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Migrants' Choice of Remittance Channel: Do General Payment Habits Play a Role?

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  • Anneke Kosse
  • Robert Vermeulen

Abstract

This paper investigates the determinants in migrants' choice of payment channel when transferring money to relatives abroad. We surveyed 1,680 migrants in the Netherlands, identifying five remittance channels: bank services, money transfer operator (MTO) services, in-cash transfers via informal intermediaries, ATM cash withdrawals abroad and carrying cash when travelling back home. To the best of our knowledge, we are the first to present evidence of the role played by general payment habits: migrants who regularly use internet banking for other purposes are more likely to use bank services for remittances as well. However, we also demonstrate that other important drivers exist in determining the choice of payment channels, such as personal characteristics and country-specific factors, (perceived) costs, ease of use and the availability of remittance options. Based on our findings, we suggest that financial education, cost reduction and new (mobile) remittance solutions may serve a valuable role.

Suggested Citation

  • Anneke Kosse & Robert Vermeulen, 2013. "Migrants' Choice of Remittance Channel: Do General Payment Habits Play a Role?," DNB Working Papers 375, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:dnbwpp:375
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    References listed on IDEAS

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    Cited by:

    1. Chantha Hor & Pheara Pheang, 2017. "Analysis Determinant Factors Effect on Migrant Workers' Remittances Flow to the CLMV Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 202-207.
    2. Tamás Ilyés & Lóránt Varga, 2015. "A General Equilibrium Approach of Retail Payments," MNB Working Papers 2015/3, Magyar Nemzeti Bank (Central Bank of Hungary).
    3. Koji Kubo, 2015. "Evolving Informal Remittance Methods of Myanmar Migrant Workers in Thailand," Working Papers DP-2015-45, Economic Research Institute for ASEAN and East Asia (ERIA).
    4. Éric Darmon & Laetitia Chaix & Dominique Torre, 2016. "M-payment use and remittances in developing countries: a theoretical analysis," Revue d'économie industrielle, De Boeck Université, vol. 0(4), pages 159-183.
    5. Metzger, Martina & Riedler, Tim & Pédussel Wu, Jennifer, 2019. "Migrant remittances: Alternative money transfer channels," IPE Working Papers 127/2019, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    6. Silke Meyer, 2020. "“Home Is Where I Spend My Money”: Testing the Remittance Decay Hypothesis with Ethnographic Data from an Austrian-Turkish Community," Social Inclusion, Cogitatio Press, vol. 8(1), pages 275-284.
    7. Christian Ambrosius, 2016. "Remittances and Financial Access: Is There Really a Link and for Whom? Evidence from Mexican Household Data," The World Economy, Wiley Blackwell, vol. 39(7), pages 964-982, July.
    8. Thomas Yeboah & Emmanuel Frimpong Boamah & Thomas Padi Appai, 2021. "Broadening the Remittance Debate: Reverse Flows, Reciprocity and Social Relations Between UK-Based Ghanaian Migrants and Families Back Home," Journal of International Migration and Integration, Springer, vol. 22(1), pages 47-68, March.
    9. Zhu, Heng, 2016. "Remittance frequency, transaction fees and household impacts," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235561, Agricultural and Applied Economics Association.
    10. Lalouette, Laure & Zamora-Pérez, Alejandro & Rusu, Codruta & Bartzsch, Nikolaus & Politronacci, Emmanuelle & Delmas, Martial & Rua, António & Brandi, Marco & Naksi, Martti, 2021. "Foreign demand for euro banknotes," Occasional Paper Series 253, European Central Bank.

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    More about this item

    Keywords

    Remittances; payment instruments; qualitative choice models;
    All these keywords.

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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