What is Money Remittance?

Money remittance serves as a crucial lifeline, often forming the backbone of many developing economies.


Money remittances refer to the process of sending money from one location to another, usually across borders, using a variety of channels such as banks, fintech platforms, bank drafts, money transfer operators, etc.  

This service has become increasingly popular in today’s global economy, as people often need to send and receive money from different parts of the world for various purposes, such as supporting family members, paying for education or healthcare, or business transactions.

Money remittance serves as a crucial lifeline, often forming the backbone of many developing economies. It is a financial practice that is as ancient as civilization itself but has evolved significantly with the advent of new technologies. 

In this article, we’ll explore everything you need to know about money remittance, including the different types of remittance services available, the fees and charges associated with remittance, and the benefits and risks of using this service.

What is Money Remittance

Money remittance, also known as a remittance transfer, is a financial transaction where funds are moved from one individual or entity to another, typically across the border. According to the World Bank, remittances are funds transferred from migrants to their home country. They are the private savings of workers and families that are spent in the home country for food, clothing, healthcare, etc, which in turn drives the receiving country’s economy. 

Such transfers often occur when individuals, known as remitters, send a portion of their earnings to family members or loved ones in their home country. While this may seem like a simple process, it involves a complex network of financial institutions, including banks, money transfer operators (MTOs), and mobile money providers, among others. 

Money remittance is divided into two categories, namely:

  • Inward money remittance refers to the remittance that comes into a particular country or region from another country. This usually involves individuals or businesses transferring funds to recipients located in the destination country. For instance, receiving money in Nigeria, from the UK. Inward remittances play a crucial role in supporting economies by sending in foreign funds, which can be used for various purposes such as family support, investment, or savings.
  • Outward money remittance refers to the remittance that leaves a particular country to another country. Individuals or businesses use outward remittance services to transfer funds internationally for purposes such as foreign investments, business transactions, tuition payments, or personal support to family members abroad. For instance, sending money out of the UK to Nigeria. 

Both inward and outward money remittance services are essential for global economic interactions, enabling individuals and businesses to conduct financial transactions across international boundaries. These services contribute to the flow of funds, support families, and foster economic growth on a global scale.

Key Features of Money Remittance 

Sender and Receiver: The sender is the individual or entity who initiates the remittance transfer, and the receiver is the one who receives the funds.

Method of Transfer: Remittances can be sent through various methods such as bank transfers, online platforms, bank drafts, money order, or mobile money applications.

Service Providers: These are payment processors that facilitate the transfer of funds. They include banks, MTOs, or digital financial platforms.

Remittance Corridor: This term refers to the geographical path that a remittance follows from a sender to a receiver.

What Are Remittance Fees?

The fees associated with money remittance can vary widely depending on several factors, including the remittance service provider, the amount of money being sent, the destination country, the method of transfer (online, in-person, bank-to-bank, etc.), and the speed of delivery. Here are 9 common remittance fees you might encounter:

  1. Transfer Fees: These are the fees charged by the remittance service provider for the actual transfer of funds. Transfer fees can be a flat rate or a percentage of the amount being sent.
  2. Exchange Rate Margins: Some remittance providers often make money by offering exchange rates that are slightly lower than the real mid-market exchange rate. The difference between the exchange rate they offer and the actual exchange rate is called the “exchange rate margin,” and this can result in additional costs for the sender and the recipient.
  3. Receiving Fees: In some cases, the recipient might also have to pay a fee to receive the transferred funds. This fee could be charged by the receiving bank or pickup location.
  4. Service Fees: Some remittance providers may charge additional service fees for using their platform or for providing certain features, such as faster delivery options or customer support.
  5. Delivery Speed Fees: If you need the money to be delivered quickly, you might be charged an extra fee for expedited services.
  6. Payment Method Fees: Depending on how you fund the remittance (credit/debit card, bank transfer, cash), there might be additional fees associated with the chosen payment method.
  7. Cancellation or Modification Fees: If you need to cancel or modify a remittance transaction, there could be fees associated with making those changes.
  8. Conversion Fees: If the sender is sending money in a currency different from the destination currency, there might be currency conversion fees involved.
  9. Hidden Fees: Always be wary of hidden fees that might not be clearly stated upfront. It’s essential to carefully read the terms and conditions of the remittance service to understand all potential charges.

The best way to determine the exact fees associated with a particular money remittance is to visit the website of the remittance service provider you’re considering or contact their customer support. It’s also a good idea to compare fees across different providers to ensure you’re getting the best deal for your specific needs. Keep in mind that fees can change over time, so it’s essential to verify the most up-to-date information before making a decision.

The Impact of Money Remittance on the Global Economy

As the world becomes increasingly interconnected, the remittance industry has become an essential component of the global economy. The World Bank estimates that by the end of 2021, remittance flows to low and middle-income countries will reach $551 billion, highlighting the significant impact of this industry. 

In the grand scheme of things, money remittance plays a vital role in the economic stability of many countries, particularly those with a significant diaspora population. This section explores the various impacts of money remittance on the global economy. They Include:

1. Poverty Alleviation and Economic Development 

Remittances can contribute significantly to poverty reduction in recipient countries. These funds often go directly to the families of migrants, providing a lifeline for those living in economically disadvantaged situations.  In 2019, according to the World Bank, global remittances reached a staggering $554 billion, making them a critical lifeline for many developing countries. This income diversity can boost households’ consumption, enabling them to afford basic needs such as nutrition, education, and healthcare. 

2. Support for Small Businesses 

Remittances can also stimulate economic growth by providing capital for small businesses. Many recipients invest a portion of their remittances in starting or expanding small businesses, driving job creation and economic development in their local communities. In 2020, according to the World Bank, remittances to low and middle-income countries reached $540 billion, making them a critical source of external financing for these countries. By boosting small and medium enterprises (SMEs), remittances can facilitate economic diversification and resilience. 

3. Stabilizing Effect During Economic Shocks 

During economic downturns or crises, remittances often prove more stable than other forms of financial inflows. Migrants tend to send more money home to support their families when the economic situation in their home country worsens, providing a safety net during uncertain times. For instance, the COVID-19 pandemic had a profound impact on global remittances. Infact, the World Bank projected a decline of around 20% in 2020 due to the economic crisis induced by the pandemic. However, it’s interesting to note that despite such challenges, remittance flows remained more resilient than expected. This stabilizing effect can help recipient countries navigate periods of economic precarity and maintain social stability. 

4. Enhancing Financial Inclusion 

Finally, remittances can foster financial inclusion by introducing recipients to formal financial services. The requirement to use financial infrastructure to send or receive remittances can encourage unbanked or underbanked individuals to open bank accounts, leading to increased financial literacy and independence. 

While the significance of remittances in the global economy is undeniable, there are also some challenges with remittance services that need addressing, such as high transfer costs and regulatory issues. Nevertheless, the potential for remittances to continue driving economic growth and supporting global poverty reduction efforts is immense. 

Challenges Faced in Money Remittance

Remittance services, while vital for many individuals globally, face numerous challenges. These hurdles often impact the efficiency, cost, and overall experience of sending or receiving money. Let’s delve deeper into these challenges: 

1. High Transaction Costs 

Transferring money across borders can be expensive. The World Bank reports that the global average cost of sending $200 was 6.8% in the first quarter of 2020. It’s a significant amount considering that the United Nations’ Sustainable Development Goal (SDG) target is to reduce the cost to less than 3% by 2030.

2. Limited Access in Rural Areas 

In many parts of the world, especially in rural areas, access to remittance services can be limited. It becomes a challenge for individuals living in these areas to receive money sent from abroad. According to the World Bank, only 56% of rural adults worldwide have an account, making it harder for them to access formal remittance channels. 

3. Government Regulations

The remittance industry is heavily regulated, and providers need to comply with strict anti-money laundering (AML) and counter-financing of terrorism (CFT) regulations. These regulations, while necessary for security reasons, can hamper service delivery, especially for smaller and informal providers. 

4. Operational Inefficiencies 

Operational inefficiencies, such as outdated technology and manual processes, can slow down transactions and increase costs. This is particularly true in developing countries where technological infrastructure may not be as advanced. 

5. Fluctuating Exchange Rates 

Fluctuating exchange rates can affect the amount of money received. If the sender’s currency depreciates between the time of sending and the time of receipt, the recipient will receive less than intended. This uncertainty makes remittances a risky proposition for some people. 

Ultimately, addressing these challenges requires collaboration among governments, remittance service providers, and international organizations. The goal should always be to ensure that people can send and receive money quickly, safely, and at the lowest possible cost.

Types of Money Remittance Services

Money remittance services come in various forms, each with its distinctive features, benefits, and drawbacks. The type of service someone might choose greatly depends on factors like the urgency of the transfer, the destination country, and the amount to be transferred. Let’s delve into the different types of money remittance services available. 

Bank Transfers 

Bank transfers are the most traditional form of money remittance. They involve the transfer of funds from one bank account to another, either within the same bank or across different banks. This method is particularly favorable for large transactions due to its perceived security.  


  • Security: Bank transfers are generally secure as they involve established financial institutions with robust security measures.
  • Record Keeping: Bank transfers provide clear records of transactions, which can be useful for future reference or disputes.
  • Direct Account-to-Account: Bank transfers directly move funds between bank accounts, reducing the need for intermediaries.


  • Processing Time: Bank transfers can take time, especially for international transfers, due to verification processes and correspondent banking.
  • Fees: Some banks charge fees for both incoming and outgoing transfers, particularly for cross-border transactions.
  • Complexity: International bank transfers may involve intermediary banks and currency conversion, leading to potential complications and additional costs.

Fintech Solutions

In the age of digital technology, online money transfers have become increasingly popular. These services, provided by companies like YoguPay, PayPal, TransferWise, and Western Union, allow individuals to send money across borders swiftly and at relatively lower costs. The convenience of being able to send money anywhere at any time is a big attraction for many people. Still, it’s essential to be aware that these services also come with potential risks, such as hacking and fraud. 


  • Convenience: Online money transfers can be initiated from the comfort of your home, office, or anywhere with an internet connection.
  • Speed: Many online transfers are processed quickly, often within minutes, especially for same-bank or same-provider transfers.
  • Accessibility: Online platforms are available 24/7, allowing for transfers at any time, including weekends and holidays.
  • International Transfers: Online services often provide international transfer options with competitive exchange rates and lower fees compared to traditional methods.


  • Fees: While some online platforms offer competitive fees, others may charge higher fees, particularly for expedited transfers.
  • Technical Issues: Connectivity problems, server outages, or technical glitches can disrupt online transfers.
  • Security Concerns: Online transactions can be vulnerable to cyber threats, so using secure and reputable platforms is essential.

Mobile Money Transfers 

Mobile money transfers are a relatively new type of remittance service that facilitates the transfer of money through mobile devices. This form of remittance is especially prevalent in regions where banking infrastructure is less developed but mobile phone usage is high. Despite its convenience, this method does come with limitations, such as lower transaction limits and potential security vulnerabilities. 


  • Accessibility: Mobile money transfers are widely accessible, even in remote areas where traditional banking services might be limited.
  • Convenience: Users can initiate transfers, pay bills, and manage finances directly from their mobile devices, reducing the need to visit physical locations.
  • Speed: Transactions are often processed quickly, allowing for near-instant transfer of funds to recipients.
  • Financial Inclusion: Mobile money services contribute to financial inclusion by providing access to banking services for individuals who might not have traditional bank accounts.
  • Micro transactions: Mobile money platforms enable small transactions, making them suitable for micro businesses, informal economies, and day-to-day purchases.
  • Integration with Other Services: Many mobile money platforms offer additional services such as mobile banking, savings accounts, and mobile payments.


  • Limited to Mobile Devices: Access to mobile money services requires a compatible mobile device and network coverage, which might not be available to everyone.
  • Dependency on Technology: Technical issues, network outages, or device malfunctions can disrupt transactions.
  • Fraud and Security: Mobile money transfers can be susceptible to fraud, phishing attacks, and unauthorized access if security measures are not properly implemented.
  • Fees: Mobile money services often come with fees, and these fees can vary depending on the provider and the specific transaction.
  • Cash-In and Cash-Out Challenges: Converting mobile money into physical cash (cash-out) and loading funds into the mobile account (cash-in) might involve additional steps and fees.

Money Transfer Agents 

Money transfer agents, such as MoneyGram or Ria, offer walk-in services where individuals can send or receive money. This type of service is especially useful for those who don’t have access to banking services or prefer handling their transactions in person. Fees and transfer times can vary significantly, so it’s important to shop around for the best deal. 


  • Accessibility: Money transfer agents, such as Western Union or MoneyGram, have a widespread presence, making them easily accessible.
  • Speed: Many money transfer agents offer fast cash pickup options, especially for urgent transfers.
  • Cash Options: Recipients who don’t have bank accounts can receive funds in cash from local agent locations.


  • Fees: Money transfer agents often charge higher fees compared to other methods, especially for urgent transfers.
  • Exchange Rates: The exchange rates offered by money transfer agents might not be as favorable as those offered by banks or online platforms.
  • Limited Control: Using agents might provide limited control over the transfer process, and recipient choices might be limited depending on local availability.

Money Order

A money order is a payment method that allows individuals to send a specific amount of money to another person or entity, often across long distances. It is a prepaid and pre-printed document issued by a financial institution or postal service. The sender purchases the money order for a designated amount and names the recipient. Money orders are a secure way to transfer funds as they are typically backed by the issuing institution. Recipients can then deposit or cash the money order at their local bank or post office.


  • Security: Money orders are secure and reliable because they are prepaid and issued by a reputable institution.
  • No Bank Account Needed: Both the sender and recipient don’t necessarily need bank accounts to use money orders.
  • Widely Accepted: Money orders are generally accepted by banks, post offices, and other financial institutions, making them accessible to many.


  • Limited Amounts: Money orders often have limits on the maximum amount that can be sent, which might not suit larger transactions.
  • Fees: There are fees associated with purchasing money orders, and these fees can add up, especially for multiple transactions.
  • Processing Time: Money orders can take time to be delivered and processed, especially if they are sent through mail.

Bank Draft

A bank draft, also known as a cashier’s check or banker’s draft, is a payment instrument issued by a bank on behalf of a customer. It guarantees the payment to the recipient, as the funds are drawn directly from the sender’s account. Bank drafts are often used for larger transactions or international payments, as they provide a higher level of security compared to personal checks. They are commonly employed for making payments when a certified form of payment is required.


  • High Security: Bank drafts are considered very secure because they are issued directly by a bank and are backed by the bank’s funds.
  • No Account Required: Both the sender and recipient don’t need to have bank accounts; the recipient can deposit the draft into their bank account.
  • International Use: Bank drafts are commonly used for international payments, providing a reliable way to send funds across borders.


  • Fees: Banks often charge fees for issuing bank drafts, which can make them more expensive compared to other methods.
  • Processing Time: Bank drafts might take time to be issued and delivered, especially for international transactions.
  • Replacement Challenges: If a bank draft is lost or stolen, the process of getting a replacement can be time-consuming and complex.

Card Payment

Card payments involve using credit or debit cards to transfer funds electronically. Debit cards deduct the payment amount directly from the cardholder’s bank account, while credit cards provide a line of credit that needs to be paid back. Card payments can be made in person at a point of sale terminal, online through e-commerce platforms, or over the phone. They are widely used for both domestic and international transactions due to their convenience and immediate processing.


  • Convenience: Card payments are quick and convenient, especially for online and in-person transactions.
  • Immediate Processing: Transactions are usually processed in real-time, allowing for instant availability of funds to the recipient.
  • Wide Acceptance: Credit and debit cards are widely accepted globally, making them suitable for various transactions.


  • Fees: Card transactions can involve various fees, including foreign transaction fees for international payments.
  • Security Concerns: While secure, card payments can be susceptible to fraud and unauthorized use if card information is compromised.
  • Dependence on Technology: Card payments require reliable technological infrastructure, which might not be available in all locations.

Choosing The Right Money Remittance Method For Your Cross-Border Transfers

There’s no one-size-fits-all approach to money remittance, but understanding the nuances of the various methods available can help you make an informed decision. Ultimately, the choice of remittance method should be guided by your individual circumstances, including the urgency of the transfer, the amount to be sent, the recipient’s preferences, and the costs involved.

For individuals and businesses looking to send remittances across Africa, Yogupay is your go-to choice for seamless money remittances to Ghana, Nigeria, Malawi, South Africa, Kenya, Zambia, Cameroon, and beyond. 

Yogupay understands the significance of every hard-earned cent. That’s why we offer competitive fees and provide full transparency on charges and exchange rates upfront. No hidden surprises – just straightforward and fair pricing, ensuring that your funds reach their destination quickly and at the utmost value. 

With Yogupay, you can trust that your funds are in safe hands, allowing you to focus on what truly matters. The platform also offers a user friendly app to enable you to send money on the go. Transact with YoguPay today and say goodbye to delayed transactions, exorbitant fees, long paperworks, and hidden fees. 

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