Cross-Border Money Transfer Corridors: Where Is the Real Volume?

Cross-border money transfer refers to the flow of money from one country to another. It is often linked to immigration and remittances (money migrants send back home) as an indication of an informal yet substantial socioeconomic relationship between countries.

To fully grasp the concept of cross-border money transfers and the extent of their importance in the global economy, you’d have to look at both the global migration and remittance data side by side.

Essentially, as migration increases globally and migrants earn better in their host countries, remittances increase exponentially.

For context, as the number of international migrants increased from 174 million to 281 million between 2000 and 2020, remittances spiked from $128 billion in 2000 to $831 billion in 2022, according to the UN World Migration Report 2024.

That’s a lot of money being moved around.

But as you would expect, in terms of migration, some countries have strong ties to each other, and it’s likely that a substantial portion of these funds is moving between them.

Most importantly, such country pairs exist around the world. And what you should look out for is best described as a “money transfer corridor.”

Basically, a money transfer corridor (or money remittance corridor) refers to the flow of money between a specific pair of countries — such as U.S. to Mexico.

Focusing on these country pairs reveals where the bulk of that $831+ billion went and why. And that’s just exactly what we will be doing in this article.

So, let’s dive in!

Global Overview of Cross-Border Remittances

Cross-border remittances are a vital tool for global economic growth and development. The interdependence, especially between developing countries, through migration and remittances, helps form a solid foundation for most countries to catch up with the rest of the world. According to the World Bank, about 40% of all global remittances between 2019 and 2023 happened between developing countries.

In fact, World Bank projections suggest that by the end of 2025, remittance flows to developing (low- and middle-income) countries would reach $690 billion.

Interestingly, fintechs have a lot to do with the exponential increase in global remittances, as they have made it a lot easier for migrants to send and receive money via app anywhere in the world

The impact of fintechs in moving money around the globe is better emphasized by cross-border payments, which go beyond personal remittances (person-to-person cross-border transfers) to include customer-to-business and business-to-business payments.

For context, FXC estimates indicate that the addressable market for global cross-border payments stood at around $194 trillion and is expected to grow exponentially over time.

The global remittance, on the other hand, is expected to cross $1 trillion by 2029.

Now, you may wonder: where are all these funds coming from? Which countries are they going to?

According to the 2024 World Migration Report, the top remittance-sending countries are the U.S., Saudi Arabia, Switzerland, Germany, China, Kuwait, Luxembourg, the Netherlands, France, and Qatar.

The top remittance-receiving countries are India, Mexico, China, the Philippines, France, Pakistan, Egypt, Bangladesh, Nigeria, and Germany.

Expectedly, most of the high-volume money transfer corridors come from a pairing of countries from the top receiving and sending countries.

Top High-Volume Corridors

How do organizations like the World Bank determine the volume of money transfer corridors?

Fundamentally, since the gateways for most money transfers are regulated, it is somewhat easy to aggregate all the money transfers going from financial institutions in one country to financial institutions in another.

Suppose you transfer money to Ecuador with the BOSS Money App, the amount you sent adds to the pile of remittances within the U.S. to Ecuador money transfer corridor. For context, data from the World Bank Bilateral Remittance Matrix indicates that the remittance flow in the U.S./Ecuador corridor is $2 billion.

With that out of the way, let’s have a quick look at some of the top high-volume corridors, according to 2021 estimates:

The high volume of money transfers in these corridors can easily be traced to the diaspora population, economic ties, and rate of labor migration from the receiving countries to the sending countries.

Basically, the higher the number of working migrants in a host country, the higher the remittances to their home country.

Hence, bearing in mind that there are over 10 million Mexican migrants in the U.S., most of whom are sending money back home, it makes sense that about $53 billion flows through the U.S./Mexico money transfer corridor.

India has significant portions of its labor migrants distributed in the U.S. and the Gulf nations, resulting in substantial inflows from different corridors. With about $111.2 billion in remittance inflows in 2022, India maintains a very strong position as the top remittance country.

Mexico, with over 95% of its remittance inflows coming solely from the U.S., comes a far second at $61.1 billion.

Drivers of Volume in Key Corridors

Besides migration and diaspora populations, some other factors are also very influential in driving the huge volumes of remittance flows in these money transfer corridors.

One of the key factors to note here is the recent cost-effectiveness and ease of sending money abroad, especially since fintechs leveled the playing field. As cross-border money transfer becomes cheaper and easier, migrants become more comfortable with sending substantial amounts back home.

In Mexico, for example, money transfer costs have dropped by far more than 50% since 1999 as providers try to outdo each other in terms of affordability and efficiency of transfers. As a result, money transfers in the U.S./Mexico corridor have been increasing exponentially despite a drop in migration rate from Mexico to the U.S.

Other key factors to note here are economic disparities and labor export/import, and the consequential effects on the currency volatility and inflation in receiving countries.

Most remittance-sending countries are high-income countries with strong currencies, relatively low inflation rates, and high labor import. The reverse is the case for most of the remittance-receiving countries.

Hence, when a migrant in a high-income country sends money back home, they take advantage of these factors in various ways.

In India and Nigeria, for instance, the average annual salary hovers around US$2,650 and $1,250, respectively. Meanwhile, an immigrant in the U.S. would, on average, make at least US$35,000 annually.

The disparity in the currency pairs and earning power, fuelled by inflation in receiving economies, means that any amount transferred could mean a whole lot for the folks at home.

As immigrants in high-income countries weigh the cost and convenience of sending money back home and what it could mean for their folks in terms of healthcare, shelter, education, food, and other basic necessities, they feel compelled to send money back home more often.

The longer these trends persist, the more likely it is that the volume of remittance flows in these corridors will continue to rise. And as economies grow and migration patterns change, new high-volume corridors may emerge.

Conclusion

Given the volume of remittances flowing across the world, it is clear that cross-border money transfers are a crucial part of economic growth in low- and middle-income countries. From a personal perspective, remittances make a significant difference in improving the lives of loved ones and communities back home.

With migration increasing, currency volatility and inflation favoring host countries, and cross-border transfers becoming more cost-effective, the remittance flow in high-volume corridors is bound to continue rising.

You can also enjoy more benefits by leveraging the competitiveness of fintechs, which provide cheaper and faster transfers to send more money back home while saving more money for yourself.