A remittance is money sent by a person in one country to a person in another, typically by a migrant supporting family at home. Remittances move through banks and specialist transfer providers, and their cost is measured by the exchange-rate margin plus fees.
Globally, remittances are one of the largest financial flows to developing economies, and Australia is a significant sending country: corridors to India, China, the Philippines, Vietnam and the Pacific carry steady volumes driven by family support rather than commerce.
The economics of a remittance are simple to state and easy to obscure. The sender pays in one currency, the recipient receives another, and the total cost is the transfer fee plus the gap between the provider’s exchange rate and the mid-market rate. Providers compete as much on the visibility of that cost as on the cost itself.
The World Bank prices remittances against a fixed benchmark: the total cost of sending US$200, expressed as a percentage of the amount sent, counting both charges together, with the mid-market comparison it uses called the interbank rate. Sustainable Development Goal target 10.c sets the global average at under 3 per cent by 2030 and marks corridors above 5 per cent for elimination, which on that benchmark is US$6 and US$10. The World Bank measured the global average at 6.4 per cent in the fourth quarter of 2023, or US$12.80. Now hold the charge still and move the amount: the same US$10 is 5 per cent of a US$200 send and 1 per cent of a US$1,000 one. A cost quoted as a percentage has two terms, and only one of them is the provider's.
Tradergy’s corridor pages show the live mid-market rate in both directions for each corridor, which is the baseline any remittance quote should be checked against. The site explains the process and never recommends a provider.
Longer read: How international money transfers work. What actually happens between pressing send in Australia and money arriving overseas - the routes, the checks, the two charges, and where transfers get held up.
See the send-money corridor pages for where this term shows up in practice.
Related terms
Exchange-rate margin · SWIFT code (BIC) · Mid-market rate · All terms
Primary authority: AUSTRAC: remittance service providers. Definition reviewed against the authority’s published material; this page is reference information, not advice.
Common questions
What does it cost to send a remittance?
Two things: the stated transfer fee, and the exchange-rate margin hidden inside the quoted rate. The margin is usually the larger component. Comparing the quoted rate against the live mid-market rate for the corridor reveals the full cost.
How long does an international transfer take?
Anywhere from minutes to several business days, depending on the provider, the destination country, and how the money is paid out. Transfers through modern specialist providers often arrive the same day; traditional correspondent-bank transfers can take longer.
Why do remittance costs differ so much between corridors?
Volume and competition. Heavily used corridors with many competing providers tend to price tighter margins, while thin corridors with few providers and harder payout networks cost more to serve. The World Bank tracks corridor costs globally for exactly this reason.