the market and latest trends in the UK remittance market and government regulations.
The UK is a major host of migrants, and London remains a global center for migration with approximately 3.8 million residents out of a total population of 8.65 million. The United Kingdom has an outflow of more than US$17 billion in remittances to developing countries. Remittance flows from the United Kingdom are mainly sent to former colonies throughout the world, including Bangladesh, India, Kenya, Nigeria, Pakistan and Sri Lanka, as well as to China, Lithuania, the Philippines and Poland.
Poland and Lithuania are the main corridors of the UK in Europe. Outside of Europe, Nigeria and India have the largest flows of remittance from the UK.
The UK remittance market is relatively competitive and offers consumers a range of services, from the traditional “cash-to-cash” products through agents, transfers to and from bank accounts, as well as online and mobile services. Banks are generally more expensive than money transfer operators (MTOs) if the transfer is based on SWIFT systems but cheaper when transfers originate from migrant country banks or are made between banks belonging to the same group.
TransferWise, WorldRemit, Azimo are some of the popular players in the UK remittance market. Western Union, a leading cross-border money transfer company with a ~15% worldwide market share, is being challenged by multiple well-capitalized upstart companies in the UK. TransferWise offers the true mid-market exchange rate while WorldRemit is giving tough competition to the Western Unions and MoneyGrams of the world with a commission-beating online and mobile remittance services. Azimo is a mobile money transfer startup based out of London. It provides a low-cost, fast and safe way to send money around the world.
Electronic payment products are increasingly replacing cash in domestic transactions. These remittance products are based on contracts between international money transfer operators (MTOs) and payment service providers.
The cost of money transfer from the United Kingdom is slightly higher than the average for Europe. A reduction to 5% would save migrants huge transfer costs. The regulatory frameworks are designed to reduce limitations, promoting diversity in the marketplace, providing incentives for banking institutions to offer low-cost transfers and nurturing the positive impact of new technologies.
The conventional modes of money transfer will continue to enjoy a broad customer base, but there is a huge opportunity for money transfers in the digital space as consumers want a more convenient option for sending money. The modern customer is busy and may not have the time to visit a physical location to send or receive money.
- Overview of the UK’s Remittance Market
- Market Size of the UK Remittance Space
- Key Market Players in the UK Remittance Space
- Latest Technology Trends in the UK’s Remittance Market