Revealed: The hidden cost of International Remittance
~ Head of global money transfer business, Xpress Money, calls for regulation to address soaring international remittance fees ~
~ Some markets are effective monopolies, Xpress Money COO contends ~
October, 2015: The Chief Operating Officer of Xpress Money, Sudhesh Giriyan, is calling for regulation of the charges made on international remittances, a consumer market worth an estimated £400 billion globally.
Money transfer services are a frequent, convenient and established method of transferring money between families and friends internationally. The services are increasingly popular in the expatriate Asian, African and Eastern European populations in the UK.
COO Sudhesh Giriyan said, “What we are seeing is a huge variation in fees and customer rates between territories that exploits and disadvantages clientele. Our global average cost for sending remittances is 2.09%. We see no reason why any money transfer business should be in a position to charge more than this. The average cost for sending remittances globally is around 7.6%. The figure is inflated by costs charged in sub-Saharan Africa which, in some cases, amount to as much as 20%”.
“In 2009 the G8 set a target of reducing average charges to five percent. Six years on, we are woefully short of that target. Candidly, we see intensive lobbying in this sector, creating effective monopolies in some countries that exploit those in need.”
More than £15bn in remittances are sent from the UK every year, with an estimated two-thirds sent to developing countries.
Estimates suggest that around one in 10 people globally send or receive remittances. Sums sent to developing countries alone are around £289 billion, according to recent World Bank estimates.
In the UK, money transfer services are typically operated through convenience stores. A customer visits a local convenience store, arranges the transaction in moments, and the funds are immediately available to the recipient in most cases, either in cash or in a bank account, on a mobile wallet or remit card. Door delivery services are also available in some receive countries.
He added: “In many cases, funds being transferred are sent by low-paid workers seeking to assist family members in their native countries. Sums transferred are often relatively small and it is extraordinary that some businesses in our sector should be able to charge the fees that they do”.
“One of the greatest advocates for reform is former UN secretary general Kofi Annan who last year called for formal investigation by London financial regulators”, he concluded.
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