The Banking Potential Of Remittance Recipients

"Both the volume and the frequency of remittances have increased the spending potential of recipients, which is an important step toward banking," commented José María Ayuso, Executive Vice President, Visa International, Latin America and Caribbean Region. "Visa has been a pioneer in the development of products for remittance recipients such as Visa Giro, a solution that allows the recipient to get the funds through a convenient and secure payment card, instead of cash."

The study included interviews with beneficiaries in Ecuador, El Salvador, Mexico and the Dominican Republic, as well as senders residing in the U.S. and Spain. Remittances to the latter three countries are from the U.S., while in Ecuador they come predominantly from Spain.

Key findings highlight the recipients' interest in joining the banking system.

• Approximately 50 percent of the remittance volume to the region is distributed through financial institutions, but only 11 percent is received in bank accounts; the remainder is distributed in cash. This shows that despite the participation of financial institutions in the process, recipients are not yet receiving the benefits provided by banking.
• 56 percent of interviewees expressed an interest in establishing some type of formal relationship within the financial system. Similarly, 70 percent showed a favorable attitude toward banks.
• Remittances are not the only source of family income. Nearly half of the beneficiaries are employed part-time or full-time, and for 52 percent of them remittances represent supplemental income. Only one of eight beneficiaries considers remittances the only source of income.
• 15 percent of beneficiaries save or invest the money they receive because remittances increase their income by 50 percent.
• Most frequent uses include purchasing goods, developing a business, savings in foreign or local currency, paying debt, and certain luxuries such as traveling.
• The level of solvency, spending potential, savings and investment are higher among remittance recipients than among people of similar socioeconomic levels who do not receive remittances. Nearly half are economically active people.
• 24 percent of senders interviewed have been living abroad for 10 to 15 years and continue to send remittances periodically, showing the consistency of this business in the long term.

  As the leading electronic payment system in the money transfer sector, Visa identified the need for specific tools to receive remittances and created solutions like Visa Giro, a card delivering multiple benefits to users, including immediate access to funds, privacy of reception, use of a PIN (Personal Identification Number), protection of funds in case of loss or theft, the ability to make purchases at over 20 million merchants, and access to cash at over 860,000 ATMs. Currently, Visa Giro is present in more than eight countries throughout the region.