Low-income adults in Asia receive more than 3.5x their income from overseas senders each month: UniTeller

MONTHLY remittances from family and friends working abroad now averages more than 3.5 times the monthly incomes of recipients in Asia, according to Uniteller, a US-based cross-border payment processing company.

Its new report found that the average monthly remittance sent back by low-income overseas migrants is US$685, against their receiver's average monthly household income of US$196, after surveying low-income remittance recipients in the Philippines, India, Indonesia and Vietnam and senders from the United States, Hong Kong and Singapore.

Out of the four receiving countries, India sees the biggest gap between monthly incomes and monthly remittances, with recipients each month receiving 1.8 times their incomes from overseas. Vietnamese recipients only receive 1.1 times their incomes each month from overseas, the smallest gap among all four countries.

"As the reliance on remittances grows, a key challenge is ensuring this income translates to building sustainable wealth and prosperity,'' said Alberto Guerra, chief executive officer of UniTeller.

Relatively high amounts, or on average nine per cent of the remittance money, are spent on non-essential luxury items, noted the report.

The report also saw smaller sums being spent on areas that may further economic progress, such as education and savings, which on average only takes up 11 per cent and 14 per cent of the expense respectively.

This is on top of the fact that these low-income households allocate almost half of the remittance money for day-to-day family needs and bill and loan repayments, which respectively account for 23 per cent and 25 per cent of expenses.

As a result, an average of 27 per cent of recipients run out of money consistently, the highest percentage being 56 per cent in India.

On average, 48 per cent of these households will reach out to their main sender again when they run out of the remittance money. In the Philippines, 72 per cent would contact the sender when short of money, with 53 per cent resorting to forgo day-to-day needs in such a condition, both being the highest percentage among all four countries.

Growing reliance on remittances may also increase emotional stress on families and strain relationships with senders. This is the most acute in India, where the expectation of receiving remittances has placed emotional stress on 74 per cent of the respondents' family, and impacted 76 per cent of respondents' relationship with the sender.

With 93 per cent of receivers having the final say on how to use remittance funds to meet their family's needs, financial education is key to building sustainable wealth for low-income households, said the report.

According to the report, 75 per cent of Filipino recipients interviewed expressed strong interest in learning and cultivating good financial habits, followed closely by 69 per cent in Indonesia, 68 per cent in India and 59 per cent in Vietnam.

Mr Guerra noted that mindset changes, technological advancement and local infrastructure limitations affect how one sends or receives money.

All countries surveyed are largely digitalised, with 89 per cent of respondents owning a mobile wallet account and 99 per cent having a smartphone.

Further, 96 per cent of households interviewed would consider using mobile apps to electronically receive money transfers, while 91 per cent were receptive to a semi-digital payments solution that would allow them to confirm the transaction online before fulfilling the transaction at a physical payer location.

However, concerns on security remains an issue for 69 per cent of the respondents, followed by concerns over not being able to receive funds at 44 per cent and concerns over a complicated process at 43 per cent.

Many overseas workers have families that reside in provinces, outside of urban cities and where even rural banks are not easily accessible.

"Major remittance players must also work with telecoms operators, banks and even educational institutions, to create the appropriate financial products and mechanisms of delivery that are more aligned with their users' mobile and commercial habits," said the report.