Research & Analysis

Paving the Way for Digital Financial Services in Jordan

In 2016, formal international remittances were estimated at US$445 billion—three times the amount of official development assistance flows. This significant number does not include remittances channeled through informal channels. If more customers were to turn to formal, digital, and cheaper services, remittances would have an even stronger developmental impact, notably in countries where protracted humanitarian crises affect large numbers of people.

In 2015, Jordan received over US$3.8 billion in remittances, equivalent to 10 percent of its GDP, and sent at least US$500 million. Jordan was selected as the focus of this research by CGAP, GIZ, and the Central Bank of Jordan because of its large volume of transactions, a population of 9.5 million people that includes more than 2.6 million refugees, and the Central Bank’s strong commitment to financial inclusion. The research presented in this paper explores the Jordanian remittances market and informs development intervention pilots aimed at improving access to financial services for low-income Jordanians and Syrian refugees living in Jordan.

This report covers the ecosystem and regulation of both international remittances and domestic payments systems to which they link. It lays out an analysis of eight inbound and outbound migration and remittances corridors. It covers Jordan’s promising mobile money ecosystem, which is built around the Jordan Mobile Payment (JoMoPay) platform. A few key findings include:

  • Jordan has a regulatory environment that enables the growth of mobile financial services. It has comprehensive regulation on e-money issuance. Issues still being discussed include safeguarding of funds, client protection, and money exchange houses.
  • Jordan’s infrastructure is well-placed to support domestic payments digitization. There is a high level of interconnectivity between mobile services and the broader payments ecosystem, with interoperability between e-money issuers as well as interconnectivity with the broader ecosystem (ATM switch, bill payment platform, cards acquirers).
  • JoMoPay contends with a highly cash-based society. This requires a concerted effort to drive the uptake of mobile payments. However, JoMoPay offers a unique opportunity to connect international payments systems. Given that the Jordanian market is highly competitive, and has numerous client profiles and service providers, achieving scale will require creating a nondiscriminatory and sound playing field.

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How do you increase financial inclusion when the most vulnerable and financially excluded part of your population becomes host to a massive, even more vulnerable, and even less financially included group of refugees? Building on a quantitative survey, this research shows that for financial services to work for refugees, they also need to work at scale in-country.