Remittances: Glossary

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Access point - A physical location where remittance recipients can collect their money or cash-in and cash-out to/from any stored-value device (e.g. a bank branch, post office, mobile network agent, retail store or self-service machine).

Agent - An entity that captures or distributes remittance transfers on behalf of a remittance service provider (RSP).

Anti-money laundering/Combating the financing of terrorism (AML/CFT) - Policies to detect and reduce money laundering and terrorism financing.

Blockchain - An open, distributed ledger that can record transactions in digital currencies  (or tokens) between two parties and encrypted within “blocks” in a verifiable and permanent way. Bitcoins are one of the digital currencies used in blockchains. Applied to remittances, blockchains allow cross-border remittances among registered individuals or businesses without bank settlement and clearing systems.

De-risking strategy - The phenomenon of financial institutions terminating or restricting business relationships with clients or categories of clients in order to avoid rather than manage risk (Financial Action Task Force).

Diaspora - A community of people who live outside their country of origin and maintain a connection to their homeland or ancestry. Diaspora communities often remain emotionally and financially connected to their home communities. Migrant workers are also included within the category of diaspora.

Diaspora investment - The savings set aside by diaspora members with the purpose of financing personal projects in their home countries to improve their wealth, and generate financial returns or impact on development.

Fragile state - A state with weak capacity to carry out the basic functions needed for poverty reduction and development, and for safeguarding the security and human rights of its populations and territory, and that lacks the ability or political will to develop mutually constructive and reinforcing relations with society (OECD/DAC, 2010). Post-conflict countries are often referred to as a special case of fragile states.

Migrant worker - “A person who is to be engaged, is engaged or has been engaged in a remunerated activity in a State of which he or she is not a national.” (United Nations)

Migration flows - Cross-border movement of citizens from one country to another.

Money service businesses (MSBs) - Regulated non-bank financial institutions that transmit or convert money. They include money transmitters, payment instrument sellers, stored-value providers, check cashers, issuers or sellers of traveller’s checks or money orders and currency dealers or exchangers.

Money transfer operator (MTO) - A service provider that receives payment in cash, digital payment or by bank transfer, from the sender for each transfer (or series of transfers) without requiring the sender to open an account.

Mobile network operator (MNO) - A provider of wireless communication services that can also play a role in transferring remittances through the mobilization of its agent network as access points and as an issuer of electronic money.

Online service - Method to remit money using the Internet or the telephone network as access channels; bank account or credit/debit/prepaid cards as funding sources; and computers, phones or smartphones as access devices. Online services replace physical and in-cash interactions by remote electronic transactions.

Payment institution (PI) (or establishment) - In the European Union, a specific category of non-bank institutions allowed to handle payment operations including remittances.

Postal networks - Association between postal banks and postal organizations to use post office networks as delivery channels for postal or MTO remittance products.

Remittance corridor - Also known as remittance market, it specifies the remittance flow between an originating country (or region) and a receiving country (or region).

Remittance families - Transnational households composed of migrant workers who send remittances and their relatives who receive them in their countries of origin.

Remittance outflow - Flow of remittances leaving a country.

Remittance inflow - Flow of remittances coming into a country.

Remittance service provider (RSP) - An entity, operating as a business that provides a remittance service for a fee to end-users, either directly or credited to an electronically funded account, or partnering with agents owning access point networks such as stores, post offices or bank branches to collect the money to be sent.

Remittances - Cross-border, person-to-person payments of relatively low value. The transfers are typically recurrent payments by migrant workers to their relatives in their home countries to cover a substantial part of their daily expenses.

Rural presence - The extent of geographical coverage of a payout network in rural areas of a country.

Source: Sending Money Home: Contributing to the SDGs, One Family at a Time (Jun 2017, IFAD)

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