True Borderless Supports Positive Social Impact for Migrants and Their Communities and Sustainability of Remittance Services Regionally

Remittances are a part of life for migrant workers. Migrant workers work in host countries, and they need to send money to their families frequently. This private flow of money is important for most countries, especially for developing countries, as the total amount of remittance far exceeds the total combined amount of private direct investment and official development assistance. On average, about half of the money remitted goes to rural areas, which have people with lower incomes. The money remitted becomes a lifeline for this target segment; it contributes approximately 60% of the family’s household income.[1] With an estimated 258 million international migrants worldwide,[2] global remittance flow in 2019 reached USD 714 billion, up 2.7% year-over-year (YoY).

Despite this, the money remitted only represents an estimated 15% of what migrant workers earn. The remaining 85% is used for other expenses, such as food and rent, or saved.[3] This shows that migrant workers can also benefit from other financial services, such as payments, savings, insurance and investments, and they might even seek out loans. However, monetizing this target segment is not straightforward. For example, undocumented migrant workers might prefer financial services using informal channels with less-stringent identification processes and lower costs. Countries with significant amounts of undocumented migrant workers struggle with large, unbanked populations. In general, it is not just demand-side issues. Banks are also reluctant to provide loans to migrant workers due to the credit risk.

Many remittance service providers are expanding their businesses to include other service offerings, considering the potential market demand for associated and diverse financial services to serve migrant workers. Merchantrade, based in Malaysia, has successfully partnered with companies in the industry to provide extensive touchpoints for remittance nationwide, plus insurance products and payments services for migrant workers. Its partnership with AXA and MCIS has resulted in affordable micro-insurance and life insurance products for migrants. Merchantrade is building an ecosystem of relevant new services to serve the needs of migrant workers and their communities. Simple economics drive building ecosystems to serve migrant workers in host countries. However, the potential is large; not many companies consider linking to the blue ocean beyond, which includes ecosystems in migrant home countries.

Apart from financial services in the host countries, migrant workers can also benefit from remote access to financial services in their home countries. According to Frost & Sullivan research, migrant workers buy insurance or mobile top-ups for their families at home. However, this is not unique to consumers and can be extended to regional businesses. It is not uncommon for migrants to own businesses or to help run businesses. With 5G and digital payment facilities, internet of things (IoT) solutions can more reliably facilitate real-time remote business operations management, both locally and from another country. The need for borderless ecosystems and remote access is not new and may expand into true borderless ecosystems in the future.

The rising mobile and internet penetration in the Asia-Pacific region has paved the way for online websites and mobile applications to tap into a wider customer base. This is also true for the migrant worker segment. Rapid Asia study findings show that smartphone penetration among migrant workers is not far behind the mass market. In some cases, it may already exceed mass-market levels and is expected to increase further.[4] A seamless, user-friendly mobile application experience is an advantage for companies competing for downloads.

Early indications of the possibilities of borderless ecosystems have been demonstrated by Traveloka, an Indonesian company that provides ticket booking services. In Traveloka’s mobile application, users can swap the settings between seven different countries. This feature enables convenient remote access to regional ecosystems. For example, a user in Malaysia can purchase train tickets in Indonesia with minimal friction. This service can be incredibly useful if tickets are the only thing that migrant workers need.

Many migrant workers already have access to online websites and mobile applications; however, there is a reluctance to use them. Migrant workers, especially those with lower incomes and lower education levels, are concerned about business continuity. They are more inclined to use channels that have a notable offline presence near their residence in their host and home countries. Since the start of the COVID-19 pandemic, migrant workers have become more aware of digital, but the shift to digital may be slow. The financial services business is built on trust established over many years, and migrant workers still prefer an online and offline presence to transition to utilizing online digital channels.

Migrant workers spread across the region may warrant geographical expansion of a business serving them regionally. However, in expanding abroad, companies need to overcome many challenges, including the different regulations on financial services and reach required in each country. There is also the digital service tax, which reduces price-performance value for customers and reinforces the perception of a bordered world. However, a silver lining does exist with the advancement of technology. Newer technologies such as blockchain are enabling lower costs and higher efficiency. In the remittance services industry, blockchain can enable near-real-time remittances with less than USD 0.01 remittance fees. Therefore, new technologies can help remittance services providers reduce costs, resulting in profitability improvements while delivering better rates to customers.

Migrant workers are key contributors to societies in Asia-Pacific. However, despite their role in a country’s economy, many of their financial services needs have not been fulfilled. True borderless financial ecosystems can address the market gaps. However, in creating these ecosystems, there will be many challenges to build trust and educate customers. Collaboration between local regulators and industry participants, clever use of technology, and going digital will be imperative.

Some are already ahead of others in this race. Merchantrade has an international money transfer organization (IMTO) platform with 100 partners, including more than 40 banks. It has successfully executed targeted marketing strategies for migrant workers and their families in multiple countries regionally. The company operates multiple online and offline platforms in Malaysia, including more than 450 agent locations, 81 branches, multiple mobile applications, and online websites. With its decade-long experience, Merchantrade has already built the groundwork for a regional ecosystem and is set to continue its business expansion regionally.

Migrant workers in Asia-Pacific need borderless financial services. True borderless may be a utopian concept for many years to come. Time will tell how the future of the region will be transformed by technology and regulations. Meanwhile, some companies, such as Merchantrade, are pushing the boundaries of what is possible and taking steps to lead the remittance services industry into the future.



[1] United Nations,, accessed on 2 October 2020.

[2] International Organization for Migration,, accessed on 2 October 2020.

[3] United Nations,, accessed on 2 October 2020

[4] Rapid Asia,, accessed on 2 October 2020.

About Quah Mei Lee

Quah Mei Lee is a Director with Frost & Sullivan’s ICT practice. Working on Mobile & Wireless Research for Asia-Pacific, her area of expertise lies in telecoms strategy with a specific interest in 5G.

Quah Mei Lee

Quah Mei Lee is a Director with Frost & Sullivan’s ICT practice. Working on Mobile & Wireless Research for Asia-Pacific, her area of expertise lies in telecoms strategy with a specific interest in 5G.

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