As per an article published in a national newspaper, only 28% of rural Indians have internet-enabled smartphones and a limited grasp of digital literacy. While urban youth seamlessly navigate the realms of digital services, their counterparts in the underbanked sector are yet to experience digital banking.
Internet has reached India, far and wide, but the dream of 100% digital literacy remains elusive. Moreover, traditional banking structures struggle to extend their reach. Bank branches and ATMs are not able to cater to most of the rural population.
In India, there’s a big group of people who move from villages to cities for better job opportunities—around 100 million of them! But here’s the thing, most of them don’t have bank accounts and find it tough to send money back home to their families in the villages. They send money back to their villages through informal modes.
The emergence of domestic money transfer
Amidst this backdrop, a significant market emerges—the domestic remittance arena. Instead of relying on big banks, business correspondents use digital and financial services of fintechs to people who don’t have easy access to banks.
These versatile agents offer a comprehensive range of digital banking and financial services right from their shops, and one standout service is Domestic Money Transfer (DMT).
DMT is a cash-to-bank-account remittance service provided by business correspondents. Imagine a scenario where a city worker wishes to send money to their family in the village – that’s where these DMT services shine.
With the ease of a visit to one of these domestic money transfer agents, even individuals less acquainted with digital transactions can effortlessly hand over cash. The agent, acting as a helpful intermediary, ensures a smooth and instant transfer of funds to any bank account across India, simplifying the entire process.
This blog explores how DMT services empower individuals nationwide, provide seamless financial solutions, and help bridge the financial inclusion gap.
Empowering Local Businesses
DMT services have given a new dimension to local retailers and shop owners across India. Through these services, retailers can now offer cash-to-bank-account remittance services to their customers. This not only increases footfall in their shops but also empowers them to contribute to the financial well-being of their communities.
Seamless Transfers Across India
DMT service allows users to remit funds to both nationalized and private banks, thus catering to a wide customer base. The support for National Electronic Funds Transfer (NEFT) and Immediate Payment Service (IMPS) ensures that transactions are secure, fast, and accessible across the country.
The Migrant Population’s Lifeline
Migrant workers often need to send money back to their families in their hometowns. DMT services have become their lifeline. These services allow them to transfer funds securely and quickly, ensuring their hard-earned money reaches their loved ones when needed the most. One of the significant impacts of DMT services is the reduction of geographical barriers. Rural populations, who might have previously faced difficulties in accessing banking facilities, can now transfer money conveniently, transforming their financial landscape.
DMT services not only serve migrant workers but also empower the underbanked population. Those without easy access to traditional banking now have the means to manage their finances and benefit from the broader financial system.
Stimulating Small and Medium-sized Enterprises (SMEs)
Domestic money transfers often serve as a lifeline for small and medium-sized enterprises (SMEs). Many businesses, particularly those in local communities, rely on a steady influx of funds to maintain operations and expand. By facilitating quick and secure money transfers, these enterprises can invest in inventory, equipment, and personnel, driving local economic development.
The Future of Domestic Money Transfer Services
As technology continues to evolve, DMT services are likely to become even more accessible and innovative. With a keen focus on customer needs and security, these services will play an increasingly pivotal role in shaping the financial landscape of the nation. A CRISIL report predicts that Rs 80,000 crore to Rs 90,000 crore domestic remittances industry will increase from 11% to 13% CAGR over the next few years.
Domestic money transfer services are revolutionizing the way people access and manage their finances in India. These services have not only made sending money more accessible but have also empowered local businesses and underbanked populations. With the continued support of the government and technological advancements, the future of DMT services in India looks promising, promising a more financially inclusive and connected nation.