Fifty-one per cent of UAE residents who sent money to family and friends over the past 12 months believe they would have struggled financially without their support, a report by global payments company Mastercard has said.
About 89 per cent of consumers globally made cross-border payments in the past 12 months to support family, friends or children who live abroad, Mastercard’s annual Borderless Payments Report 2021/2022 found.
Despite a wider economic recovery and international travel reopening after the Covid-19 pandemic, 66 per cent of UAE residents sent more money in the past year to family abroad.
The global payments company surveyed 8,000 consumers across 15 markets.
“Concerns about these family members are one of the main reasons the number of cross-border payments continues to increase — especially in countries with large numbers of migrant workers, who traditionally send remittances to their families back home,” the Mastercard report said.
Cross-border payments are currency transactions between people or businesses in different countries, according to the consultancy EY.
The sender typically chooses a front-end provider, such as a bank or a money transfer operator, to initiate the payment and the recipient receives the money via the medium specified by the sender, EY said in a report last year.
Traditionally, cross-border payments flow via the correspondent banking network, which most front-end providers use to settle the payment.
However, in recent years, new back-end networks have emerged to optimise cross-border payments by enabling interoperability between payment methods and providing senders with more avenues to reach the receiver, EY said.
Global cross-border payment flows are expected to hit $156 trillion in 2022. The industry is being shaken up by a rush of new entrants that promise to solve long-standing problems, according to EY's research.
Global remittance flows to poor and middle-income countries grew by 7.3 per cent to $589 billion in 2021, according to a World Bank report.
The five most common destinations for those remittances were India, China, Mexico, the Philippines and Egypt.
About 54 per cent of UAE residents said families abroad were still struggling to recover from Covid-19 and required their financial support, according to Mastercard.
The pandemic hastened the switch from traditional channels to digital payments.
Fifty-seven per cent of those surveyed in the Emirates said they now rely more on online cross-border payments due to the lingering effects of Covid-19, the survey found.
The need to support family was the key driver for sending money abroad, Mastercard said, with about nine in 10 consumers in the UAE saying they sent money abroad to help family and friends.
In addition to general family support, other reasons included payments for child support, medical expenses, tuition and even wedding costs, the report said.
Speed was the top priority for UAE consumers who send money abroad, with 54 per cent of those polled ranking the delivery of funds within 24 hours as the top consideration.
Although 89 per cent of UAE respondents expressed confidence that their money would arrive in time, 87 per cent said they would use cross-border payments more often if they were faster, the survey found.
Payment security was another priority for consumers in the UAE. A majority, or 86 per cent, of people in the Emirates said they felt confident about the security of online cross-border payments, the research said.