This article is the first in a two-part series on payments and remittance behavior in South Asia and Indonesia highlighting results from a new Â鶹´«Ã½AV study funded by the Bill & Melinda Gates Foundation. Jake Kendall is a staff member of the Bill and Melinda Gates Foundation.
WASHINGTON, D.C. -- Nearly 800 million South Asians and Indonesians, which equates to 60% of the adult population in the South Asian region and Indonesia, sent or received a payment or remittance in 2012. The majority of the South Asian and Indonesian respondents did so informally, with 512 million people sending or receiving cash in person or sending it informally in some other way.
Remittances or payments could have been domestic or international; sent to friends or family, a school, or other institution; or received from the government, a nongovernment employer, or from the sale of crops, produce, or livestock. Sri Lanka and Indonesia had the highest number of respondents reporting such payment or remittance activity, at 84% and 83%, respectively, in the 12 months before the survey. Those in Afghanistan were the least likely to report these types of transactions, with 46% responding that they had either received or made a money-based transaction.
Most Remittances, Payments, and Money Transfers Are Domestic
Of those surveyed, 3% reported sending or receiving remittances from friends or family based internationally. In contrast, those in South Asia and Indonesia were nearly six times more likely to report sending, receiving, or bringing in a domestic money transfer involving friends or family in the 12 months before the survey.
About three in 10 South Asian and Indonesian respondents (32%) made at least one payment to a school, company, or other institution, making this type of payment the most common across all transaction types surveyed. The majority of these school/company/institution transactions were cash only (84%) in nature, and Sri Lankans (60%) and Indians (57%) led in conducting these types of transactions.
Four percent of all people who took the survey reported being cheated or losing money when either sending or receiving it, domestically or internationally, in the 12 months before the survey.
Of those, 76% reported losses during the process of receiving an informal cash transfer, while 24% reported the loss during an electronic transfer or some other way. Respondents who conducted formal electronic transactions as well as those who conducted only informal cash-based transactions reported losses, thus indicating that both types feature some risk.
Wealthy, Highly Educated, and Young Most Likely to Conduct Electronic Transactions
Those who were young, female, well-educated, or in in the wealthiest income quintiles were more likely than other demographics to use electronic transactions to make or receive a payment or remittance.
Seventy-five percent of men, compared with 45% of women, reported making or receiving at least one transaction in the 12 months before the survey. However, women who made or received a payment or remittance were more likely to have done so electronically (11%) than men (8%).
Older respondents were more likely to say they made or received a remittance or payment at least once in the 12 months before the survey. Those aged 15 to 18 were least likely to have made or received a remittance or payment (45%) in the last 12 months. However, for respondents in this age group who did make a transaction, they were the most likely of all age groups to have done so using only electronic methods.
In general, the higher the level of education, the more likely respondents were to have made a remittance or payment transaction sometime in the 12 months before the survey. Education also played a role in determining which type of transaction a respondent was most likely to carry out. Those with the highest level of education were more than twice as likely to use electronic means to make a transaction as those with a high school education or less to do the same.
Respondents' income level was also indicative of the types of transactions they made. Of those who made or received remittances or payments, 82% of those in the poorest income quintile chose informal means such as sending or receiving money through a family member or friend, or bringing it themselves, while 53% of the wealthiest used these methods. The wealthiest were roughly three times as likely to use electronic payments -- including bank transfers, mobile money transfers, electronic transfer services (e.g., Western Union), or a post office -- as were the two poorest income quintiles.
Implications
There is a largely untapped market of 512 million people in South Asia and Indonesia who currently conduct informal cash-based transactions, including using informal money carriers, sending the money by bus or traveling friends, or simply carrying cash themselves to deliver it in person. That people are frequently using options to transfer money with inherent risk illustrates the importance of providing safer, better options to transfer money.
Electronic transactions are most likely to appeal to certain demographics within a population, including those who are young -- who are likely to be more informed about new technologies -- the wealthy, and the highly educated.
Although global organizations involved in the field tend to focus on international remittances, this study shows that few respondents reported sending or receiving payments or remittances from an international source. There are far more market opportunities for those institutions who are interested in domestic remittance, payment, or money-transfer business opportunities.
There are ample business opportunities for public and private-sector actors, however there is still a long road to the full integration of technology in the South Asian and Indonesian remittance and payment markets. While the study shows that 83% of survey respondents have access to a mobile phone, these countries lag far behind in Internet saturation, with 6% of respondents saying they had access to the Internet at the time of the survey. Thus, mobile-based banking options may be a prime target for increasing formal transactions, while Internet-based banking options or transfer capabilities only have the potential to reach a small segment of the highest educated and wealthiest of the population at this time.
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Survey Methods
Results are based on face-to-face interviews with 1,000 adults, aged 15 and older, conducted September-October 2012, in five South Asian countries and Indonesia, plus 2,540 adults in India. Regional totals represented in this article are population-weighted averages, accounting for the population size of a country. For results based on each sample of national adults, one can say with 95% confidence that the margin of sampling error ranged from ±2.4 percentage points to ±3.8 percentage points. The margin of error reflects the influence of data weighting. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls. 
Â鶹´«Ã½AV's coverage area includes entire countries, including rural areas. The sampling frame represents the entire civilian, non-institutionalized adult population. Exceptions include areas where the safety of interviewing staff is threatened, scarcely populated islands in some countries, and areas that interviewers can reach only by foot, animal, or small boat.
For more complete methodology and specific survey dates, please review .
