Remittances

In everyday usage, remittances usually mean money that people who have migrated send to relatives or communities in their places of origin. The International Organization for Migration also includes transfers in kind, such as goods. The term has a more specific meaning in economic statistics. For example, the World Bank's personal-remittances indicator combines personal transfers between resident and nonresident households with compensation earned by certain short-term or cross-border workers. Consequently, a balance-of-payments figure may not correspond exactly to the narrower idea of a migrant sending family support, and figures from different sources should be compared only after checking their definitions.

Transfers may pass through banks, money-transfer operators, post offices or mobile-money services. The options available, delivery time and ease of collection differ between countries and corridors. The total price is not always just the advertised fee: the exchange rate offered to the customer may also include a margin above the interbank rate. United Nations metadata for Sustainable Development Goal indicator 10.c.1 measures costs using the total price of sending the equivalent of 200 US dollars. Target 10.c calls for reducing the global average cost to below 3 per cent by 2030 and eliminating remittance corridors with costs above 5 per cent. These are policy targets, not a statement that the targets have already been met.

For receiving households, remittances are private income that may help meet everyday needs and provide support when circumstances are difficult. The International Fund for Agricultural Development highlights the importance of these transfers to rural families and explores how access to financial services can help recipients save, invest or support businesses. Such effects are not automatic: receiving money does not by itself guarantee access to credit or lasting economic gains, and opportunities vary among households and places. Remittances are therefore an important part of many families' finances, not a guaranteed path to wider development.

International remittances are made up of many transactions and travel through formal and informal channels, including transfers of goods. The World Bank and IOM note that differences in definitions and collection methods, as well as flows that are not recorded, limit the completeness of available statistics. Recorded totals can also change when people switch between informal and formal services, even if the amount sent has not changed by the same degree. Remittance data are thus useful for studying cross-border household finance and national economies, but they should be interpreted in light of what each measure includes and how it was compiled.