Remittances are widely used as an important source of capital for businesses, families, and communities in many countries such as Mexico, Italy, Philippines, and many more where most migrants come from or return home. Remittance is also a significant part of the economy and is a steady source of revenue for global banks. And as the global economy is projected to slow down and the Federal Reserve keeps interest rates at unflattering levels, people are wondering if this will in turn, cause remittances to suffer.
But the truth is: Remittance is a huge industry, and it's only going to get bigger!
The reason behind this is just the same as was finally discovered after the COVID-19 crisis – families will continue to send money to their loved ones. Even more so during these uncertain economic times. The real question is, where to find online money transfer services that are reliable, less expensive, and convenient with just a few clicks? This is why at Future Fintech Labs, we decided to develop Tempo to solve this problem.
It may be too early right now to tell exactly when the recession will be upon us. And while the experts may disagree on exactly how severe it will be, they all agree that a recession is coming.
What is a recession?
A recession occurs when an economy declines due to poor performance in two consecutive quarters or more. The National Bureau of Economic Research (NBER) defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP growth, real income growth, employment (labor market), industrial production and wholesale-retail sales". When the economy is projected to be heading towards a recession, it's often thought to get worse before things get better. That sometimes might mean more cautious spending from individuals which could also mean lower sales for businesses and lower economic growth for society at large.
What does that mean for remittance?
So this might mean that the recession coming will ultimately affect remittances. However, we can take some educated guesses based on the past and what we know so far about the current situation:
Remittance is a huge market. And right now, remittances are now more than $600 billion a year and are predicted to increase by 4.7% in 2023, reaching up to $810.79 billion globally, according to Insider Intelligence.
This is good news for the people who send money, but not so much for those who receive it. Fees and rates have been climbing steadily over the last few years, and there's no sign that they'll stop any time soon.
In fact, if you're sending money overseas, you may want to consider avoiding traditional banks or other mainstream financial service providers, because these companies tend to charge higher fees when compared with peer-to-peer (P2P) payment services like PayPal and Venmo or other online money transfer platforms like Tempo.
How can immigrants prepare for economic uncertainty?
There are major steps that immigrants can take to ensure that they're prepared for any unexpected economic downturns that might be brewing ahead:
Find better ways to send money that is convenient and less expensive:
In a nutshell, this would be the most straightforward answer. This is true for both residents in the U.S. and those in their home countries. For instance, Tempo allows immigrants living abroad to send money faster than ever before without having to deal with multiple banks or financial institutions. Money transfer services like ours are also becoming increasingly popular as a means of remittance due to their ease of use and little to no-cost fees.
Find ways to improve your financial literacy:
This includes learning about different types of investments such as stocks, bonds, and mutual funds, among others. It also means developing good financial habits such as saving money regularly and avoiding unnecessary spending on items like luxury cars or excessive designer clothing.
Start saving early and save more:
Start building up an emergency fund, for example, so that you're prepared if something goes wrong with your finances down the road (for example: losing your job). If you've been saving all along, then keep saving! You're already ahead of the game.
Diversify your investments:
If you already started investing, start diversifying your assets. Make sure your portfolio includes assets that are more stable than stocks and bonds. Including assets like real estate (if possible), precious metals and other commodities, or even mutual funds that invest in these assets (which might include some stocks). These tend to be less volatile during times of market turmoil so they can help preserve your finances and wealth during times like these.
It has been many years since the last major financial bust. Now, the world is vulnerable to a new one. This can happen anytime. It is important to be prepared as you can never tell which specific way the market will go. The world is changing and no one is immune to concerns about these uncertain times. However, despite the imminent recession, nearly one in seven people use remittance services to remit money to friends and family residing outside their countries of origin. So it would be safe to assume that online money transfers are predicted to stick around inspite of the economy.
While it's impossible to predict the future, we do think that there is plenty of reason to stay optimistic about financial security during the upcoming recession. There are alternative services, such as mobile remittance services, that are increasingly being used in place of traditional wire transfers. And many consumers are expected to continue sending money due to cultural and family obligations. As an online money transfer solution, Tempo offers both convenience and safety for the sender and for the receiver. Customer support is available 24/7, and the online app is easy-to-use and understand.
The more educated you are about how to navigate these uncertain times, the more you can expect for a more positive impact in the future. This is why Future Fintech Labs will be hosting an upcoming online event that is scheduled to feature our fantastic team here at Future Fintech Labs. We will discuss how to get started with our fast-growing mobile remittance service platform, Tempo. The event is free and open to anyone interested in learning more about how they can use Tempo to send money abroad.
Click here to sign up for our free event happening on Thu, December 15, 2022, at 10:00 AM – 3:30 PM EST.