Channels of OFW remittances.
by: Yodz Insigne
Based from a study conducted by Aranda (2005) regarding the economic and social determinants of remittance behavior of OFWs in choosing remittance modes, the choice of channel of the OFWs is influenced by a combination of social and economic variables. The said study concluded that the social variables that were influential were occupational level, community membership, civil status and household income while economic variables that were significant were transaction cost, exchange rates, inflation rates and deposit interest rate of banks. Aranda (2005) concluded that OFWs are risk-averse and that those who are low-income, low-skilled migrants are more likely to use formal channel than the informal channel and the more attractive the economic variable, the more likely that formal channels will be chosen by the migrant than informal channel.
Similarly, Samal (2006) concluded that migrants send remittances home through several means such as money order, through the contractor, neighbors, co-workers or relatives. Various remittance systems are now available in the Philippines. Several online remittances with tie-up in Philippine banks are also available in many OFW destinations such as the in the United States, the Middle East, Asia and Europe. One of the successful firms in online remittance business for OFW is the I-Remit Incorporated. Loyola (2008) reported that I-Remit’s remittance volume jumped 57% in the first half of the year to five hundred thirty one million US dollars. This figure is evidence that OFWs are now aware of the innovative and technology driven systems of remittance transfers.