South America Digital Remittance Market Outlook, 2029

A digital transformation is sweeping through South America and changing the face of financial transactions, especially when it comes to cross-border remittances. A youthful population characterizes the region, and it has emerged as very receptive to change in mobile technology, acting as a catalyst in the rapid adoption of digital remittance services. It is an important demographic trend, as it calls forth the demand for convenient, effective, and inexpensive methods of money transmission across borders, hence serving the needs and requirements of migrant workers and ex-patriats who remit to families back home.

One of the strategic advantages in South America when it comes to the digital remittance market includes growing mobile penetration rates. Countries like Brazil and Colombia have big expansions in mobile banking services, making remittance platforms very accessible through smartphones. This mobile-first approach enhances not only accessibility but also fosters a competitive environment wherein fintech startups and traditional financial institutions innovate to meet the demands of consumers. Most South American countries have different regulatory frameworks at the country level, but generally support fintech innovation and digital payments.

For example, countries like Brazil have been at the forefront of this in terms of progressive regulations that permit an increase in the rate of financial inclusion and the protection of consumers, all while ensuring the stability of the financial system. The technological innovation has been a huge driver for the South American path toward prominence in digital remittances. Examples include blockchain technology, which increases cross-border transaction security and transparency, hence lowering related costs and processing times relative to traditional banking methods, and mobile wallets and payment applications that make it easy to send and receive money across borders with low fees and competitive exchange rates. Companies like Nubank have gone further to break the rather traditionalist banking industry in Brazil with its digital banking services, including remittance capabilities from a mobile app. Such a distinct solution seems to have pulled in millions of customers where the user interface is friendly and very forthcoming with structures of fees, which really resonated within a tech-savvy population on the lookout for modern means of managing finances.

According to the report, the South America Digital Remittance market is anticipated to add to more than USD 1.90 billion by 2024-29. Measures from governments in South America, in increasing or promoting financial inclusion and digital literacy, enlarge the outreach of banking services and the entrance of digital payment solutions, including remittances. For instance, in reductionning financial exclusion and reinforcing economic resilience by the means of digital financial tools, including remittances, the programs are made in countries like Brazil and Colombia. In fact, the pandemic accelerated the move to digital payments in South America, including remittances.

Lockdowns and social distancing measures that reduced access to traditional banking services led most consumers to use digital platforms for secure and convenient money transfer. This crisis underscores the need for robust digital infrastructure and reliable remittance services to hold up financial inflows during perils. Fintech start-ups are innovating by entering the remittance markets using new technologies and business models. For instance, dLocal out of Uruguay and TransferWise: low-cost, fast-moving transactions combined with transparency in its fee structures make its presence strongly felt over digital transactions.

These innovations serve the rapidly increasing demands of tech-savvy consumers and go on to contribute to market competitiveness. South America is part of regional trade and economic cooperation agreements, and they thus influence the nature of cross-border remittances. International trading platforms feature remittance functions so that businesses and individuals in all parts of the region have a full suite of financial tools. This boosts economic growth and results in even more financial integration among various countries. The consumer preferences in South America are for affordability, speed, and reliability in remittance services. Those platforms offering competitive exchange rates, low fees, and convenient transfer options would be further quoted and therefore gain traction toward the light by users searching to grasp value and convenience.

Market Drivers

• Economic Instability: Economic instability and currency devaluation in several South American countries drive the demand for remittance services. People seek to send money to more stable economies or support families affected by economic challenges. Digital remittance platforms offer a safer and more reliable means of transferring money compared to traditional methods, which can be susceptible to local financial turmoil. This need for secure and efficient remittance services amid economic instability significantly boosts the market in the region.
• Diaspora Communities: Large diaspora communities from countries like Venezuela, Colombia, and Brazil contribute to the high demand for remittance services in South America. These expatriates send money back home to support their families, driving the use of digital remittance platforms. The convenience, speed, and lower costs associated with digital transfers compared to traditional methods make them the preferred choice for these communities. This continuous flow of remittances sustains the growth of the digital remittance market in South America.

Market Challenges

• Regulatory Variability: The regulatory environment in South America is highly variable and often unstable, posing significant challenges for digital remittance providers. Each country has its own set of financial regulations, and frequent changes can create uncertainty and compliance difficulties. This lack of regulatory consistency increases operational complexities and costs, making it challenging for companies to offer seamless and compliant services across the region. Navigating these regulatory hurdles is crucial for the successful operation of remittance services in South America.
• Limited Digital Infrastructure: Despite growing mobile and internet penetration, parts of South America still suffer from inadequate digital infrastructure, particularly in rural areas. This limitation hinders the widespread adoption of digital remittance services. Connectivity issues and low smartphone penetration can restrict access to digital platforms, making it difficult for remittance providers to reach and serve the entire population effectively. Improving digital infrastructure is essential to expanding the reach and impact of digital remittance services in the region.

Market Trends

• Growth of Mobile Money Services: Mobile money services are gaining traction in South America as a convenient alternative to traditional banking. Countries like Brazil and Argentina are seeing increased adoption of mobile wallets and digital payment solutions. These services offer an accessible way for people to manage their finances and transfer money, especially in regions with limited banking infrastructure. The growing popularity of mobile money is transforming the remittance landscape, making it easier for people to send and receive funds digitally.
• Blockchain Adoption: The adoption of blockchain technology is emerging as a significant trend in the South American remittance market. Blockchain offers a transparent, secure, and cost-effective way to conduct cross-border transactions. Startups and established financial institutions are exploring blockchain-based solutions to improve the efficiency and security of remittances. This technology reduces transaction costs and processing times, making remittance services more attractive to users and driving innovation in the market.

In South America, Outward leads the digital remittance market due to its economic instability and large diaspora communities.

The South American leadership in outward digital remittances is driven by economic instability among a number of countries, coupled with large diaspora communities stretching across the region and beyond. A number of countries - Venezuela, Colombia, Brazil, and Argentina - have economic instability with devaluing local currency, among others, which makes most of the people shift financial transactions to more stable economies. Consequently, many South Americans living abroad in North America and Europe send money home in vast amounts to support their families and ensure some economic alleviation.

For example, Venezuela has faced rigid hyperinflation and economic crises, which have caused large outward remittances as Venezuelans abroad transfer money home to help families deal with the economic challenges. Countries like Colombia and Brazil have huge populations of expatriates working in the United States and Europe and generating huge remittance outflows. Indeed, these remittances became an income and hence require efficient and cost-friendly digital remittance services. The growth rate for digital remittance platforms in South America is further driven by increasing internet penetration and smartphone usage, which enables convenient and cheap money transfers.

For example, companies such as Ria Money Transfer and WorldRemit have been able to sprawl around the region, offering competitive rates and fast transaction times for their services. These platforms service South American migrants by giving them user-friendly interfaces and secure transfer options. South American governments and financial institutions have acknowledged remittances as a factor of economic stability and development. Programs to reduce transaction costs, raise the level of financial literacy, and popularize digital financial services contribute to an increase in the digital remittance market. An example is the policy initiatives in Brazil, thanks to which the nation saw an increase in the levels of financial inclusion and support for digital payments, encouraging more and more migrants to start using formal channels of remittances.

Banks dominate the digital remittance market in South America due to economic volatility in the region and flows of remittances from diaspora communities.

States like Brazil, Colombia, and particularly Venezuela are very prone to economic instability, often experiencing high inflation and currency devaluation, most people find it necessary to look for reliable and secure ways through which they can send money to their relatives who are still at home. For instance, Banco do Brasil, Itaú Unibanco, and Banco Santander Brasil dominate the remittance market in Brazil because these financial institutions can offer competitive exchange rates and customized products for remittances. These banks run extensive networks of branches and use their digital channels to reach a wide spectrum of remitters, thereby better making the process comprehensible and convenient for money transfers.

This has resulted in high outward remittance flows from Venezuela into the rest of the world. Many Venezuelans abroad transfer funds through banks such as Banco de Venezuela and Banco Mercantil to family members in order to help their kin survive amidst hyperinflation and economic hardship. During the past few years, notorious internet penetration and smartphone usage across South America facilitate the adoption of digital remittance platforms for money transfers that are fast and cheap. TransferWise and other fintech startups join Nubank inthe disruption of traditional remittance markets with state-of-the-art solutions that bypass traditional banking channels, especially for tech-savvy consumers going after efficiency and transparency in financial transactions.

Personal remittances top the South American regional digital remittance market due to the large number of migrants who have had to migrate for work and hence send money back home to their families.

Migration has a very old history in South America, both within the region and to other parts of the world. Mass migration from countries in South America to several other nations for work, education, or other opportunities has resulted in families and loved ones being left behind across borders. Personal remittances - that is, transfers of money sent by individuals to their relatives and friends - have become an important source of income for many households in this region. With the digital remittance platforms, it is now much easier and convenient to send money back home for migrants. Beginning on their mobile device, a customer can easily initiate a transfer, select the recipient, and select a method of delivery by just clicking.

No need to waste time going to a remittance center or bank physically, which is hassle-prone to most, especially to those who work for long hours or stay far away from such centers. Digital remittance platforms charge lower fees and offer competitive exchange rates compared to banks or money transfer operators. This means that a lot of money transferred by migrants actually goes through to the recipients, making a difference in changing lives in South America. Personal transfers are also used for some of the more vital human expenses, such as food, housing, and education, and help to reduce poverty and increase economic development in the region. According to the World Bank, personal remittances to Latin America and the Caribbean amounted to a record US$96 billion in 2021, underlining the contribution this market makes toward the regional economy.

Brazil is leading in the digital remittance space due to its large number of people emigrating and the vast expatriate communities.

The COVID-19 pandemic has made the adoption of digital remittance solutions advance in Brazil as travel and movement restrictions limited accessibility to traditional remittance channels. During this period, digital platforms became handy, ensuring continuous financial flows to keep in line with their two biggest roles: critical digital infrastructure for global connectivity. Citizens move to destinations either for work, education, or other reasons and constantly send money back home to support families and invest in local businesses. This demographic trend is very demanding in terms of efficient, reliable, and cost-effective services in remittance - needs that the digital platforms excel in providing.

These new-era digital remittance providers, among them companies like Remessa Online, TransferWise, or MoneyGram, have looked to cash in on Brazil remittance by providing innovations that satisfy the demand of both the sender and those receiving the money. The platforms use technology to bring easiness to making a transfer, along with competitive exchange rates, low transaction charges, and faster transaction times. In addition, it is more appealing to tech-savvy customers looking for transparency and convenience in financial transactions. An excellent example is Remessa Online, which has made it easier for foreigners residing abroad to send money home because of the ease of use and simplicity involved in the remitting process.

It makes it possible to send money from many countries into a bank account in Brazil at up-to-date exchange rates and with very minimal fees, providing accessibility and reliability to people. Added to this, some of the positive economic drivers like FDI and tourism also support growth in the case of Brazil toward digital remittance. FDI inflows support economic growth by way of job creation, and through tourism, there is some addition to foreign exchange earnings, some part of which finds a place in the overall remittance flows. Digital remittance platforms facilitate financial transactions because they are efficient and secure for cross-border transfers through seamless integration with world banking networks and regulatory standards.

Years considered in this report:

• Historic year: 2018
• Base year: 2023
• Estimated year: 2024
• Forecast year: 2029

Aspects covered in the report:

• Digital Remittance market outlook with its value and forecast, along with its segments
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

By Type:

• Inward
• Outward

By Channel:

• Bank
• Money Transfer Operation
• Online platform
• Others

By End User:

• Migrant Labour
• Personal
• Small Business
• Others

The approach of the report:

This report consists of a combined approach of primary and secondary research. Initially, secondary research was used to get an understanding of the market and list the companies that are present in it. The secondary research consists of third-party sources such as press releases, annual reports of companies, and government-generated reports and databases. After gathering the data from secondary sources, primary research was conducted by conducting telephone interviews with the leading players about how the market is functioning and then conducting trade calls with dealers and distributors of the market. After this, the research team made primary calls to consumers by equally segmenting them in regional aspects, tier aspects, age group, and gender. Once the research team attained the primary data, they verified the details obtained from secondary sources.

Intended Audience

This report can be useful to industry consultants, manufacturers, suppliers, associations, and organizations related to the Digital Remittance industry, government bodies, and other stakeholders to align their market-centric strategies. In addition to marketing and presentations, it will also increase competitive knowledge about the industry.