Does Going Digital Make Remittances Cheaper? Evidence from the Kuwait–India corridor

Abstract

Digital channels are widely expected to lower the cost of sending money home, yet most of the evidence compares averages across very different markets. Using 5,902 quarterly price quotes from the World Bank's Remittance Prices Worldwide survey, covering the six Gulf Cooperation Council (GCC) corridors to India and Kuwait's routes to six destinations (2011–2025), this paper asks whether digital remittance services are cheaper than agent-based ones once the corridor and the provider are held fixed, and whether the Kuwait–India corridor is cheaper than comparable Gulf routes. Service-level regressions with quarter, corridor and provider fixed effects show that sending US$200 from Kuwait costs about 0.89 percentage points less than from the other GCC states; two-thirds of the gap lies in fees and one-third in exchange-rate margins. The central result concerns the digital channel. On Kuwait's routes, digital services look about 0.4 points cheaper in raw comparisons, but the gap shrinks by three-quarters and loses significance once provider fixed effects are added: it reflects which providers go digital, not the channel itself. Across six definitions of a digital service, the same provider prices its digital and agent products almost identically. The broader lesson is that digitalization does not automatically lower prices in mature remittance markets: lower costs to serve reach senders only where providers choose, or are pushed by competition, to pass them on.