**What is a remittance?**

# What is a remittance? 17 April 2026 ##### _What happens when workers abroad send money home? We explain the process, the timelines, fees and more._  Every year millions of people leave their homes to work abroad. From construction sites in the Gulf states to hospitals in Europe, private homes in South-East Asia to farms in North America, migrant workers are supporting themselves as well as sending funds back home. These cross-border payments, known as international remittances, collectively amount to hundreds of billions of dollars every year. So much so, remittance inflows to low and middle-income countries dwarf foreign aid. Remittances are a lifeline for hundreds of millions of families, who use the money sent home by relatives to cover their daily expenses. Remittances bolster foreign exchange reserves and support economic stability. However, just because they’re important, it doesn’t mean that remittances are simple, cheap or work well. We explain what remittances are, the difference between remittances and payments, who sends and receives them, how the system works, and more about timelines, costs, regulations and security. ##### In this article, we cover: 01. What is a remittance? 02. What is the difference between a remittance and a payment? 03. What are the biggest sending and receiving countries for remittances? 04. How do customers send remittances? 05. How do recipients receive remittances? 06. How do remittances work? 07. How long do remittances take? 08. How much do remittances cost? 09. What are the most important regulations for remittances? 10. How secure are remittances? #### **1\. What is a remittance?** A remittance is the transfer of funds from one person or group to another. That’s the simplest definition, although ‘remittance’ can mean different things to different people, depending on context. For the purposes of this article, we think of remittances as worker or migrant remittances. This is when ex-pat workers send money back home to their families or to pay things like school fees, mortgages or standing charges abroad. An estimated [$857 billion was sent in remittances worldwide](https://www.migrationdataportal.org/themes/remittances-overview#:~:text=Global%20overview,19%20pandemic%20(ibid.).) in 2023, according to the Migration Data Portal. #### **2\. What is the difference between a remittance and payment?** Remittances tend to be personal cross-border transfers. They are executed by banks, fintechs and money transfer operators (MTOs), among others. Payments are broader than remittance transfers. They can be domestic or cross-border and include methods, such as bank transfers, payment cards, mobile wallets and more. Payments are executed by banks and fintechs, but also payment service providers, generally for the purchase of goods and services by individuals or businesses. #### **3\. What are the biggest sending and receiving countries for remittances?** The top five sending countries for remittances are the United States, Saudi Arabia, Switzerland, Germany and China. They account for around 40% of the global remittances sent, according to the [Migration Data Portal](https://www.migrationdataportal.org/international-data?i=remit_paid&t=2022). Meanwhile, the top five recipient countries for remittances in 2024 were India, with an estimated inflow of $129 billion, followed by Mexico ($68 billion), China ($48 billion), the Philippines ($40 billion) and Pakistan ($33 billion), according to [World Bank](https://blogs.worldbank.org/en/peoplemove/in-2024--remittance-flows-to-low--and-middle-income-countries-ar#:~:text=The%20top%20five%20recipient%20countries,percent%29%20%28figure%202%29.) figures. Remittances are a massive, critical and often underestimated inflow to the global economy. Remittance flows to low and middle-income countries dwarf foreign aid. They are a lifeline for hundreds of millions of families, who use the money sent home by relatives to cover food, housing, healthcare and education. In smaller economies, remittance inflows represent large shares of gross domestic product (GDP), highlighting their importance for funding the current account and fiscal shortfalls. Topping the list is Tajikistan (45% of GDP), followed by Tonga (38%), Nicaragua (27%), Lebanon (27%), and Samoa (26%), according to 2024 [World Bank](https://blogs.worldbank.org/en/peoplemove/in-2024--remittance-flows-to-low--and-middle-income-countries-ar#:~:text=The%20top%20five%20recipient%20countries,percent%29%20%28figure%202%29.) figures. #### **4\. How do customers send remittances?** Remittances are usually transferred electronically via a bank, fintech or money transfer operator, such as Western Union or MoneyGram, which charges a fee for the service. A typical remittance happens in three steps: **Step 1:** The sender pays the remittance to the sending organization using cash, check, money order, credit or debit card, or a debit instruction. This step can be completed online, via a mobile app or in person at an agent location. **Step 2:** The sending organization instructs its agent in the recipient’s country to deliver the remittance. **Step 3:** The paying organization pays out to the beneficiary. #### **5\. How do recipients receive remittances?** Recipients can collect remittances from the receiving money service operator or bank in a variety of ways. This includes cash pickup from a physical location. Or having funds transferred directly into a bank account, on to an eligible payment card or mobile wallet. #### **6\. How do remittances work?** Behind the scenes, remittances involve compliance checks, currency conversion and some type of network. To prevent money laundering and terrorist financing, organizations offering remittances must verify customer identities, monitor transactions, report suspicious activity and keep proper records at a minimum. Currency conversion occurs when the sender’s currency is converted into the local currency of the recipient. Some operators add a mark-up or ‘margin’ to the mid-market exchange rate. Sometimes also known as the ‘interbank’ rate, the mid-market rate is the midpoint between the buy price and the sell price of a currency. Adding a mark-up to the exchange rate could make the transfer more expensive, even if there’s no or only a low upfront transfer fee. Remittances are processed through some type of electronic network. The larger money transfer services, such as Western Union or MoneyGram, have built their own proprietary networks. Other options for bank account-based transfers are correspondent banking or SWIFT. This explains why while funds may show on account instantly, the actual movement of money between banks and agents behind the scenes may take 1-5 days to settle the transaction. #### **7\. How long do remittances take?** Remittances take anything from a few minutes to days to arrive. It depends on the sender and recipient countries, the payment methods used as well as the service provider or network. Even remittances that don’t involve a bank account at the customer level may rely on banks for the actual transfer of funds. And banks typically have daily cut-off times and are generally unavailable outside banking hours, e.g. in the evenings, on weekends and bank holidays. #### **8\. How much do remittances cost?** Remittance fees vary widely based on the service provider, the sender and recipient countries, the amount and the payment methods used. Fees range from a few dollars to a percentage of the transfer amount. Costs can include both a transaction fee and a currency exchange mark-up, which can significantly reduce the amount beneficiaries receive. Writing in 2024, the [World Bank](https://www.worldbank.org/en/news/press-release/2023/12/18/remittance-flows-grow-2023-slower-pace-migration-development-brief) characterized remittance costs as “persistently high”.