Following two consecutive years of decline, remittances, or cross-border peer-to-peer (P2P) money transfers, hit a record high of $613 billion globally in 2017. For 2018 (the exact numbers aren’t out yet), remittances were expected to grow to $642 billion, a 4.6 percent increase compared to the previous year.

The stats were outlined in a World Bank Migration and Development Brief. The Bank estimates that officially recorded remittances to low- and middle-income countries reached $466 billion in 2017, an increase of 8.5 percent over $429 billion in 2016. Global remittances, which include flows to high-income countries, grew 7 percent to $613 billion in 2017, from $573 billion in 2016. The stronger than expected recovery in remittances was driven by growth in Europe, the Russian Federation, and the United States. Remittance inflows improved in all regions and the top remittance recipients were India with $69 billion, China ($64 billion), Philippines ($33 billion), Mexico ($31 billion), Nigeria ($22 billion), and Egypt ($20 billion).

The global average cost of sending $200

In the first quarter of 2018, the global average cost of sending $200 was 7.1 percent, more than twice as high as the Sustainable Development Goal target of 3 percent. Sub-Saharan Africa remains the most expensive place to send money to, where the average cost is 9.4 percent. Major barriers to reducing remittance costs are de-risking by banks and exclusive partnerships between national post office systems and money transfer operators. According to industry experts, these factors constrain the introduction of more efficient technologies such as Internet and smartphone apps and the use of blockchain in remittance services.

In 2018, remittances to East Asia and the Pacific region were expected to grow 3.8 percent to $135 billion. For Europe and Central Asia, the forecast was a 6 percent growth to $51 billion. Backed by improvement in the U.S. labor market and higher growth prospects for Italy and Spain, remittances to Latin America and the Caribbean were expected to grow 4.3 percent to $83 billion last year. A moderate growth of 4.4 percent to $56 billion was expected for Middle East and North Africa, while the forecast for South Asia was a 2.5 percent increase to $120 billion. When it comes to remittances in Sub-Saharan Africa, last year they were forecasted to grow 7 percent and reach $41 billion.

Factors that will fuel digital growth

“While remittances are growing, countries, institutions, and development agencies must continue to chip away at high costs of remitting so that families receive more of the money. Eliminating exclusivity contracts to improve market competition and introducing more efficient technologies are high-priority issues,” said Dilip Ratha, lead author of the Brief and head of KNOMAD.

The increased smartphone penetration, greater demand for digital transactions, and an overall need for faster cross-border transfers are expected to fuel digital growth globally. With the shift to digital comes an audience of younger, digital-savvy customers using remittances – a segment that companies are looking to target. As a result, the global remittance industry is becoming increasingly competitive for firms to navigate. And in order to win, companies will need to prioritize the four areas consumers value most in remittances: cost, convenience, speed, and safety.