What Is Remittance? Meaning, Examples and How Remittances Work

If you live or work in one country and send money to someone in another country, you may already be making a remittance without realizing it.

The word remittance is commonly used to describe money sent from one country to another, particularly when someone living or working abroad sends money to family, friends or their home country.

For example, someone living in the UK might send £300 to their family in Nigeria each month to help with household expenses. That payment can be described as a remittance.

Remittances can be sent through banks, specialist money transfer services and digital financial apps. Depending on the provider and destination, the recipient may receive the money directly into a bank account, mobile wallet or as cash.

But remittance has a broader meaning than simply "sending money abroad."

In this guide, we'll explain what a remittance is, how remittances work, the different types, who uses them, how much they cost, how exchange rates affect the amount received and how to choose a suitable way to send money internationally.

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What Is Remittance?

A remittance is a transfer of money or funds from one person or party to another.

In everyday financial conversations, the term is most commonly associated with money sent across international borders, particularly when someone living or working abroad sends money to family or communities in their home country.

For example, someone living in London might send £500 to their family in Lagos. The sender pays £500, the money is converted into Nigerian naira where applicable, and the recipient receives the resulting amount through the chosen delivery method.

The same concept applies to payments such as:

• Sending money from the UK to India
• Sending money from the UK to Nigeria
• Sending money from Canada to Nigeria
• Sending money from The USA to Nigeria

The countries and currencies may change, but the basic idea is the same: money is sent from one person or location to another, often across international borders.

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What Does Remittance Mean?

The word remittance comes from the verb "remit", meaning to send or transfer money.

In modern financial services, remittance is often used when talking about international payments, especially money sent by migrants or people working abroad to people in their home countries.

A remittance doesn't necessarily have to be sent to a family member. Someone might send money to their own account overseas, pay for a property or support a friend or relative.

How Do Remittances Work?

An international remittance generally involves several stages.

1. The sender starts the transfer

The sender chooses a bank, money transfer service or financial app and enters the amount they want to send.

They'll usually need information about the recipient, such as their name and bank or payment details.

2. The sender pays for the transfer

Depending on the provider, the sender may fund the transaction through:

• A bank account
• Debit card
• Credit card
• Existing account balance
• Another supported payment method

3. The money is converted

If the sender and recipient use different currencies, the money needs to be converted.

For example: GBP to NGN or GBP to INR

The exchange rate used can have a significant effect on how much the recipient ultimately receives.

4. The money is delivered

The provider processes the payment and sends the money through the relevant payment networks.

Depending on the service and destination, the recipient may receive the money through:

• A bank account
• Mobile wallet
• Payment account
• Cash-pickup location
• Another supported receiving method

The exact process depends on the provider, destination and delivery method.

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What Is an Inward Remittance?

An inward remittance is money received from another country.

For example, imagine someone living in the UK sends £500 to a family member's bank account in India.

From India's perspective, that payment is an inward remittance because money is coming into the country from abroad.

The term is therefore about the direction of the money from the receiving country's perspective.

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What Is an Outward Remittance?

An outward remittance is money sent from one country to another.

For example, if you're living in the UK and send money to your family in Nigeria, that payment is an outward remittance from the UK's perspective.

An easy way to remember the difference is:

Outward remittance = money going out

Inward remittance = money coming in

The same transaction can therefore be an outward remittance in one country and an inward remittance in another.

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Who Uses Remittances?

Anyone can send a remittance, but they are particularly important for people who live and work away from their home country.

A common example is a migrant worker sending part of their earnings to family members at home.

For instance, someone who moves from Nigeria to the UK for work might regularly send money to their family in Nigeria.

The recipient might use the money for:

• Food
• Housing
• Education
• Healthcare
• Household bills
• Business activities
• Savings
• Other everyday expenses

Remittances aren't limited to family support, however.

People may also send money internationally to pay their own expenses, support a relative studying overseas, make a property payment or business remittance.

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Why Are Remittances Important?

Remittances are important at both the household and economic level.

At an individual level, money sent from overseas can help families pay for everyday necessities and important expenses.

At a wider economic level, remittances represent a significant flow of money between countries. The World Bank estimates that remittances to low- and middle-income countries reached about $656 billion in 2023 while The UK digital remittance market generated approximately $1.53 billion in revenue in 2024 

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For some countries and communities, money received from relatives working abroad can therefore represent an important source of household income and foreign currency.

This is one reason the cost and reliability of international money transfers matter.

When someone sends money regularly, even relatively small differences in fees or exchange rates can affect how much ultimately reaches the recipient.

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What Are the Different Ways to Send a Remittance?

There isn't one universal way to send a remittance.

The right option depends on where you're sending the money, how much you're sending, how quickly it needs to arrive and how the recipient wants to receive it.

1: Bank transfers

Traditional banks can send international payments directly to another bank account.

This can be convenient if you already use the bank for your everyday finances. However, international payments can involve transfer fees, exchange-rate costs and, depending on the payment route, intermediary charges.

2: Money transfer services

Specialist money transfer services are designed specifically for moving money internationally. They may offer online transfers, mobile apps, bank deposits, cash pickup and other delivery options.

3: Digital financial apps

Some financial apps allow users to manage international transfers through an app.

These services can make it easier to see the exchange rate, fees and expected amount received before completing a transfer.

4: Cash pickup

Some providers allow recipients to collect money in cash from participating locations.

This can be useful when the recipient doesn't have access to a suitable bank account or prefers cash.

5: Mobile wallets

In some countries, remittances can be delivered directly to a mobile money wallet.

Availability depends on the destination country and provider.

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How Much Does a Remittance Cost?

The cost of an international remittance can vary considerably.

There isn't always a single "remittance fee". The overall cost can include several components.

1. Transfer fee

A provider may charge a fixed transfer fee or a percentage of the amount being sent.

2. Exchange-rate markup

If you're converting currencies, the provider may apply a margin to the exchange rate.

This is important because a transfer can appear inexpensive while still costing more through the exchange rate.

3. Intermediary fees

Some international payment routes involve intermediary banks or other institutions that may charge for processing the payment.

4. Recipient fees

Depending on the payment route, the receiving bank or payment provider may charge the recipient.

This is why comparing only the advertised transfer fee can give you an incomplete picture of the cost.

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How Exchange Rates Affect Remittances

Exchange rates determine how much money the recipient gets when currencies are converted.

Suppose you send: £500 from the UK to India

The provider converts your pounds into Indian rupees.

If the exchange rate changes, the recipient may receive a different amount even if you send exactly the same £500.

This is why exchange rates are an important part of remittance pricing.

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Remittance vs Bank Transfer: What's the Difference?

The terms remittance and bank transfer are sometimes used interchangeably, but they aren't exactly the same thing.

A bank transfer describes a method of moving money.

A remittance describes the payment or money being sent, particularly when referring to international or personal transfers.

You can therefore send a remittance using a bank transfer.

You can also send a remittance through a specialist money transfer service, digital financial app or another supported method.

The distinction matters because you don't necessarily need to use a traditional bank simply because you're sending money internationally.

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Remittance vs International Money Transfer

These terms are closely related.

An international money transfer is a broad description of moving money across national borders.

A remittance is commonly used when describing money sent internationally, particularly personal transfers such as money sent by people working abroad to family or communities in their home countries.

In everyday conversation, the terms are often used interchangeably.

The difference is mainly about context and purpose rather than the basic mechanics of moving the money.

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How to Send a Remittance Using Pesa

If you live abroad and regularly send money to family, friends or your own account in another country, Pesa can be a convenient option to consider.

Pesa is designed to make international money transfers straightforward through its app, allowing you to send money without having to rely on a traditional bank's international transfer process.

For people who regularly send money home, the most important things to consider are usually how much the recipient receives, the exchange rate, any transfer fees and how convenient the process is.

With Pesa, you can use the app to set up an international transfer and review the transaction before sending it.

A typical transfer involves:

1. Choose the country you're sending money to.
2. Enter the amount you want to send.
3. Add or select the recipient.
4. Review the exchange rate and transfer details.
5. Confirm and send the transfer.

Pesa can be particularly useful for people living abroad who regularly send money to countries such as India, Nigeria, Ghana and Kenya.

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How Long Does a Remittance Take?

There is no single standard delivery time for every remittance.

A transfer may arrive very quickly or take longer depending on factors such as:

• Provider
• Destination country
• Currency
• Payment method
• Delivery method
• Banking infrastructure
• Compliance or verification checks
• Weekends and public holidays

For example, a transfer to a supported bank account may follow a different process from a cash-pickup transaction.

Transfers involving additional verification or banking intermediaries may also take longer.

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How Can You Receive a Remittance?

The recipient can receive a remittance in several ways, depending on what is available in their country.

1: Bank account

The money is deposited directly into the recipient's bank account.

This is one of the most common options for digital international transfers.

2: Cash pickup

The recipient collects the money from a participating location.

This can be useful where bank-account access is limited.

3: Mobile wallet

In supported markets, the money can be sent directly to a mobile money account.

4: Payment account

Some providers allow recipients to receive money into a digital financial account.

The available options depend on the destination country and provider.

Are Remittances Safe?

Sending money internationally can be safe when you use a legitimate financial provider and take reasonable precautions.

Before sending money, check:

• Who operates the service
• Whether the provider is authorised or registered where appropriate
• What protections apply to your money
• How the provider handles fraud
• What customer support is available

You should also verify the recipient's details carefully.

A mistake in a bank account number or other payment information can cause delays and, depending on the payment system, may make recovering the money difficult.

Never send money to someone simply because they have asked for it. If you're unsure about a payment request, verify the recipient independently before completing the transfer.

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How to Choose the Best Remittance Service

There are many ways to send money internationally, so how do you choose between them?

Focus on the factors that actually affect the value and experience of your transfer.

1. Total cost

Compare the transfer fee and the exchange rate.

2. Amount received

This is one of the most useful numbers to compare.

If you send the same amount through two providers, check how much the recipient would actually receive.

3. Transfer speed

If the money is needed urgently, choose a service that provides an appropriate delivery time for your destination.

4. Delivery method

Check whether the recipient can receive the money through their preferred method.

5. Supported countries and currencies

Not every provider supports every country or currency.

6. Convenience

If you send money regularly, a simple process and easy-to-use app can save time.

7. Security and regulation

Check the provider's regulatory status and the protections that apply to the service.

8. Transparency

Before you send money, you should be able to understand what you're paying and what the recipient is expected to receive.

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Why Remittance Fees Matter for Regular Senders

A one-off transfer fee might not seem significant.

But if you send money every month, the cost can add up.

Imagine someone sends £300 internationally every month. That's: £300 × 12 = £3,600 sent each year

Even a small difference in total transfer costs or exchange-rate value can therefore become meaningful over 12 months.

This is why regular remittance senders should compare providers based on the total value of each transfer, rather than choosing whichever provider advertises the lowest headline fee.

The same principle applies whether you're sending £50, £500 or several thousand pounds.

Are Remittances Only Money Sent to Family?

No.

While family support is one of the most common contexts in which people use the term, remittances are not restricted to payments between relatives.

A person may send money internationally to:

• Their own account overseas
• A friend
• A partner
• A university
• A landlord
• A healthcare provider
• A business
• Another organisation

The term is often used broadly in consumer financial services.

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What Should You Check Before Sending a Remittance?

Before confirming an international transfer, take a moment to check the details.

1: Check the recipient

Make sure the recipient's name and account or payment details are correct.

2: Check the exchange rate

Look at the rate being used to convert your money into the recipient's currency.

3: Check the total cost

Don't look only at the transfer fee. Consider any exchange-rate markup and other applicable charges.

4: Check the amount received

This is often the simplest way to compare different services.

5: Check the delivery estimate

If the recipient needs the money urgently, make sure the expected delivery time works for them.

6: Check the destination

Make sure the provider supports the country, currency and receiving method you need.

Taking these steps before sending money can help you avoid unnecessary costs and delays.

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The Bottom Line

A remittance is money sent from one person or party to another, commonly across international borders.

For millions of people, remittances are a practical way to support family, pay expenses, contribute towards education or healthcare and move money between countries.

If you regularly send money to family, friends or your own accounts overseas, comparing these factors can help you choose a transfer service that offers the right combination of cost, speed, convenience and transparency.

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