Migrant Remittances and the need for efficient transfer systems to facilitate poverty alleviation: Bluekite, Florida.

Posted on March 4, 2013 by alexgjones

This week, Florida based cross-border payment service Blukite finalized a $1.5 million funding from private investors (Miami herald). This will be used to develop its electronic software model, which allows migrants to pay bills on behalf of their relatives who remained in their country of origin. The model is currently operational in Florida, where it already offers cross-border bill payment services to countries including Mexico, Guatemala, Honduras and El Salvador. Migrants can directly pay electricity, gas, water, Internet, cable, fixed & mobile phone, and financial services. The system is operated through third party agents, notably western Union stores.

Promoting the service has been put in the hands of store owners, and while in the beginning migrants were sceptical of the service, through word of mouth it is gaining recognition in the Florida migrant communities. But with Western Union, (a global brand with stores on every continent), the recent funding goal is to have BlueKite operational in 400 stores in Florida by the first quarter, with expansion into five more states and Europe (firstly Spain) by the second quarter.

In 2010 remittances were estimated to be valued at $300 billion, close to the global Foreign Direct Investment, and larger than Official Development Assistance. With these figures rising, understanding the impacts that remittances play in poverty alleviation, and ways to facilitate efficient transfers are more salient than ever. Michele Binci (2012) in ‘the benefits of Migration’ concurs that remittances are a powerful tool for the families receiving them to pay for needed expenditure. However from a study in Vietnam, between 1991 and 1999 she notes that while international remittances are larger in terms to capital, they are less effective than intra-country remittances. This is because the cross boundary migrant has very little control over the spending by the family, whereas intra-boundary migrants can implement strict control over what bills, schooling, and heath care expenditure occurs. With this in mind, BlueKite offers the potential for cross border control over remittance expenditure. Instead of sending back remittances wholly, individual bills can be paid directly, and thus giving a tighter leash on remittance expenditure.

The reason why such tighter control over family spending has been difficult is the majority of remittances receiving families are under-banked, that is do not have the means for creating bank transfers, while migrants who work illegally will struggle to open a bank in their host country. BlueKite’s vision of global expansion offers an exciting change in the habits of remittance flows. In a climate where remittances have outstripped ODA, increasing control and efficiency of these flows has the potential for economic change in the receiving nations. But relying on private funded ventures to drive this change would be nonsensical of Governments and International organisations alike. We need to start taking remittance flow innovation seriously as the key to facilitating poverty, alleviation where aid and investment has failed.

Read:http://thenextweb.com/la/2013/01/11/how-bluekite-is-shaking-up-remittances-in-florida-eyeing-expansion-into-spain/

Read:http://www.miamiherald.com/2013/01/13/3179335/healthcare-accelerator-now-accepting.html