Barriers and enablers for the uptake of Fintech remittance platforms by migrant entrepreneurs in South Africa

Abstract

Migrants in South Africa are currently benefiting from the evolution in the remittance industry. Enhanced focus and innovation by Fintech providers have enabled more cost effective and convenient ways for users to send money to their countries of birth (Gomber, Kauffman, Parker, & Weber, 2018; Kumar, Nim, & Sharma, 2019). In addition to remittance service providers and migrant users of remittances, migrant entrepreneurs fulfil a key role as stakeholders in the digital remittance ecosystem; the services they provide to both service provider and user, contributing to the uptake of Fintech platform usage in developing countries where cash remains prevalent (Rodima-Taylor & Grimes, 2019; World Bank, 2018). The exploratory study set out to determine which factors promote and detract from the adoption of digital remittance services by migrants. Due to the interlinking interactions of the platform technology, the migrant entrepreneur, and the migrant user, an apt lens through which the study was viewed was the actor-network theory (Thomas, Price, & Schau, 2013). Three research questions were derived in order to address the purpose of the study. The first question probed the social and behavioural interactions and influences within migrant communities. This fed into the second and third questions: What factors promote usage of Fintech platforms, and which serve as barriers to their adoption? With a view to understand this phenomenon better, semi-structured, in-person interviews were conducted with migrants living in South Africa. The competitive remittance industry in South Africa allowed migrant entrepreneurs and other users to be selective in which providers were used. It was confirmed that migrant entrepreneurs were key sources of product information in their communities (Arunachalam, Bahadir, Bharadwaj, & Guesalaga, 2020). The cost of a transaction, the quality and speed of the service, and accessibility to the nearest cash facilitator was cited as some of the other key enabling factors. The barriers to the uptake of Fintech platform usage was mainly environmental, migrants falling victim to their circumstances in terms of their technical and financial literacy, their physical environment, and the regulatory requirements imposed by institutions.