I see the growth of digital remittance to remain robust in the near future

London-based digital remittance player, WorldRemit, sees increased remittance flow to countries like India as global economies recover from the Covid-19 pandemic. In a conversation, Ruzan Ahamed, Country Director for South Asia, told Bizz Buzz that digital remittances to India will grow due to the supportive ecosystem. He also said that the unaccounted money flow has declined since April due to the travel restrictions imposed across the world

How do you view India as a remittance market? As an online player, what are your views?

We are a digital remittance company based out of London. We receive money in six countries to send them to more than 140 countries. Remittances to India started in 2012-13 and we have an extensive experience in the country. As far as the market is concerned, India is the biggest remittance receiver in the world with migrants residing in most places. Our origin is in the UK, where a lot of Indian migrants are living. We have several offerings for money transfer including account transfer.

How is WorldRemit placed in the pecking order with respect to other large remittance players?

India today receives the bulk of the remittances from the Middle East regions. More than 50 per cent of the remittances come from this region. Our market focus is not there and we are still not present in the Middle East. We are an app-based company. So, customers have to download our app and transact through their debit or credit card or online bank accounts. So, we serve the customer segment who are bank customers. Also, the supporting infrastructure for digital transactions has come into effect in 2016-17. Due to this, we see a serious push towards digital remittances. However, digital remittance players still do not account for a big share of the market. We are one of the significant players in the digital remittance space.

Is the Indian model different from other countries as far as the payment system is concerned?

Yes. The Indian market is different because here the payment system is all bank-linked. So, banks have a role to play. In comparison to this, in the Western nations, payments are linked to credit or debit cards. In Africa, it is all mobile-based wallets. Also, India does have a vibrant payment system due to the entry of multinational corporations. India's own UPI (Unified Payments Interface) is being emulated across many nations. This supporting environment will definitely give a push to the digital mode of transactions, which will support the overall remittance market and help the growth of companies like us.

How big is South Asia for WorldRemit and how are you growing in India?

I will not go into numbers as we are yet to collate our numbers for the year. But, as far as new customer acquisition is concerned, we have seen significant additions, especially of Indian customers. There are various factors driving this growth. Especially, we have seen higher remittance flow from migrants to the native country during the time of crisis. For example, if there are floods or challenges in the economy, the remittance flow usually rises. This time, the situation is different as there is a crisis everywhere. Still, we have seen customers coming and trying our platform. We now have six million customers globally and South Asia has added a significant number of new customers. Overall, the highest growth has been seen in the South Asia market in the last seven to eight months.

Where do you see Indian remittance ending up in 2020? Do you see a significant contraction this year? Also, will 2021 see a 'V'-shaped recovery?

It is a tough question to answer at this point in time because there were certain views at the early stage of the pandemic, which suddenly changed across the world with time. I think, in terms of remittances, it will depend on the market we operate in. The time frame of 2021-22 will be an interesting period to watch. That is because, a lot of people have lost their jobs in the Middle East region and due to this, there might be a slight decline. But, as soon as the travel restrictions are lifted, people are likely to come back to their native countries. We have seen that when people come back to their own country, they usually bring back all their savings to the destination country. This has happened this year when people came back after losing their jobs. But, as various governments are supporting people in many Western nations, it helps people to send money back home. So, how the economy fairs over the coming months, a lot will depend on this factor. This factor will be played out across the world, irrespective of regions.

However, as far as digital remittances are concerned, we see significant growth prospects as there are plenty of head rooms to grow. So, I see the growth of digital remittance to remain robust in the near future. Overall, there can be a slight decline. But, if vaccinations happen faster than expected and economies recover sooner than projected, the market will be on a growth path. The beauty of the remittance market is that as long as the economic inequalities exist, migrants will move in search of better lives. This will continue to drive the remittance market. We have also seen that when there is a problem in one region, people tend to move to other regions. For instance, when the Middle East region faced some problems in the last few years, people move to Canada, Australia among others. So, once the pandemic is over, the growth in the remittance market will come back.

A lot of unaccounted money (called hawala transaction) comes to this part of the world. Has that come down during the pandemic?

The transfer of unaccounted money is not only specific to this part of the world. It is there everywhere. During the beginning of the pandemic, the World Bank has projected around 20 per cent contraction in the overall contraction this year. However, this number will be that high given that remittance flow has improved. As far as unaccounted money flow is concerned, this has definitely come down from April due to travel restrictions being imposed everywhere. Also, the growth of the digital remittance players helps in the reduction of this unaccounted money flow.