Top Remittances Facts
- The highest remittance outflow countries in 2019 were United States USD 68 billion, United Arab Emirates USD 43 billion, and Saudi ArabiaUSD 35 billion (Statista).
- The global remittance market is to reach USD 685 billion in 2020 (AMR).
- In 2020, El Salvador received USD 5.936 billion of remittances, extending to 24.093% of their GDP (worldBank).
- India received USD 83.1 billion in 2020, and was the largest remittance-receiving country before China USD 59.5 billion, Mexico USD 42.9 billion, and the Philipines USD 34.9 billion (Statista)
- The global remittance market is estimated to reach USD 730 billion in 2021 (AMR).
- 70% of the global remittance market is expected to benefit personal use in 2021 (AMR).
- The global remittance market is projected to reach USD 930 billion by 2026, growing at a CARG of 3.9% (AMR).
- Approximately 70 countries rely on remittances for more than 4% of their GDP (ifad)
International money transfers are commonly referred to as “remittances.” Remittance is essentially the transfer of money sent from one party to another, often overseas.
‘Remittance’ comes from the word ‘remit’, which means ‘to send back’.
Remittances can be personal money transfers or business payments. The two main factors that are driving the increase in the remittance market are the increase in individuals living and working abroad and the increase in globally connected businesses.
As technology makes our world feel smaller, more people are taking advantage of the opportunity to work abroad. Sending remittances home to their families allows them to continue supporting their loved ones while they are away.
Along the same lines, the ability for international trade has increased due to technology and use of the Internet. This allows businesses to connect with customers, suppliers, and employees from around the world, resulting in increased business remittance payments.
Remittance Market Size Overview
Now we’ll take a look at the remittance market size based on a few different factors. We’ll share statistics about the channel (how remittances are sent), the application (what the remittances are used for), and the end-user (whether the remittances are for personal or business uses).
The global money transfer market size was valued at USD 683 billion in 2018 and is expected to grow at a compound annual growth rate of 3.9% from 2021 to 2026. The global money transfer market size is expected to reach approximately USD 730 billion in 2021.
There are many factors affecting the growth of the global money transfer market such as the basic need for safe and secure international money transfers. It is estimated that by 2026 the global remittance market is going to reach an astonishing USD 930 billion.
The remittance market is expected to continue growing as the global market is fueled by decreased costs, an increase in cross-border transactions, and an increase in the availability of mobile-based payment channels.
A lack of awareness of digital remittance has slowed the growth of remittance to some extent. But the increased use of technology, the Internet, and the availability of mobile devices are expected to continue driving the increase of the remittance industry.
Here’s a table of remittance growth since 2018 and the projected market growth to 2026:
||Market size in USD billions
Remittance Market Size by Channel
This increase in international transactions and digital-based payments strongly increases the adoption of new players that are willing to join the global remittance market.
The main players in the global remittance market are:
- Money Transfer Operators
Banks take the highest share of the global remittance market, with 51% of funds expected to be channeled by banks in 2021. Money Transfer Operators are expected to channel 26% of remittances in 2021, while others make up the remaining 23%.
The percentages are expected to change slightly by 2026, with banks’ percentages reducing to 48%, Money Transfer Operators increasing to 28%, and others increasing to 24%.
Check out the table below, we broke down the main global remittance channels from 2018 – 2026:
||Money Transfer Operator (%)
The personal use of money transfers accounted for the majority of global revenue in 2020 according to PRNewswire. And with more people worldwide live outside of their birth countries than ever before, it is assumed that a large amount of money will continue to be remitted.
Remittance Market Size by End User
The end-users, that is, the person or entity who receives the remittances, are grouped into two categories. The two main end-users are:
The majority of remittances go towards personal use. 70% of the global remittance market is expected to benefit personal use in 2021.
We organized the monetary breakdown of global remittance by end-user from 2018 – 2026:
||Personal Use (USD billions)
||Businesses (USD billions)
Source: AMR, IMF, GrandViewResearch.
Workers and Migrant Remittance
Workers and migrant remittances are money transfers made by migrants residing in a foreign country to their families in their home countries. These are also known as cross-border money transfers.
According to the World Bank, as of 2019, there were 7.5 billion people in the world. It is estimated that one in nine people are supported by remittances sent home by migrant workers.
Migrant workers typically send home only 15% of what they earn. On average, this amounts to $200 to $300 every one to two months. The remaining 85% of earnings stay in the country and are spent, saved, or invested locally.
There are 195 countries in the world. Approximately 70 of these countries rely on remittances for more than 4% of their GDP. These remittances are an imperative source of social and economic growth.
More than 50% of remittance transfers are sent to rural areas. Three-quarters of the world’s food-insecure individuals live in these areas, and the flows of these remittances help them improve their lives and increase resilience.
The accumulated remittances to these areas is projected to reach USD $1 trillion over the next five years!
Source: EuroStat, UnitedNations, IFAD.
Highest Remittance-Receiving Countries
The top ten remittance-receiving countries are listed below. Surprisingly, there is a mix of both developed and emerging markets, showcasing the wide variety of countries where remittances are received. While the highest receiving country was India with USD $83.1 billion received in remittances, France and Germany are also listed in the top ten remittance-receiving countries.
Top 10 Remittance-Receiving Countries in 2020:
- India – USD 83.1 billion
- China – USD 59.5 billion
- Mexico – USD 42.9 billion
- Philippines – USD 34.9 billion
- Egypt USD – 29.6 billion
- Pakistan – USD 26.1 billion
- France – USD 24.5 billion
- Bangladesh – USD 21.8 billion
- Germany – USD 17.9 billion
- Nigeria – USD 17.2 billion
Source: Statisitica, Knomad.
Highest Remittance-Outflow Countries
The top 3 remittance outflow countries in 2019 were United States USD 68 billion, United Arab Emirates USD 43 billion, and Saudi Arabia USD 35 billion.
The United States, United Arab Emirates, Saudi Arabia, and Switzerland have been the top remittance sources since before 2015.
The United States has been the number one sender of remittances since 1995, and USD $71.6 billion in remittances was sent from the United States in 2019.
United Arab Emirates has been in the second position since 2015 and sent USD 45 billion in remittances in 2019. Saudia Arabia sent USD 31.2 billion in remittances in 2019.
Below is a list of the highest remittance-outflow countries in 2019:
- United States – USD 71.6 billion
- United Arab Emirates – USD 45 billion
- Saudi Arabia – USD 31.2 billion
- Switzerland – USD 28.2 billion
- Germany – USD 24.1 billion
- Russia – USD 22.2 billion
- China – USD 15.1 billion
- France – USD 15.1 billion
- Kuwait – USD 14.8 billion
- Netherlands – USD 14.5 billion
Source: WorldBank, WorldMigrationReport.
Mexico received USD 42.88 billion in personal remittances in 2020. This amounted to 3.985% of their GDP. Personal remittances received in Mexico have been increasing each year since 2013 after slight dips in 2012 and 2013.
In 2019, the total personal remittances were USD 39.022 billion, or 3.075% of their GDP. The impact of received remittances on GDP increased sharply from 2019 to 2020, with a 0.91% net increase of GDP.
The second highest change over the past ten years occurred between 2015 and 2016, when the GDP attributable to personal remittances increased from 2.239% to 2.66%, a net increase of 0.421%.
Since 2010, personal remittances received in Mexico have nearly doubled, from USD 22.08 billion in 2010 to USD 42.88 billion in 2020. Over the same time period, the percentage of GDP attributable to personal remittances increased from 2.087% to 3.985%.
This data is reflective of the increasing importance of remittance receipts on Mexico’s GDP.
The vast majority of remittances (95.6%) received in Mexico come from the United States.
Personal remittances paid from Mexico have decreased over the past three years, from USD 999,848,929 in 2018 to USD 981,248,256 in 2019 and finally down to USD 898,705,958 in 2020.
Mexico is the third highest recipient of personal remittances in the world. The increase in personal remittances has, for the most part, remained somewhat steady over the past decade.
Personal remittances received in India have increased from USD 53.48 billion in 2010 to USD 83.149 billion in 2020.
In 2020, personal remittances accounted for 3.17% of India’s GDP. The inward remittance market is estimated to grow at a 5.8% CAGR (compound annual growth rate) and is expected to reach USD 123.88 billion by 2026.
Personal remittances in India are primarily received from the United Arab Emirates, Saudi Arabia, and the United States. Technology providers have worked to make remittances more available to those who don’t have access to a bank account, and now Indian recipients can have stored funds transferred to their email addresses.
In 2014 only 53% of Indians had a bank account; by 2018 this percentage skyrocketed to 80%. This rapid growth, in addition to increased adoption of technology, will encourage the remittance market in India to keep growing.
The growth of remittances received in India over the past decade has been sporadic. Large jumps in 2011 and 2012 were followed by three years of nearly stagnant growth, followed by a sharp dip in 2016.
Since then, the upward trajectory has continued for the most part, although the remittances received in 2019 (USD 83.332 billion) were nearly equal to those received in 2020 (USD 83.149 billion).
Though the dollar value of personal remittances decreased from 2019 to 2020, the percentage of the GDP attributable to personal remittances increased from 2.903% in 2019 to 3.17% in 2020.
Remittances to India are taxed at 5% due to income tax returns often not being filed on remittance funds.
The average remittance increase in the Philippines from 2010-2020 was 4.93%. Rapid growth has increased the received remittances from USD 21.557 billion in 2010 to a peak of USD 35.167 billion in 2019, followed by a small dip to 34.913 billion in 2020. It is expected to grow to USD 58.824 billion by 2026, a growth rate of 7.2%.
The growth in overseas workers from the Philippines has contributed to the increase in remittances. Protecting overseas workers has become a top priority for the government, and policies enacted as a result have encouraged a continued increase in overseas workers.
The top countries sending remittances to the Philippines are Saudi Arabia, United Arab Emirates, and Malaysia.
Personal remittances received were responsible for 9.658% of the Phillippines’ GDP in 2020. Remittances have an enormous impact on the economic growth of this country, and this has been consistently true over the past decade.
The GDP attributable to personal remittances peaked at 10.345% in 2010, and the lowest GDP was 9.333% in 2019. Almost 97% of remittances are spent on essential items such as food. In 2019, USD 26.08 billion of remittances was spent on consumption, USD 4.447 billion on savings, and USD 5.522 billion on investments.
In the Philippines, remittance providers are regulated by the government. Besides banks, people can also use institutions such as pawnshops and money lenders to send and receive remittances.
El Salvador Remittance
The average remittance increase in El Salvador from 2010-2020 was 4.86%. Remittances to El Salvador have increased each year since 2010. In 2010 the total personal remittances were USD 3.472 billion; by 2020, this amount had increased to USD 5.936 billion.
The percentage of GDP attributable to personal remittances hovered between 18% and 19% between 2010 and 2016. The GDP increased to 20% in 2017, and by 2020 it had increased to an astonishing 24.093%.
The largest increase was between 2019 when the GDP from personal remittances equaled 21.048%, and 2020 when they equaled 24.093%. This was an increase of over 3% net GDP in a single year.
The second-largest increase was between 2016 (18.856%) and 2017 (20.002%), a net increase of 1.146% in GDP. These high rates underscore the importance of personal remittances on El Salvador’s economy and shows the increasing reliance upon remittances to support the economy.
The largest jump in the value of personal remittances received in El Salvador in a single year was from 2016 (USD 4.562 billion) to 2017 (USD 4.996 billion).
The increase was USD 0.434 billion, or 9.5%!
The average remittance increase in Vietnam from 2010-2020 was 8.86%. While personal remittances in 2010 were USD 8.26 billion, they had more than doubled to USD 17.2 billion by 2020.
Personal remittances have increased every year since 2010. The largest increase in a single year was from 2011 (USD 8.6 billion) to 2012 (USD 10 billion). Growth is projected to continue at a CAGR (compound annual growth rate) of 5.4% to USD 24.372 billion by 2026.
Emigration from Vietnam has continued to increase, with the majority of overseas workers residing in Taiwan, South Korea, Malaysia, and Japan. In 2018, the net migration rate declined by 1.06%, with 142,860 workers emigrating from the country.
Typical remittance channels in Vietnam include commercial banks, post, and economic institutions. The National Assembly and State Bank of Vietnam strictly regulates remittance flows for international money transfers.
All remittances made to Vietnam must be in Vietnam Dong, in accordance with governmental policies. The majority of the Vietnam population prefers to use cash rather than credit cards or electronic money.
The majority of remittances received in Vietnam are used for production (~70%), real estate (~20%), and family support (~10%).
The percent of GDP attributable to personal remittances since has ranged from a high of 7.125% in 2010 to a low of 6.343% in 2020. Remittances are an important part of Vietnam’s economic growth.
The average remittance increase year over year in China from 2010-2020 was 3.93%. While personal remittances increased overall during this period, there were some startling changes which we will discuss below.
First, personal remittances increased rapidly from 2013, when the total personal remittances equaled USD 17.79 billion, to 2014, when total personal remittances equaled USD 29.911 billion. This was an increase of 68% in a single year.
Between 2015 and 2016, personal remittances plummeted from USD 33.105 billion in 2015 to USD 26.883 billion in 2016, a decrease of nearly 19%. Then again between 2017 and 2018, personal remittances reduced from USD 28.676 billion to USD 24.306 billion (a decrease of 15%).
Then again China remittances took another nosedive from 2018 to 2019, when personal remittances were USD 18.294 billion (a decrease of nearly 25%).
Though China was the second-highest recipient of total remittances in 2019, personal remittances make up only a small portion of their GDP. In 2020, personal remittances represented only 0.128% of their GDP.
Since 2010, remittances have remained under 0.3% of China’s GDP, despite the drastic changes in the USD value of remittances.
The USD 33.105 billion in personal remittances received in China in 2015 accounted for only 0.299% of their GDP, the highest GDP percentage since 2010. In 2019 and 2020, the GDP attributable to personal remittances was only 0.128%, the lowest over the ten-year period.
United States Remittance
The average remittance increase in the United States from 2010-2020 was 0.69%. Personal remittances to the United States have remained fairly stable over the past decade.
In 2010, personal remittances totaled USD 5.93 billion. This was followed by three years of increases until 2013 when personal remittances totaled USD 6.613 billion. Following this, there were decreases in 2014 and 2016, and increases in 2015 and 2017, but the totals remained bracketed by the 2012 and 2013 numbers.
This back-and-forth trend ended in 2018 when there was a sharp increase from the 2017 personal remittance total of USD 6.347 billion to USD 6.651 billion. This increase amounted to a modest 4.8%, but it was a sizable increase in comparison to other years.
Personal remittances continued their increase in 2019 to an all-time high of USD 6.724 billion before plunging to an eight-year low of USD 6.166 billion in 2020. This drop of 8.2% was the largest change over this ten-year period. Only 2010 (USD 5.93 billion in personal remittances) and 2011 (USD 6.104 billion in personal remittances) reflected lower personal remittance values than 2020.
Over this same period of time, the percentage of GDP attributable to personal remittances in the United States has remained nearly flat. GDP from personal remittances represented a high of 0.04% in 2010 to a low of 0.029% in 2020.
Depending on your nationality, residency, the tax laws of the country you are in, the reason you are receiving international payments, and the sum you are receiving will determine if you are required to pay taxes on your money transfer.
Do I have to Pay Tax on Money Transferred from Overseas?
The straightforward answer is yes, but honestly, it depends.
If you’re a US citizen then you absolutely need to pay tax to the IRS, but only if you pass the IRS limit. If you’re receiving a large transfer from overseas, you should expect to pay taxes especially if the funds are for business purposes.
Generally, you don’t need to pay taxes on gifts of foreign money. However, you still need to report it to the IRS!
And even though you might not have to pay taxes, remember that your funds might still be subject to other fees such as transfer fees.
What is IRS Limit with International Wire Transfers?
The IRS limit with international wire transfers is USD 10,000.
Banks and money transfer operators are required to report international wire transfers that exceed USD 10,000. This requirement is due to the Bank Secrecy Act, and the limit is in place to help avoid money laundering, tax evasion, and other fraudulent activities. Even if you make several smaller transfers that total more than USD 10,000, your account may still be flagged and the amounts reported.
By law, banks must monitor for fraudulent activity and report any suspicious activity. Banks are required to gather information about the person sending and receiving the money as well. You may need information such as the recipient’s name and address, information about their bank and bank account, and the reason for the transfer.
Why do Bank Transfers Take So Long?
Bank transfers typically take between one and five business days. Bank transfers use a network of banks to process payments. Transfers between different accounts at the same bank may happen instantly or only take a day because the money doesn’t have to move to a different institution.
However, transfers to other banks in the same country may take a few days, while transfers to other countries could take even longer because the funds have to make their way through the network of banks.