A remittance app is an app that sends money to family or friends in another country, usually faster and more cheaply than a chain of banks. A remittance is money that a person working abroad sends home. Remittance apps are also called international money transfer apps. Some still work through agents, local shops where a person hands over or collects cash.
A remittance app makes one promise: it shows the exchange rate and the fee before you pay. A bank transfer often hides its cost inside the exchange rate. The bank uses a rate worse than the real one, and keeps the difference. This is called a forex markup. A remittance app either uses the real exchange rate, the rate banks use between themselves, and charges a clear fee, or shows its markup on the screen.
Here is a typical case. An electrician from Tamil Nadu works in Dubai. He wants to send AED 2,000 to his wife in Madurai. In the app, he enters the amount. The app shows the rate, its fee of AED 10, and the rupees his wife will receive, about ₹51,000. He pays from his UAE bank account. The app checks his name, and his wife's name, against government lists of people and organisations who are not allowed to receive money, through sanctions and PEP screening. It has already completed KYC, the identity check, when he signed up.
How does the money reach India so fast, without a chain of correspondent banks? The remittance company keeps money in its own accounts in both countries. It receives his dirhams in its account in the UAE. At the same moment, it pays rupees from its account in India into his wife's account. So no money physically crosses the border for each payment. The company settles its own balances between the two countries later, in large amounts. Many apps use a cross-border payout network for the last step, the payment in India.
In India, the payment usually arrives through IMPS or UPI, and the wife can spend it at once with her UPI app. Some people abroad also keep their savings in a multi-currency account, and send money home from it when the exchange rate is good.