Introduction to Remittance
Basically any money that is transferred from one party to another in the form of a bill or invoice or even a gift can be considered as remittance. But the term remittance is more broadly used for the money that is sent by migrants, who work abroad away from their family to their family back at home. These remittances are also called workers' or migrants’ remittances.
What is Remittance?
The literal meaning of remittance is to send back. So talking in financial terms, remittance is sending money to a party more likely living in another country. This is usually done by people working in foreign countries who send a part of their money to their families back at home. These remittances are sometimes a largest source of income for most families living in a slow growing economy and developing countries.
Most commonly remittances are made through digital money transfer. This can be done by the electronic payment system of banks or a money transfer service. This usually saves time as digital transfers usually take less than ten minutes so it is usually a preferred way of making remittances. Through this method the person who makes the payment is charged a certain amount of fee for the transfer.
Remittances are important for the people living in small and developing countries which have slow growing economies as their relatives working abroad send them these remittances which form a major part of their income. Remittances also play an important part at the time of disasters by providing assistance in disaster relief funds.
Both of the above factors play an important role in raising the standard of living for people living in the less developed countries with a slow growing economy. These remittances also help such people living in less developed countries to open bank accounts which help the overall economic development.
