Fintech Potential for Remittance Transfers: A Central America Perspective

Author/Editor:

Julia Bersch ; Jean François Clevy ; Naseem Muhammad ; . Esther Perez Ruiz ; Yorbol Yakhshilikov

Publication Date:

June 25, 2021

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

This paper analyzes the potential for fintech to facilitate cheaper and more efficient remittances, and to enhance financial inclusion in Central America. Digital remittances remain nascent in the region, primarily reflecting behavioral inertia, small cost advantages of digital over traditional channels, and inadequate financial literacy. Through expanded alliances between traditional and fintech operators, digital remittances can further reduce transaction costs and reach those remote, low-income households in a timely and secure manner. A meaningful expansion of fintech remittances necessitates an enabling regulatory environment for digital financial services, and KYC and AML/CFT requirements proportionate to the value of transfers.

Series:

Working Paper No. 2021/175

Frequency:

regular

English

Publication Date:

June 25, 2021

ISBN/ISSN:

9781513585420/1018-5941

Stock No:

WPIEA2021175

Pages:

52

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