The Story of Remittances From Canada in 2025

The key findings suggest that money continues to flow out, even when the economy stumbles. Through the first half of 2025, Canadians sent $4.5 billion CAD abroad in Q2 alone. This happened while the economy contracted sharply and GDP fell.

The pattern reveals something fundamental about human nature — people prioritize sending money home over almost everything else. Market forecasts predict 3.633% annual growth through 2035. H2 2025 and 2026 will test whether that's realistic.

Challenges for the remittance market

Despite the flow of money, three major problems are building:

1. Currency pressure

Weaker Canadian dollar means you pay more to send the same amount home (exchange rate is statistically the only factor that consistently affects outflow volume)

2. Immigration crackdown

New policies cut temporary foreign worker applications by 50% overall and 70% in the low-wage stream

3. New regulations

The Retail Payments Oversight Framework launches on September 8, 2025, introducing compliance costs that could offset recent fee reductions. Market forecasts predict 3.633% annual growth through 2035. H2 2025 and 2026 will test whether that's realistic.

How big is the money movement?

Official government data tracks these flows through the Balance of Payments — Canada's financial diary for money moving in and out. Statistics Canada publishes quarterly data under "Secondary income, Private transfers," showing exactly what's crossing borders. The pattern is clear — Canada sends far more than it receives.

The deficit in numbers

Here's what Q2 2025 looked like:

Table 1: Quarterly Private Remittance Flows (CAD Millions)

Source: Statistics Canada, Table 36-10-0016-01

Breaking down Q2 2025 specifically:

• Outflows: $4,508M CAD
• Inflows: $1,533M CAD (34% of outflows)
• Deficit: $2,975M CAD

Why the gap? Canada's immigration profile drives it. Temporary foreign workers and recent permanent residents send substantial portions of their earnings home, redistributing wealth globally.

When the economy shrinks, money still flows

Q2 2025 revealed that remittance outflows stayed strong despite economic contraction:

US tariffs hit Canadian goods hard. Currency volatility created uncertainty. Yet remittance payments barely moved. That's why economists refer to remittances as "structurally resilient." Financial obligations to family abroad stem from long-term commitments that override short-term economic trouble. You cut discretionary spending before you cut family support back home.

Market size projection

Current valuations show strong growth potential, though forecasts depend on handling the structural problems building in H2 2025:

Source: Market Research Future

What economic forces are shaping remittance flows?

Currency movements dominate everything else. Research on Canadian outward remittances from 1990 to 2022 reached a clear conclusion — the exchange rate is the only statistically significant factor. GDP per capita, inflation, and labor participation — none showed statistical significance.

The economic slowdown in Q2 2025

Canada's economy contracted sharply in the second quarter of 2025. US tariffs and currency volatility drove the decline:

The International Monetary Fund projects just 1.2% Real GDP growth for Canada in 2025. Subdued growth means tightening labor markets, which could eventually affect migrant workers' earning capacity and job stability. That might place downward pressure on remittance volumes in the long term (even though flows remained intense in the short term).

How did CAD perform as a currency in 2025?

The CAD's performance wasn't simple. Currency swings created volatility throughout 2025:

Early Q2 2025

CAD appreciated sharply against USD, compounding trade shock as US tariffs hit exports simultaneously.

Mid to late 2025

CAD reversed and weakened significantly. By mid-October, USD/CAD had reached around 1.40, making the CAD one of the worst-performing G10 currencies.

Q4 2025 forecasts

• USD/CAD: ~1.42
• CAD/CNY: ~5.05

Calling it "persistent weakness" oversimplifies what was actually a volatile period with sharp swings in both directions. Remittance volumes stayed stable despite economic chaos. Because when the Canadian dollar depreciates:

• Your target amount in foreign currency stays the same
• You absorb the extra cost by cutting your own spending in Canada
• You spend more CAD to buy the same amount in the destination currency

Total CAD outflow volume didn't decline. Remittances are non-discretionary spending — the commitment to family abroad creates a fixed target, and you bear the exchange rate risk.

How are immigration policies affecting the market?

Remittance volume growth depends on the number of foreign-born workers living and working in Canada. Targeted policy changes throughout 2025 aimed at reducing the number of temporary residents will directly constrain future remittance flows.

The temporary foreign worker crackdown

Employment and Social Development Canada rolled out restrictive measures throughout late 2024 and early 2025. Low-wage workers (who send money home most frequently) were hit hardest:

*Exemptions exist for healthcare and construction

The results:

• Overall TFW applications is down 50%
• Low-wage stream applications is down 70%

These reductions already happened (they're not projections).

The influence of policy

Historical research indicates that policy interventions have a greater impact on remittance behavior than macroeconomic shocks alone. H1 2025 demonstrated that people absorbed GDP volatility and continued to send money home. However, TFWP restrictions represent something different: a direct reduction in the supply of new remitting workers.

The demographic structure driving volume is shrinking. Low-wage temporary workers statistically send money home more frequently. Seventy percent fewer are entering Canada. Therefore, growth faces a structural limit.

The lag effect is coming soon

The full impact has not yet been reflected in Q2 2025 remittance data. The resilience in H1 flows reflects financial commitments from workers already here. But here's what's coming:

• One-year work permits tied to six-month LMIA validity will expire
• A 70% reduction in new low-wage remitters will compound over time
• The market's projected 3.633% growth rate faces serious challenges

Unless digitization and efficiency gains offset the demographic shortfall, the government's explicit goal (reducing temporary resident volumes) will cap future remittance growth.

What does it cost to send money from Canada?

Canada is committed to reducing average remittance costs to 3% (the global Sustainable Development Goal). The market benefits from competition and the adoption of digital technologies. However, costs remain substantially above that target.

How Canada compares globally

Costs vary dramatically depending on where you're sending money. The Canada-Jamaica corridor averaged 5.98% in Q1 2025 (improved from 6.47% in Q4 2024). That's nearly double the 3% target.

Global cost comparison (Q1 2025):

High-volume corridors from Canada:

Note that the 5.98% figure is confirmed for Canada-Jamaica, but comprehensive data for all major Canadian corridors isn't readily available. You shouldn't treat 5.98% as a single Canada-wide average.

The top global recipient countries (India, Mexico, China, Philippines, Pakistan) represent Canada's highest-volume corridors. Pricing competition here is fierce, often driven by newer service providers challenging traditional banks.

Digital channels reduce costs

The downward trend in several corridor costs is directly linked to the growth of digital remittance channels. Digital transfers are projected to reach $2.8 billion USD in 2024, compared to $2.4 billion USD for traditional methods. Mobile banking apps and services are becoming preferred methods. Therefore, costs are dropping:

• Non-digital channels: 7%
• Digital transfers globally: 5%
• Traditional banks: 12% (most expensive)

Fintech companies and Money Transfer Operators increase competition, pulling average costs closer to the 3% SDG target.

The problem with data transparency

Getting good data remains difficult. The World Bank's Remittance Prices Worldwide monitors hundreds of corridors, but specific current costs for high-volume Canadian corridors aren't always available in published reports. As a result:

• You struggle to identify the cheapest transfer options
• Policymakers can't properly evaluate the cost reduction progress
• Non-transparent elements (like exchange rate margins) obscure the total cost

For example, a 2.42% margin was noted for Canada-China in the first quarter of 2025. The lack of granular, real-time data hinders everyone.

What's changing with regulations in 2025?

The most considerable immediate risk to market structure and operating costs comes from mandatory implementation of the Retail Payments Oversight Framework (under the Retail Payment Activities Act). The Bank of Canada oversees this framework to enhance security and standardize how Payment Service Providers manage risk.

Critical compliance dates

Payment service providers faced a tight timeline:

The Bank of Canada made it clear that while requirements will apply fully starting September 8, they may not complete reviewing all applications by that date. PSPs conducting retail payment activities must comply fully with RPAA requirements (except reporting) regardless of application review status.

The cost shock

September 8 created an acute cost shock for the industry. Meeting mandatory requirements demands substantial investment:

• New audit procedures
• Compliance personnel
• Infrastructure upgrades
• Ongoing monitoring systems

The timing creates tension. Financial stability and consumer trust (the regulatory goals) conflict directly with reducing costs toward the 3% SDG target.

Unless remittance service providers achieve extreme operational efficiencies through digitization, new compliance burdens will likely lead to increased transaction fees. Regulatory-driven cost increases risk reversing the positive cost reduction trends seen in early 2025.

Market consolidation pressure

The compliance burden acts as a barrier. Smaller remittance service providers and emerging Fintech firms, lacking deep capital or existing compliance infrastructure, face disproportionate challenges in meeting the September 8 standards.

Who's positioned to survive:

• Large financial institutions already possess the required frameworks.
• Major Money Transfer Operators (can absorb costs easily)

Who faces challenges:

• Small remittance providers (limited capital)
• Emerging Fintech firms (lack infrastructure)

Market consolidation will accelerate. Over time, consolidation may lead to reduced competition within the sector. Less competition means less aggressive pricing and limited future cost reductions. The framework is changing Canada's remittance market structure.

Where does the market go from here?

Competing forces are pulling in opposite directions. The picture for H2 2025 and 2026 involves tension between efficiency gains and structural headwinds.

The competing forces

H1 2025 showed remarkable resilience. Remittance outflows reached $4,508 million CAD in Q2 alone, remaining strong despite the GDP contraction. People continued to send money home even when the economy struggled. However, pressure is building for H2 2025 and beyond:

• RPOF compliance deadline (September 8, 2025) threatens cost inflation
• TFWP restrictions cut new remitter intake (50% overall, 70% low-wage)
• Currency volatility creates unpredictable expenses

The government's immigration policy explicitly aims to reduce the volume of temporary residents. Regulatory oversight imposes new cost floors. Together, these create a volume ceiling and cost floor defining remittance performance for 2026 and beyond.

Key projections summary

Table 2: Key metrics and forecasts

What needs to be done?

Navigating this environment requires specific actions from regulators and industry players.

For regulators and policymakers

Two options for regulators and policymakers:

Fee monitoring becomes critical

The Bank of Canada must track remittance service provider pricing closely after September 8. Analyze fee increases and exchange rate margins in Q4 2025. The goal: ensure RPOF security objectives don't undermine the commitment to reducing transfer costs.

Recalibrate volume projections

Economic analysts and government bodies need to adjust remittance volume projections downward urgently. Previous assumptions based on stable migrant inflows no longer apply. The quantified reduction in new temporary foreign worker applications (50% overall, 70% low-wage) changes everything. Future projections must treat immigration policy as a primary constraint.

For remittance service providers

Two options for regulators and policymakers:

Prioritize digital optimization

Digital channels offer the only viable path to absorb operational costs from RPOF. Digital platforms globally provide significantly lower costs than traditional methods. Maximize efficiency gains through automation and reduced overhead to maintain competitive pricing while meeting heightened security requirements.

Enhance transparency

Share all fees and exchange rate margins with customers proactively. Exchange rate margins often represent the most significant non-transparent component of total cost. Transparency aligns with the RPOF spirit and helps restore consumer confidence amid increasing compliance costs.

The path forward….

Volume stability through Q2 2025 demonstrated that people prioritize sending money home over almost everything else. However, that resilience now faces new structural realities reshaping how money moves across Canadian borders.

Meeting the projected 3.633% growth rate through 2035 requires careful balance. The market must adapt to immigration policy constraints while using digital efficiency to offset regulatory costs. Whether providers can achieve both simultaneously will determine the Canadian remittance space for years to come.

References used in this report

Statistics Canada

• Table 36-10-0016-01: Balance of International Payments, Current Account and Capital Account (Secondary income, Private transfers)
• Canada's Balance of International Payments, Second Quarter 2025
• Historical releases of the balance of international payments

Bank of Canada

• Retail Payment Activities Act (RPAA) implementation timeline -Payment service provider registration requirements and oversight framework

Government of Canada

Employment and Social Development Canada (ESDC): Temporary Foreign Worker Program policy changes Highlights of reduced usage of the Temporary Foreign Worker Program Quarterly Financial Report for the quarter ended June 30, 2025

International Organizations

• International Monetary Fund (IMF): Canada and the IMF - 2025 GDP projections
• World Bank Remittance Prices Worldwide
• World Bank Migration Data Portal: Remittances data and analysis

Global Affairs Canada

• Quarterly Economic and Trade Report: 2025 Quarter 2

Academic Research

• ResearchGate: "Macroeconomic Determinants of Outward Remittances from Canada" (1990-2022 analysis)
• Economy and Society (Ukraine): Macroeconomic determinants study

Financial Institutions

• RBC Capital Markets: Currency Report Card and Forecasts
• National Bank of Canada: Forex forecasts and analysis

Market Research

• Market Research Future: Canada Remittance Market Size, Growth Report 2035

Industry & Legal

• Blakes Law Firm: Final Regulations to the Retail Payment Activities Act analysis
• Stikeman Elliott: RPAA Payment Service Providers Registration Update
• Payments Canada: International Payments - Payments Behaviour Tracker (Wave 3 2023)

Global Policy

• G20 Global Partnership for Financial Inclusion (GPFI): G20 National Remittance Plan Canada 2021

All data is current as of October 2025. Quarterly remittance figures are seasonally unadjusted unless otherwise noted.