Transforming Remittances: How Earned Wage Access Can Ensure Fairer International Payments

Transforming Remittances: How Earned Wage Access Can Ensure Fairer International Payments

To mark International Day of Family Remittances (16th June), specialist global payroll provider, CloudPay has urged more employers to consider how they can support fairer international payments.

According to the World Bank, $647 billion was transferred to individuals in low and middle-income countries in 2022, with projections indicating this could reach $5.4 trillion by 2030. Despite this substantial flow, many remittance transfer providers impose commissions as high as 25%. CloudPay advocates for employers to adopt more flexible and cost-effective methods, such as earned wage access (EWA) solutions, allowing workers to access their accrued earnings and transfer them internationally whenever needed.

Ferdinand Dragtstra, Strategy Director New Markets, at CloudPay, commented on how EWA can solve many of the challenges facing families relying on income being transferred from overseas:
“Remittance and commission fees hit some of the world’s poorest people especially hard. New, fairer options are needed to support vulnerable families. Most developed countries heavily rely on migrant workers, who move in search of better-paying jobs that can support them and their families in their home countries. However, the rates and additional fees seen in many remittance providers significantly undermine the benefits of these jobs.

“Users often become dependent on providers and have no other legal alternatives available to them, especially those in rural areas. They’re also more sensitive to currency fluctuations which can reduce the value of money they are sending. In some extreme cases, workers resort to giving envelopes to truck drivers and other non-secure routes that are fraught with risk and make it unlikely that money will ever reach the intended recipient.

“Fortunately, there is some positive movement. The United Nations has set a target to reduce the global average transaction fee to 3%, compared to the current average of 6.25% - part of this goal is to encourage providers to offer fairer options for remittances. Our EWA solution, CloudPay NOW, stands out in this respect and is already being used by employers and employees worldwide. Employees can access their earnings and transfer funds directly to any bank account, including those of family members abroad. Remittances can be a matter of life and death, so having a platform that enables money to be sent easily and quickly can make a world of difference.”