Remittance in banking refers to the transfer of funds from one bank account to another as a gift or payment. It is used to pay bills or invoices and can be sent via an electronic payment system, wire transfer, mail, draft, or check. Remittance is commonly used for international money transfers and is a popular mode of payment. The term is most often used nowadays to describe a sum of money sent by someone working abroad to their family back home. Remittances are typically transfers from one person to another and are targeted to specific needs of the recipients, thus tending to reduce poverty.

Remittance services play a massive role in today’s financial ecosystem, and the amount of money being sent internationally has increased exponentially in recent years. For some countries, remittance flows account for a sizeable portion of their GDP. In 2018 alone, migrant workers moved a staggering equivalent of $689 billion USD over the globe. Remittance services boost economies and are also used to help those living in less developed nations open bank accounts, a trend that helps promote economic development.

Remittances are sent using an electronic payment system or service, and recent fintech (financial technology) waves in international money transfers are forcing fees down. Rising players include Payoneer, Wise, and WorldRemit. Regulation and oversight continue to be strengthened to ensure a more secure movement of funds.

In summary, remittance in banking refers to the transfer of funds from one bank account to another as a gift or payment, and it is commonly used for international money transfers. Remittances are targeted to specific needs of the recipients and tend to reduce poverty. They play a massive role in today’s financial ecosystem and boost economies. Remittance services are sent using an electronic payment system or service, and recent fintech waves in international money transfers are forcing fees down.