Have you ever considered how connected the entire world has become? Every single day, billions of dollars flow across borders, boosting economies and supporting livelihoods.

It's incredible to consider the enormous volume of these transactions - money sent by immigrants, laborers and families to their loved ones all around the world. This massive transfer of wealth, known as international remittances, is one of the most significant financial forces influencing the planet today.

Let's find out more about remittances and the most popular money transfer ways from Saudi Arabia and the United States to India, the largest beneficiary of remittances.

Global remittance: What should you know?

Remittances are simply money that overseas individuals and families send back to their home countries. It's the flow of funds from immigrant workers in one country who are sending portions of their paychecks back home to support friends and family elsewhere.

According to the World Bank report, remittance flows to low and middle-income countries (LMICs) are expected to be $656 billion in 2023, reflecting a small 0.7% increase.

Remittances are predicted to grow at a stronger rate of 2.3% in 2024, albeit this growth will vary by location.

India tops the remittance chart, again

India leads the globe when it comes to receiving remittances from abroad. In 2023, India received a record $120 billion in remittances, boosted by sound labor markets in the Gulf, the United States and Europe.

However, reduced outflows from Gulf Cooperation Council (GCC) countries, owing to lower oil prices and production cuts, contributed to a minor slowdown in remittance growth.

Despite this, remittance inflows to India are predicted to rise marginally, reaching $124 billion in 2024 and $129 billion by 2025.

This is primarily due to the large Indian diaspora communities in the United States, the United Kingdom, Canada, Australia and the Gulf States. Indian expats have families back home to support, so they work hard abroad and send a significant percentage of their earnings home.

The US-India remittance corridor is huge. According to sources, more than $10 billion is sent from America to India each year. With approximately 4 million Indians in the United States, financial support demonstrates a great deal of love and responsibility. Western Union and MoneyGram dominate this lucrative payment method.

But the Gulf countries play an even bigger role, considering how many Indians have migrated to Saudi Arabia, UAE and Qatar for employment over the decades. Remittances from the Middle East to India exceed $40 billion annually.

Other significant money pipelines include migrant worker remittances from countries like China, Mexico, Philippines and Pakistan.

Western Union transports large amounts of money from the United States to Mexico, whereas MoneyGram is a major player in the China-to-Philippines remittance channel.

Here are the top remittance recipient countries that follows India:

• Mexico: $66 billion

• China: $50 billion

• Philippines: $39 billion

• Pakistan: $27 billion

Major remittance corridors in the world

The global remittance landscape is dominated by a few key corridors that enable the annual movement of billions of dollars across borders. Here are a few of the more important ones:

1. United States to India: The United States continues to be India's largest source of remittances, accounting for a sizable portion of total inflows. Indian expats, particularly those working in high-paying industries such as technology and healthcare, send a significant amount back home. This corridor benefits from the strong US job market, allowing Indian migrants to provide critical financial support to their relatives in India.

2. Saudi Arabia to India: Saudi Arabia is another important remittance corridor for India, fuelled by the enormous number of Indian workers employed in Gulf Cooperation Council (GCC) countries. Many of these people work in industries such as construction, domestic work and services.

3. United States to Mexico: Due to their proximity, the U.S.-Mexico remittance corridor is also among the most prominent. In order to provide for their family, Mexican immigrants who work in a variety of sectors, such as construction, services and agriculture, send money home.

4. United States to the Philippines: The Philippines is significantly reliant on remittances from its overseas labor, particularly Filipino workers in healthcare, domestic service and maritime jobs.

5. Russia to Central Asia: Remittances from Russia to Central Asia have traditionally provided a lifeline for countries such as Uzbekistan, Kyrgyzstan and Tajikistan. Migrant workers from these countries, who mostly work in Russia's construction and service sectors, have typically sent a sizable amount of their wages home.

What are the key remittance channels in the world?

The following are the most popular remittance channels utilized by people sending money from the United States to India and Saudi Arabia to India:

1. Money transfer services

For sending remittances, money transfer services like Western Union and MoneyGram have long been well-liked. These businesses make it simpler for senders to transmit money swiftly and securely by offering both physical facilities and online platforms.

While MoneyGram transfer costs can occasionally be on the higher side, particularly for bigger payments, Western Union may be a little less expensive.

1. Bank transfer

In recent years, many banks have simplified their international money transfer services to make remittances faster and more economical.

• SWIFT transfers: Many banks utilize the SWIFT network to make international transfers. Major banks in the United States, including Bank of America, Citibank and Wells Fargo, provide SWIFT services for transferring money to Indian bank accounts. These transfers are safe and well-established, but they can be more expensive than other methods, with costs ranging from $10 to $50, depending on the bank.

• State Bank of India (SBI): SBI, India's largest public sector bank, is a key recipient of remittances. Several US banks work with SBI to make transfers easier and less expensive.

• Banks in Saudi Arabia, like Al-Rajhi Bank and Saudi National Bank (SNB), allow Indian expats to deposit remittances directly to Indian bank accounts. These banks frequently work with Indian banks such as ICICI and HDFC to provide lower costs to expats.

1. Digital-first remittance service

Fintech has transformed remittances, making digital-first platforms the most convenient and cost-effective solution. These services use mobile apps and websites to eliminate the need for physical branches, reduce fees and expedite transactions.

• Wise (previously TransferWise): Provides low-cost, straightforward fees and mid-market exchange rates with no hidden markups, making it a popular choice among Indians living in the United States.

• Remitly: Popular in the United States-to-India corridor, Remitly offers competitive fees and currency rates, as well as options such as bank deposits, mobile wallets and cash pickups.

• Xoom (a PayPal service): Streamlines transfers by allowing for bank deposits, mobile reloads and cash pickups, making it extremely convenient for PayPal users.

• Brands like Instarem and Paysend also offer competitive exchange rates and fast transfers between Saudi Arabian banks and Indian accounts.

1. Mobile wallets

These services enable funds to be transmitted straight to a recipient's mobile device, where they can then be used for payments, withdrawals or future transfers.

• Google Pay, PayTM and PhonePe are major mobile wallet platforms in India that enable recipients to receive funds from overseas directly into their mobile wallets.

• STC Pay, a popular digital wallet in Saudi Arabia, is widely used by Indian workers to send money home. STC Pay enables rapid transactions to Indian bank accounts and mobile wallets such as Paytm.

1. Cryptocurrencies

Platforms like as Coinbase and Binance enable users to transmit cryptocurrencies such as Bitcoin or Ethereum abroad, with recipients able to convert the funds to their native currency.

Lower transaction fees, particularly for bigger payments, are one of the most compelling reasons to use cryptocurrencies. However, the volatility of cryptocurrency pricing, along with regulatory issues, make this a less stable alternative for most remitters.

While cryptocurrency is still not extensively used for remittances, it is gaining popularity among a limited, tech-savvy set of senders and recipients.

1. Informal remittance channels

Many migrants use informal channels (like Hawala or Hundi system) because official means are expensive or they do not have access to banking services. This can cause concerns with transparency and security.

While these channels may provide lower costs and speedier transactions, they lack transparency and oversight, making them riskier than conventional options.

What else to explore in the remittance industry?

Despite its enormous scope, the remittance industry faces issues, particularly due to hefty fees that reduce the amount of money received by families.

However, with major technology companies like as Meta joining the global payment industry, there is optimism for progress. Increased competition and advancements in technology could reduce costs, ensuring that a greater portion of each US Dollar or Saudi Riyal sent makes it to loved ones.

Blockchain also has the potential to alter remittances by eliminating intermediaries and enabling worldwide peer-to-peer microtransactions.

Meanwhile, central governments are always implementing new policies to reduce the cost of remittances.

In the end, if remittance reforms help more people get out of poverty, the future seems promising. It's wonderful to witness how much financial assistance crosses borders every day, driven by personal relationships that transcend location.