Emerging Markets

Remittances are surviving the new US tax—at least for now.

This article appears in the July/August issue of Global Finance Magazine.

The Dominican Republic isn’t just a tourist paradise; it has a more diversified economy than most Caribbean nations. Yet foreign remittances still reach four in 10 households. Last year, Dominicans abroad sent home a record $11.87 billion, up 10.3% from 2024, according to the Central Bank of the Dominican Republic (BCRD). 

For such a country, 2025 was a banner year. But as of January 1, Washington has been levying a 1% tax on remittances paid by cash, money orders, or cashier’s checks under the One Big Beautiful Bill Act, which President Trump signed last year.

Related: Country Report: The Dominican Republic Is on the Rebound

While the tax has heightened anxiety in migrant communities, the BCRD forecasts a mild impact on the country, with remittance growth slowing to 3.5% in 2026, or roughly $12.2 billion. Manuel Orozco, director of the Migration, Remittances and Development Program at the Inter-American Dialogue, a Washington-based think tank, broadly agrees, though for reasons rooted less in the tax than in how Dominicans send money.

“My estimate is about 4% growth this year,” Orozco says. “I wouldn’t argue that the slowdown is due to the 1% tax, but rather to the precautionary fear factor.”

Early data supports his analysis. Patricia Krause, economist for Latin America at Coface, a French trade-credit insurance company, says the levy has yet to leave a mark: “Although there was an expectation that it could affect remittance figures, that has not been the case for the Dominican Republic, at least so far. While remittances reached $4.1 billion in the first four months of 2026 — up 4% year over year — the increase was 11% year over year in April,” Krause notes. 

Broad Regional Trends

According to Orozco’s analysis, remittances across all of Latin America and the Caribbean are projected to grow by 4.7% in 2026, a growth rate that is down from 6.3% the previous year. This indicates that “the slowdown is regional rather than Dominican,” he says.

The reason the tax has landed softly thus far is the taxing mechanism; it applies only to transfers funded with physical cash or paper instruments, not to those paid from a bank account or card, and most Dominicans in the U.S. are able to avoid it. 

“More than 80% of Dominicans hold a bank account, and 60% were already sending money digitally before the tax arrived,” Orozco says. “That leaves roughly 40% who send cash, and that cash is not informal.”

Where Cash Remains King

Ninety-nine percent of money transfers originate through licensed companies like Western Union, and many of those senders also hold a bank account, he adds: “Instead of using cash, they may just use their debit card and avoid the charges.” At the receiving end of the corridor, cash remains king, with about 70% of transfers still collected as cash, a quarter of them through a home-delivery network Orozco likens to “DoorDash since the ’80s.”

That reflects the makeup of the Dominican diaspora, which is concentrated in the U.S. The fact that the country’s economy is not over-reliant on remittances also helps soften the tax impact. The inflows are worth close to 10% of GDP, Orozco says — 9% in 2024, according to World Bank data — but the country relies on a “much more dynamic” export-manufacturing base than its CAFTA trade partners.

Related: Dominican Republic Tourism Surges

Still, that 1% tax means a lot less cash coming into the country. The loss will total $230.7 million in 2026, according to Helen Dempster, co-director of the Migration and Displacement Program at the Center for Global Development (CGD), a Washington-based think tank. The CGD’s dataset “suggests the Dominican Republic is among the countries most exposed to the U.S. remittance tax,” she added.

However, Orozco’s own survey found that among migrants who send cash, the majority intend to continue doing so and absorb the tax rather than switch. “The impact is on the income of the cash sender,” he says. He ties the levy to the politics of the law that produced it. “It’s part of a broader political agenda aimed at migrant practices the administration deems unacceptable.”

Solly Boussidan is a contributing writer based in Brazil.

To become a financial hub, the sultanate needs the infrastructure that a major custodian can provide.

U.S. custody giant State Street is expanding into Oman, a vote of confidence in the Gulf’s smallest aspiring financial center.

At the Oman Capital Market Conference in Muscat in early June, the bank signed an agreement with Riyadh-based Jadwa Investment, which manages about $30 billion in client assets, to jointly pursue institutional clients in the sultanate, with a focus on global custody and asset servicing. The agreement formalizes State Street’s deeper push into the Omani market. State Street, one of the big three global custodians alongside BNY and Northern Trust, has served Omani clients from a Muscat office for more than two decades.

The Gulf Cooperation Council, of which Oman is a member, is a declared strategic priority for State Street. But for both sides, the logic of the deal centers on infrastructure.

Targeting Emerging Market Status

Custody and asset servicing are what Oman, as a financial center, has lacked at scale as it pursues its central ambition: to elevate the Muscat Stock Exchange (MSX) from frontier to emerging market status, attracting index-tracking capital, credibility, and prestige.

The sultanate has spent five years working toward that goal. The Oman Investment Authority, its sovereign wealth fund, took ownership of the MSX in 2021 and began injecting liquidity and floating state assets, including units of the energy group OQ. Market capitalization has nearly doubled to about $98 billion in an economy of roughly $117 billion.

Even so, the bourse is a sliver of the region’s dominant exchange, Saudi Arabia’s $2.7 trillion Tadawul. A unified regulator, the Financial Services Authority, created in 2024, has since introduced listing incentives, a junior market for smaller companies, and cross-border arrangements to give foreign investors a way in. Oman plans to privatize as many as 35 state firms by next year, further increasing the total float.

As its Gulf rivals absorb the fallout from the Iran war, Oman’s long-cultivated neutrality, its port of Duqm, and its free-trade agreement with the U.S. have positioned it as a relative haven. Whether it will harden into a genuine regional financial hub is less certain; Oman is a latecomer to a field led by Dubai and Abu Dhabi, and liquidity on the MSX remains thin, with heavy state ownership and slim free floats.

The agreement between State Street and Jadwa is, for now, only a memorandum of understanding, with no concrete mandate and no assets yet committed. But the signal is clear. When a custodian of State Street’s heft attaches its name to Oman, it redraws the Gulf’s financial map at the edges. Muscat has decided it would rather build the back office than keep renting someone else’s.

Kim Iskyan is a contributing writer based in the U.S.

Gig platforms offer seamless checkout for buyers, but emerging market payouts remain broken for workers.

In June 2026, member states from more than 180 countries convened for the International Labour Conference to determine international labor standards for digital platform workers. However, even with those standards set, payments remain a big issue. 

Imagine a freelance developer in Lagos, who successfully completes a project for a client in London on Upwork. While the client’s payment is secured instantly, the developer faces a mandatory five-day security hold on their funds, followed by conversion to Naira at unfavorable rates, and fees of up to $20 per withdrawal, all eroding a significant portion of their earnings. 

The Booming Gig Economy in Emerging Markets

The gig economy has taken off like a rocket around the world, making up for 46% of the global workforce in 2025. Global projections state that it is set to increase to $2.52 trillion by 2035 from $674 billion in 2026. And it is expanding aggressively in the Global South. According to recent Compound Annual Growth Rate (CAGR) numbers, emerging markets have growth rates of roughly 21% in India, 17% in Egypt, and 16% in Argentina and Brazil. 

Platforms such as Uber Inc. for drivers and Upwork for freelancers offer great opportunities for a second or even a primary income. However, while these companies provide seamless purchasing options for their services, they have largely not adapted their payout structures for workers in emerging markets. 

Beyond the lack of stability and control that can come with side hustles, paying workers simply and on time remains a challenge for many gig economy platforms. 

Funds get stuck between payer and recipient as they navigate local currencies across fragmented banking and mobile money ecosystems, compliantly and at speed. For all the sophistication of modern payment infrastructure, the last mile of the payout stack remains one of the most technically underserved problems in the industry.

The Fragmented Payment System

Paying is harder than it looks. There are dozens of local currencies, many with volatile exchange rates and limited convertibility. To pay in a timely, consistent manner, platforms must have local liquidity ready to go, which can be cumbersome when applied globally. Compliance complexities, such as know your consumer (KYC) and AML requirements, vary by region, while worker classification and tax withholding obligations differ. 

Additionally, many workers rely on being paid via mobile money such as M-Pesa in Africa, digital wallets, and cash-out networks rather than bank accounts, which have low penetration in some regions. 

There are no dominant payout rails, meaning a platform operating in Kenya, Nigeria, Brazil, and Colombia is working with M-Pesa, bank transfers, PIX, and PSE simultaneously. Each comes with unique settlement times, failure rates, and reconciliation requirements. These issues result in delays, unfavorable exchange rates and high cash-out fees that are all absorbed by workers.

Beyond a minor inconvenience, these issues can mean not eating or paying rent for some who live day to day. As a result, workers switch to whichever platform pays fastest, while platforms face churn and risk their local reputations. Marginal inefficiencies, such as failed transaction fees, can add up significantly for platforms such as Rappi and Glovo, which process millions of transactions per week. 

Regulatory pressure is also building. The ILC conference this month will determine standards for digital platform workers, including employment classification, pay transparency, and social protection.

Smooth Payments With a Single API

Platforms are exploring multiple solutions for workers’ payment issues in emerging markets.

Aggregator models with multiple partners are one model that helps, but simultaneously increases operational overheads, with ongoing liquidity issues. Local wallets that are pre-funded require capital and incur high management costs, making them a barrier of entry for small to medium businesses. Earned wage access ensures workers are paid on time; however, it doesn’t resolve fees. Partnerships with local in-market banks provide faster settlements, with platforms owning compliance and currency conversions. 

Single APIs may increase costs for platforms; however, they handle the complexities of local rails, currencies, payment methods, and compliance across multiple markets, making it seamless for platforms to pay workers with minimal overhead. 

It can’t be denied that side jobs and flexible working are an attractive opportunity for many, particularly in emerging markets. However, delayed payouts for workers who live paycheck to paycheck is one practical aspect that impedes on a stable standard of living and erodes trust. Those looking to expand their billion-dollar businesses must ensure that the experience is seamless not only for the customer but for all parties involved.

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Carlos Menendez, chief operating officer of dLocal, is a seasoned general manager with extensive global experience in creating and scaling businesses. Prior to dLocal, he spent 14 years at Mastercard, most recently as president of the Global Commercialization Office, and 14 years at Citi, serving senior roles such as COO of Western Europe Retail Banking, EMEA Bankcards regional director, and CFO of Citibank USA. He holds a BA in Economics from Harvard University, an MBA in Finance from The Wharton School, and an MA in International Studies from the Lauder Institute at the University of Pennsylvania.