Migrant workers send hundreds of billions of dollars home each year, yet the average cost of moving money across borders remains well above the United Nations’ 3% target. The issue comes into focus on 16 June, the International Day of Family Remittances, which recognises the contribution of more than 200 million migrants to 800 million family members worldwide.
Fintechly speaks to economist Dilip Ratha, founder and CEO of Ratha Global and a board member and adviser at regulated stablecoin infrastructure provider Encryptus, about why remittance costs remain stubbornly high, the decline of correspondent banking and whether regulated stablecoin settlement could offer a cheaper route for families sending money home.
Dilip, you spent more than three decades at the World Bank building the global remittance dataset that everyone now uses. What does that data tell us about who is really paying the cost of cross-border payments?
The data tells a very clear story: the cost of moving money across borders falls disproportionately on the people who can least afford it. Migrant workers sending small amounts home to their families face the highest fees as a percentage of what they send. When you look at the numbers, a domestic worker in Riyadh transferring $200 to Manila, or a construction worker in Dubai sending money to Lagos, they are paying $12 or more in fees. That’s 6% or more on a $200 transfer. Meanwhile, a corporation moving $50 million between subsidiaries in the same corridors pays a fraction of a percent.
What makes this particularly stark is the scale. Remittances to low- and middle-income countries surpassed $700 billion in 2024. At the current global average cost of around 6%, that means migrant workers and their families paid over$42 billion in fees in a single year. To put that in context, that is more than the GDP of many small nations, extracted from people earning hourly wages.
The cost structure is regressive by design, or at least by indifference. The infrastructure is the same, the correspondent banking chains, the SWIFT messaging, the compliance frameworks. The difference is bargaining power. A corporation negotiates. A migrant worker accepts whatever is offered. That is what the data has shown consistently for more than two decades
The G8 committed in 2009 to reducing remittance costs to 5% when the global average was 9.67%. Today it’s 6.4% – progress, but still above the target and more than double the UN’s 3% goal. Why has the decline stalled?
Progress has stalled because the institutions that control the infrastructure have limited commercial incentive to reduce fees further. When the G8 made that commitment in 2009, the global average was around 10%. By 2025, it had fallen to 6.4%. That is real progress, and it matters. But the pace of decline has slowed dramatically, and we are still well above the 5% target from 2009, let alone the UN’s 3% Sustainable Development Goal target for 2030.
The reason is over-regulation limiting market competition, not technology. In many corridors, two or three money transfer operators handle the majority of flows. Competition is limited by licensing requirements, correspondent banking dependencies, and the capital costs of maintaining pre-funded accounts in destination markets. New entrants face substantial barriers. Consumers have limited choice. The result is a market failure in the textbook sense: providers have pricing power, consumers lack alternatives, and regulators have not intervened effectively.
India’s UPI, Brazil’s Pix, Nigeria’s NIP all process payments instantly at negligible cost. In the US there are many ways to transfer funds without having to pay a fee. The infrastructure works domestically. The question is why it stops working the moment money crosses a border. The answer is that the institutions controlling cross-border infrastructure are taking advantage of onerous regulations and are optimising for margin preservation, not cost reduction.
Correspondent banking has been the infrastructure for cross-border payments for decades. What happens when that infrastructure starts withdrawing from entire regions?
When correspondent banks withdraw, the consequences cascade. A bank in Tonga or Jamaica cannot settle a US dollar transaction on its own. It needs a correspondent relationship with a bank that can access the dollar clearing system, typically a major institution in New York or London. When that correspondent bank terminates the relationship, the local bank does not simply find another partner. In small, low-volume markets, there may not be another willing partner.
What follows is a cascading failure. Without correspondent banking access, local banks cannot process international payments. Remittance operators that rely on those banks lose their settlement channel. Money transfer services close, consolidate, or raise prices to cover the cost of routing transactions through longer, more expensive intermediary chains. The migrant worker in Auckland trying to send money to family in the Pacific Islands finds fewer options, higher fees, and longer delays. Even an American-Canadian parent sending tuition money to a son studying in Canada or a Mexican-American sending money to a service provider in Mexico finds the remittance fees exorbitant.
The World Bank has documented significant correspondent banking losses across the Pacific Islands, the Caribbean, and parts of Africa. In some corridors, the number of active correspondent relationships has fallen by 25% or more. Several Caribbean countries have lost 50% or more of their correspondent banking relationships over the past decade. The irony is sharp: the regions most in need of financial integration are being systematically excluded from it by the institutions that control access.
The banking industry frames this as a necessary response to regulatory pressure. But here is the problem with that logic: when a bank terminates its correspondent relationship with a financial institution in Somalia, Somali migrants do not stop sending money home. They cannot stop. Those remittances are not discretionary. Instead, the money moves through informal channels, unregulated, unmonitored, invisible to financial intelligence systems. De-risking does not reduce risk. It redistributes it away from institutions that can manage it and toward channels that cannot. Paradoxically, the very regulations to combat financial crime end up enabling criminals to hide in plain sight.
Some people argue that unregulated stablecoin channels solve the high-fee problem by bypassing correspondent banks entirely. You’ve been vocal that this creates different harms. What are they?
The appeal is understandable. When correspondent banks charge 6% or more and informal stablecoin channels promise better rates by operating outside the formal banking system, the immediate savings are real. A worker can deliver more money to their family. But the long-term costs are substantial, and they fall on the very communities these transfers are meant to help.
Unregulated peer-to-peer stablecoin transfers bypass know-your-customer and anti-money laundering checks, creating compliance risks that can expose both sender and recipient to legal jeopardy. They underreport cross-border flows, reducing the visibility that central banks in recipient countries need to manage foreign exchange policy and monetary stability. They drain deposits from formal banking systems in developing economies, weakening the capital base that funds lending to local businesses and households. And they concentrate settlement in unregulated intermediaries who may move large volumes of capital with no oversight, creating systemic risk that developing countries are least equipped to absorb.
At scale, informal stablecoin channels do not solve the remittance problem. They trade one extractive system for another, replacing high fees with regulatory arbitrage, weak governance, and erosion of the policy tools that recipient countries need to manage their own economic futures. The individuals using these channels face legal risk they may not understand. The receiving countries lose the monetary sovereignty they need to manage their own stability. And the international financial system loses the transparency it was designed to create.
The solution is not to abandon oversight. It is to build regulated infrastructure that does not depend on correspondent banking, settlement networks that operate through licensed institutions with transparent compliance, proper custody, and oversight frameworks that protect both users and recipient economies.
You’ve joined the board at Encryptus, a regulated stablecoin infrastructure provider. After spending your career documenting the remittance problem, what does the solution actually look like?
The solution is regulated infrastructure that can settle cross-border payments in real time, at low cost, with full regulatory visibility, without depending on a chain of intermediary banks. The technology to do this already exists. Real-time settlement rails, digital payment infrastructure, modern compliance tools. What has been missing is the institutional will to deploy them at scale within a properly regulated framework.
The risk profile of a regulated, dollar-backed stablecoin operating through licensed financial institutions is fundamentally different from speculative cryptocurrency trading or unregulated peer-to-peer channels. When a stablecoin is fully reserved with US dollars and US Treasuries, held in institutional custody, and integrated into regulated banking infrastructure, you have the speed and cost efficiency of digital settlement with the transparency and oversight that regulators require and recipient countries need.
What attracted me to Encryptus is that they are building this infrastructure in practice, not just talking about it. They operate across more than 80 countries and 41 currencies, providing payment firms, remittance providers and financial institutions with compliant infrastructure for stablecoin-enabled settlement. They are integrating with mobile money operators and licensed banks in markets where banking penetration is low but mobile wallet usage is high. That last-mile infrastructure, the on-ramps and off-ramps that let someone receiving a dollar-backed token convert it into local currency and spend it, is where the real challenge lives.
The question is whether regulators will create the conditions for this infrastructure to compete on equal terms with the incumbent system, or whether they will continue to protect a correspondent banking model that extracts $41 billion annually from the world’s poorest households.
The countries that stand to benefit most from lower-cost remittance infrastructure are often the ones with the weakest banking penetration. How does stablecoin infrastructure work in markets where most people don’t have bank accounts?
This is precisely why mobile money integration is so critical. In sub-Saharan Africa, $1.4 trillion flowed through mobile wallets in 2025, according to the GSMA. The continent hosts 1.2 billion registered mobile money accounts, more than half the global total. Mobile money is not a niche. It is the dominant payment infrastructure for hundreds of millions of people. Any stablecoin strategy that does not integrate with these networks is building a motorway with no exits.
The way it works in practice is that a regulated stablecoin infrastructure provider partners with local mobile money operators and licensed financial institutions to create on-ramps and off-ramps. A migrant worker in London sends a stablecoin-backed transfer. The recipient in Lagos or Nairobi receives local currency directly into their mobile wallet through a licensed partner. The settlement happens in real time on stablecoin rails. The last mile happens through the infrastructure people already use. The compliance happens at both ends, through regulated institutions.
This is not hypothetical. It is being built now. But it requires local partnerships, regulatory engagement, and compliance tooling that works in markets where formal banking is thin on the ground. The countries with the greatest need for lower-cost remittance infrastructure, Africa, South Asia, Latin America, are the ones with the weakest correspondent banking penetration and the strongest mobile money ecosystems. The infrastructure gap is real. But so is the opportunity to build something that actually serves the people who need it most.
If you were advising regulators in remittance-dependent countries right now, what would you tell them to focus on?
I would tell them to ensure that cross-border payments are fast, affordable, transparent, and visible to regulators. Regulators should provide the conditions for stablecoin infrastructure to operate.
Regulatory sandboxes are useful here. They allow regulators to observe how stablecoin infrastructure works within a supervised environment before establishing permanent frameworks. They provide real data on compliance, liquidity, settlement risk, and user protection. And they let regulators see whether the infrastructure actually delivers on the promise of lower costs and faster settlement without sacrificing oversight.
I would also tell them to reduce compliance requirements for small-value transfers. A $200 remittance does not pose the same risk as a $200,000 corporate transaction. Risk-based regulation that differentiates between these flows can lower costs for the people who need it most without compromising financial intelligence.
Finally, I would tell them to engage with the mobile money operators, the fintech platforms and the regulated stablecoin providers who are building last-mile infrastructure in their markets. The institutions that have spent decades charging migrant workers 6% or more are not going to fix this problem voluntarily. Change will come from regulators who are willing to let new infrastructure compete, and from the infrastructure providers who are building systems that actually serve the people sending and receiving the money.
