On financial freedom: Exploring the impact of digital remittances in Jordan

For millions of families around the world, remittances are a vital lifeline. Global remittances sent from family members abroad to their relatives back home represent billions of dollars and these funds are often the only source of financial security for low-income households, providing a much-needed influx of cash to cover necessities such as food, housing and health care. 

In tandem, transparency is an essential component of successful cross-border payments. The frictional pain point associated with payments, including exorbitant fees and a disagreeable user experience, is now further exacerbated by the lack of openness in this sector. 

Poor visibility into the complexities of the payment process and associated fees results in a less than satisfactory user experience. As such, it is critical that banks prioritise transparency to improve the overall state of cross-border payments.

Remittances to economies in the Middle East and North Africa region (MENA) such as Jordan have grown 2.5 per cent in 2022 to $63 billion compared to a 10.5 per cent growth last year, according to World Bank estimates and can still benefit from improvements in digital channels to increase long-term financial resilience.

How Jordanians contribute to their home country through remittances

Jordan is a unique remittance market. While a large diaspora exists outside of the country predominantly in Saudi Arabia, UAE, Kuwait, Qatar, US and other countries, a large section of the population consists of refugees from other countries such as Syria. The government has been implementing many measures to ensure financial inclusion within all segments of the population. 

Jordanian expatriates' remittances increased by 1.5 per cent in 2022 compared with the previous year, reaching a total $3.452 billion, according to data from the Central Bank of Jordan (CBJ). About 10.5 per cent of the Jordan population is living overseas. Remittances in Jordan contribute 9.7 per cent towards the GDP in Jordan and is the fourth highest in the Middle East and North Africa region. 

The banking sector in Jordan is sound and robust, and broadly resilient to shocks and high risks, as banks enjoy high levels of capital and comfortable levels of liquidity and profitability, according to a 2021 Financial Stability Report by the Central Bank of Jordan. 

Digital remittances are seeing significant growth in the market due to the increasing adoption of digital payment solutions. In Jordan, the number of users in the digital transaction market is expected to amount to 31.02k users by 2027 and the transaction value is projected to reach $83.37 million in 2023. 

Benefits of faster money movement with Visa's innovative solutions

A recent  HYPERLINK "https://usa.visa.com/content/dam/VCOM/regional/na/us/run-your-business/d..." study published by Visa titled “Money Travels: 2023 Digital Remittances Adoption” concludes that consumers perceive the future as digital with 53 per cent of them turning to digital apps for money transferring. Besides, more than 70 per cent of consumers want a speedier payment solution that enables rapid transfers and alerts. As a result, we could highlight our service’s speed and efficiency, making it more appealing to future prospects. 

Cyber security is another pressing issue in the current digital world. According to our research, customers have a strong appreciation for the Visa brand in relation to real-time payments (RTP) solutions, with 80 per cent indicating that the brand adds credibility and confidence to their experience. With the prevalence of security threats, Visa’s assurance of safety and trust in their RTP offerings is an invaluable benefit. We believe customers will continue to appreciate the Visa brand for its renowned security measures and trustworthiness in RTP services.  

With greater visibility into the process, users will have more control over their payments and be able to make informed decisions regarding fees and other aspects of their payments. This will, in turn, result in a better user experience, lower fees, and overall better outcomes for all stakeholders in the payment process.

Despite the emergence of recent, adverse developments in the economy and a shift in consumer behaviour, Visa strives to make digital remittances an appealing alternative for individuals and businesses alike. We recognise the benefits that digital remittances provide and are working to make them a viable option for people around the world. The combination of these factors, coupled with our commitment to providing customers with the best service, make digital remittances an attractive choice for those looking for a reliable and faster way to move money and we are proud to be at the forefront of such an endeavour.

The writer is Senior Vice President and Group Country Manager North Africa, Levant and Pakistan at Visa