When it comes to international money transfers in the form of remittances, the majority of surveyed South African consumers prefer digital-only services.
This is based on insights from the inaugural Global Money Transfer Index, published by money transfer operator Western Union.
A survey of 30 599 consumers aged 18 years and older, who send and/or receive international money transfers, asked respondents how, when and why they use international money transfer capabilities, as well as their expectations for tomorrow.
Participants are from 20 countries across the Middle East, Africa and Asia Pacific. For Africa, the five key markets surveyed include SA, Kenya, Nigeria, Senegal and Morocco.
The index reveals remittances are on the up, with 64% of surveyed consumers saying they already send and/or receive money once a month or more. Over the next 12 months, 75% state they expect to increase how much they transfer or receive.
In the case of SA, the current preference for sending international money transfers is digital, with two in three (64%) consumers preferring this money transfer method, it states.
More so, 66% of consumers that receive international money transfers also choose digital.
The report further says the choice between online and retail channels will be important in the future, according to 42% of senders. This is also true of 47% of receivers, rising to 49% of 25- to 34-year-olds.
It notes: “Senders in the same age group transfer money at least once a month more than other consumers, with 73% moving money at this rate compared to 62% overall.
“Meanwhile, 18- to 24-year-old receivers are the most likely group to collect funds once a month or more: 81%, compared to the average of 72%.”
Similarly, the index notes the lion’s share (57%) of African consumers who receive funds like to collect money using standalone digital channels. More than half (53%) indicate people should be given a full range of in-person and online transfer options from now on.
For those sending money abroad, nearly two-thirds (60%) opt for digital-only transfers now, with 54% committing to the same methods in future.
With approximately 2.9 million expat residents in SA, the country ranks as the largest “send” market in Africa, according to the World Bank.
Furthermore, over $1.1 billion of remittance outflows have been recorded in the country.
According to the index, respondents named family support as the main reason for sending (43%) and receiving (27%) money.
“Older consumers are the most likely to need funds for this purpose – 38% of receivers aged 55 and over. More than three in 10 (31%) women say they collect funds for family financial support, compared to 20% of men.
“One in seven (14%) receivers intend to save what they can after collecting, with 17% of senders agreeing this is the main reason they move money.”
Across the continent, the majority (62%) of Africa’s consumers receive money transfers at least once a month or more, while 59% send funds across borders at the same rate.
Over the next 12 months, it is predicted more than three-quarters of Africa’s receivers (78%) expect these remittances to increase.
The index shows economic challenges, such as higher global cost of living, mean 81% of receiving consumers (compared to 79% globally) across the African continent are asking senders for more money.
For the same reason, 72% of African senders (71% globally) agree they are sending more than previously. This may contribute to why consumers state frequency and volume of remittances are primarily influenced by family requirements, despite common perception that remittances are driven by when salaries are received.
Commenting on the overall Africa picture, Mohamed Touhami el Ouazzani, regional vice-president of Africa at Western Union, says: “The index tells us the cost-of-living squeeze across Africa means consumers are relying on money transfers as their daily lives have become more challenging.
“As consumers tell us that the remittances they receive will need to increase, it is imperative for money transfer providers to stay agile and support consumers on their journey.”
Upcoming priorities
In terms of the future outlook of the remittance market in SA, the index notes fees are front of mind when consumers are choosing a money transfer service.
Getting the best exchange rate and keeping down the cost of transactions matters more than anything else to senders (22%), while almost one-quarter (24%) of receivers also seek providers that offer the lowest deductions as they collect their funds.
“Receivers have a strong influence on service selection. Three-quarters of them (75%) – increasing to 80% of 25- to 34-year-olds − say the brand name is important when senders suggest a money transfer provider.
“Almost four in five (79%) are more likely to select a service if it is available in their language. Senders also shop around for services, and 80% say they seek promotions such as zero-fee transfers.”
Consumers also have a clear vision of money transfer features they would like to use in the future, notes the study.
“More than eight in 10 senders (86%) − and 88% of female senders, compared to 82% of males − say a service to help them monitor currency fluctuations would be useful so they can plan money transfers.
“Senders also like the idea of a prepaid top-up card through which they can trigger transfers without having to use a bank account (76%).”
On the other hand, receivers are keen on innovations, as 82% would like money transfer brands to introduce a single mobile app that features the ability to move funds alongside other financial commitments, such as paying utility bills.
In addition, 84% say collecting money in currencies other than the rand would be beneficial.
“For a majority of both senders and receivers, crypto-currency is of interest as a remittance option, as more than four-fifths (84%) of senders would like to see it become an option in the money transfer process.”
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