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28 Oct 2021

The Role of Digital Remittances: Consolidated Findings from Supply and Demand Research

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This report is part of the outputs under the regional initiative “Mitigating the effects of COVID-19 Pandemic on migrants and their families from Central Asia” produced with the financial support of the Swiss Agency for Development and Cooperation and implemented by IOM. 

This research project aims to examine the digital remittance systems and usage in the Russian Federation and Central Asian countries, the legal, infrastructure, and the perception and behavioural barriers that may be limiting the uptake of digital financial services among migrants and remittance recipients. The research focuses particularly on the behavioural aspects of the process that may limit the engagement of migrants and remittance recipients in digital remittances and adjacent financial services. The results of this research will contribute to the evidence base for designing programmes to enhance the use of digital remittances among migrants and their recipient families, and ultimately to improve the financial inclusion of this target group using digital services.

The report was developed by: Donhatai Harris (lead author), and Anna Prohorova working under supervision of Michael Newson (Senior Labour Mobility & Human Development Specialist, Regional Office for South-Eastern Europe, Eastern Europe and Central Asia , International Organization for Migration, Vienna – Austria).

  • List of figures 
  • List of tables
  • Acronyms and Abbreviations 
  • Executive Summary
  • I. Introduction 
  • II. Financial literacy and digital remittances 
  • III. Research questions, hypotheses and methods 
    • 3.1 Research Questions
    • 3.2 Methodology
      • 3.2.1 Methods for the supply side analysis
      • 3.2.2 Methods for the demand side analysis
  • IV. Mapping digital remittance infrastructure:  Supply-side key findings
    • 4.1 Context 
      • 4.1.1 Evolution of remittance market in the post–Soviet space
      • 4.1.2 Legislative framework of digital remittances in the Russian Federation and Central Asia
      • 4.1.3 National payment systems and bank card ownership 
        • Russian Federation and Kazakhstan 
        • Tajikistan, Kyrgyzstan and Uzbekistan
    • 4.2 Digital Payment Patterns
      • 4.2.1 Sending digitally–receiving in cash
        • Availability
        • Accessibility
        • Cost
      • 4.2.2 Sending cash–receiving digitally
        • Availability
        • Cost
      • 4.2.3 Sending digitally–receiving digitally 
        • Availability
        • Accessibility 
        • Cost
  • V. Practicing digital remittances: Demand side key findings
    • 5.1 Preferences for digital remittances
    • 5.2 Actual usage of digital remittances
    • 5.3 Factors driving the choices of sending/receiving remittances
  • VI. Bringing together supply and demand: Prospects and opportunities for enhancing the uptake of digital remittances
    • Key Finding 1: Similar infrastructure but different bank card ownership by remittance senders in the Russian Federation and Kazakhstan
    • Key Finding 2: Preferences and practices of remittance senders do not coincide, revealing that switching to digital methods is still in progress 
    • Key Finding 3: Remittance recipients with bank cards still prefer cash, except for Kazakhstan
    • Context for the intervention
  • VII. Remittance behaviour intervention: Pilot design 
    • 7.1 Experimental Design
    • 7.2 Analysis of Results
      • 7.2.1 Sample selection and sample characteristics
      • 7.2.2 Click rates of the standard SMS and click rates after two weeks
      • 7.2.3 Behaviour in incentivized experiment
      • 7.2.4 Post–treatment outcomes
    • 7.3 Discussions of the results
  • VIII. Conclusion and Policy recommendations
  • IX. Annexes
    • Annex A. National payment systems in selected CIS countries
    • Annex B: Financial literacy portals launched by the national financial regulators in the Russian Federation and Central Asia countries
    • Annex C: Sampling framework for data collection
    • Annex D: Survey tool–Remittance Sender (Migrants)
    • Annex E: Survey tool–Remittance Recipient (Households)Annex F: Theory of Change
    • Annex G: Qualitative results: reasons for preferred mode of transfer
    • Annex H: Pre–intervention survey
    • Annex I: Post–intervention survey
  • X. References