Jakarta. The amount of money that Indonesian migrant workers send home to their family every month often exceeds three times the monthly income of their spouses who decide to stay at home. But unfortunately, lack of financial planning still keeps many of these low-income households under strain, a recent study showed.   

The study, titled "Both Sides of the Coin: The Receiver's Story," by US-based international payment company UniTeller, shows the average monthly remittance received by low-income Indonesia households from their family members working abroad is $547 – three times the average monthly income of $157 independently earned by the recipients.

The study surveyed 501 adults from low-income households in Indonesia using online interviews in September. It was part of a larger study that involved a total of 1,911 respondents among low-income households in Indonesia, India, the Philippines and Vietnam. 

The study found Indonesian households use up a quarter of the remittance money for their daily needs and 24 percent for paying bills and loan repayments. They spend 11 percent on education, 10 percent on tertiary luxury items and then keep 15 percent in savings.

The considerably large percentage of luxury item spending is an indication of poor financial planning. According to the study, 11 percent of the remittance recipients regularly run out of money. When this happens, 34 percent say they will reach out to the senders abroad.

This reliance and dependence on the migrant workers, unsurprisingly, affect the relationship between the senders and receivers of the remittance money.

Close to a third of the recipients admit waiting for the remittance money causes emotional stress on their family while 39 percent say it has impacted on their relationship with the senders.

Digital Behavior and Attitude

The study also opens a window into market behavior and attitude in the digital financial service sector in Indonesia. According to the data, 92 percent of the respondents have at least one mobile wallet account and 99 percent have at least one smartphone.

The most common method for receiving remittance payments is electronic transfer into a bank account (73 percent), followed by mobile wallet (42 percent) and cash pick-up (40 percent).

Indonesians seem to be willing to adopt new technology, with 96 percent receptive to semi-digital payment in which confirmation of the transaction is done online and the rest of the process is done at a physical location.

However, some are still wary of making the full switch to digital payment. 77 percent of the respondents still see cybersecurity as an issue, 41 percent fear a complicated process and 36 percent worry they might never receive their money. 

UniTeller Philippines' country president Noel Cristal said digitalization is a big opportunity in the remittance business. Payment companies should seize it to make the process more convenient for both senders and recipients.

"Many overseas workers have families that live in the provinces, outside of urban centers where physical services are more accessible. Similarly, for senders, there is a high time cost, with remittance services often requiring them to physically go to a location and queue on their day off. It's firmly on our radar in the coming year to work more closely with our public and private sector partners to enable easier access to remittance services and look at how we innovate our offering," Cristal said in a written statement.