A new presidency comes with a lot of uncertainty, and with president-elect Donald Trump the uncertainty remains. During the campaign period, Trump stated a number of key areas which could affect his administration’s foreign policy. One of these includes the financial position taken by the US relating to the payments industry. The USA, being one of the most developed nations in the world, attracts a lot of people from different nations wanting to work and live there.
With an extensive workforce of international workers in all sectors of the economy, the US has attracted a large number of immigrants who provide both skilled and unskilled labour. Non-resident workers contribute a significant portion to not only the growth and expansion of the economy but to their home countries’ economies through cross-border remittances. Remittances made by these workers resulted in the US becoming the world’s largest sender of remittances. WorldRemit estimates US$135 billion sent to other countries per year.
Mexico (the other side of the wall)
The pending presidency of the Donald Trump has not yet had a significant impact, but the payments industry, and in particular, the remittances sector, is already starting to experience some shakes. As he was campaigning, Trump stated that he would build a wall along the US-Mexican border as a means of controlling the illegal entry of immigrants. However, the funds for building the wall (approximate US$10 billion) are to come from Mexico with the US contributing little (if any) in the form of funds.
According to Aite Group, the remittances from the US transacted into Mexico was estimated to be US$24 billion last year. Trump could utilise these remittances to fund the construction of the wall. This would cause ripples in the overall payment sector with various payment companies forced to re-strategise and formulate contingency plans in case Trump pushes through with his intention. If this were to happen, many payment companies operating in both countries would witness a significant reduction in transactions resulting in a drop in both profit and trust.
Internationally (not the president-elect’s backyard)
Mexico is not the only country that may be affected by negative policies associated with the payments industry.
News Agency of Nigeria found that Nigerians living in the diaspora sent home approximately US$21 billion in 2015, with a significant portion of these funds coming from the US. Similarly, the Daily Nation found Kenyans living in the diaspora sent home remittances worth US$1.54 billion in 2015 with approximately half of these funds coming from North America (the United States and Canada).
If the Trump administration were to implement policies negatively affecting the payments industry, the economies of most countries would also be negatively affected. The payment industry in the United States is closely following the implications of a Trump presidency. Many people, more so foreign workers, are hoping their ability to send money back home will not be affected.