The use of mobile banking could halve the cost of sending money across borders from about 6% to 3% of the amount transmitted, according to an IMF Working Paper.

The resulting saving could be critically important to countries in the region for which money sent home from abroad is a key source of income, such as El Salvador, Haiti, Honduras, and Jamaica where remittances exceed 15% of GDP.

The IMF paper, Fintech in Latin America and the Caribbean: Stocktaking, examines the complicated and costly ordeal faced by many migrant workers when sending money home.

Most rely on traditional banking methods and money transfer operators to send their remittances home – and pay fees of about 6% of the amount they send ­– meaning that less is left over for the family or friends receiving the money.

However, despite Latin Americas’s high share of total world remittances – about $80.5bn in 2017 – its use of mobile money both to send and receive these payments is relatively low.

Latin America’s global share of remittances transmitted by mobile money is only about 6% compared to Sub-Saharan Africa, where it is nearly 80%.

The IMF says that with Latin America’s large population abroad sending home sizeable remittances – about 1.5% of the region’s output in 2017 – greater reliance on newer fintech options would help reduce the costs of cross-border transfers.

The paper notes that mobile operators and mobile money can transmit remittances at a relatively low-cost of about 3% compared to that of more traditional financial service providers at about 6%.

The Fund is optimistic that the rapid growth of fintech in Latin America will bring down transactions costs for migrants.

Research by the InterAmerican Developmental Bank and Finnovista shows that the number of financial technology startups in the region increased by 66% between 2017–18.

Global fintech companies are also starting to partner with local mobile network operators, money transfer operators, and banks in the region to provide financial services.