Expanded Digital Remittances Might Be the Result of the US's Significant Financial Bill
The One Big Beautiful Bill Act (OBBBA), passed in mid-2025, has introduced a new remittance transfer excise tax at a reduced rate of 1%, which will apply to certain cross-border remittance transfers sent after December 31, 2025. This tax affects both U.S. and non-U.S. citizens sending remittances.
The OBBB does not explicitly differentiate between digital and non-digital remittance methods in the tax text, meaning that this tax will likely increase the cost of remittances across both channels uniformly. For non-digital remittances, which typically involve higher operational costs, the 1% excise tax adds directly on top of existing fees, further increasing the total cost. Digital remittances, which generally have lower base fees, will also see a cost increase but may represent a smaller absolute increase in total pricing compared to non-digital methods.
Major corridors like the US-Mexico, US-India, US-Philippines, and US-China corridors may see overall pricing increases due to the excise tax. Digital remittance providers, who often compete on lower pricing and convenience, could see a reduction in their competitive advantage, but the cost difference compared to traditional non-digital providers is likely to remain.
The excise tax takes effect starting January 1, 2026, so remittance pricing adjustments by providers are expected in late 2025 or early 2026. The tax applies regardless of sender citizenship status, potentially affecting a broad range of remittance transactions from the US. Providers may absorb some of the new tax cost to remain competitive, particularly digital operators, but customers should expect a roughly 1% increase in remittance fees due solely to the excise tax structure under the OBBB.
The bill is now with the House of Representatives for final approval. President Trump had initially set a deadline of 4 July for the final version of the bill, but achieving this goal is considered "very hard". The bill's rewriting aims to circumvent the need for money transfer providers to collect extensive data on US customers and remove the requirement for providers to report specific detailed information about senders.
Sources: [1] https://www.forbes.com/sites/adamshapiro/2025/07/15/the-one-big-beautiful-bill-act-passed-by-congress-could-impact-your-remittances/?sh=66e843a6402d [2] https://www.nytimes.com/2025/07/16/business/economy/obbba-remittance-tax.html [3] https://www.bloomberg.com/news/articles/2025-07-15/one-big-beautiful-bill-act-to-increase-costs-for-remittance-senders [4] https://www.reuters.com/article/us-usa-remittances-tax-idUSKCN25311R
- The new tax under the OBBB, set to take effect on January 1, 2026, is anticipated to increase remittance fees for both digital and non-digital channels, potentially affecting a broad range of business transactions related to international finance.
- The OBBB, currently with the House of Representatives for final approval, aims to reduce data collection requirements for money transfer providers and might impact the politics surrounding international business and general-news reporting on financial regulations.
