XM -Blog

The Need Of An Open Remittance Market

June 22nd, 2015

Open Remittance Market

It is a known fact; in the year 2009, a decision was taken to reduce the global remittance costs from 10 percent to 5 percent in 5 years, termed as the ‘5×5’ objective, at the 35th G8 Summit. As of June 2015, over 5 years since the decision, the global average cost of sending remittances has reduced merely by over 2 percent and stands at 7.68 percent.

Despite regulatory efforts, why is the remittance industry, yet unable to achieve its goal?

This goal still seems like a distant dream because the biggest hurdle lies within our industry itself, and that is ‘Exclusivity’. In most cases, this scenario arises when a money transfer operator enters into an exclusive agreement with an eventual service provider (such as banks, exchange houses, local money transfer companies, retail entities, etc.) restricting it from working with any other brand in the market.  A healthy business environment is the one that nurtures competition and does not succumb to a monopolistic way of life. An open remittance policy that is non exclusive in nature, is the need of the hour, for all of us in the industry, globally.

Universal Remittance Prices


Our customers especially, are the ones who bear the brunt of exclusive arrangements, as they are left with little or no choice, while sending money to their families back home. Sub-Saharan Africa is an example of how exclusivity is one of the major reasons that is hindering the growth of its remittance industry. Despite the global average cost of sending remittance being 7.68%, Sub- Saharan Africa is still battling with the highest average costs, of 9.74%.  There is little surprise then, why a customer chooses to opt for unofficial means of money transfer, instead of the legal channels.

A few countries have, however, realized the importance of an open environment that works in favor of customers by reducing their costs of sending remittances and giving them an array of options to choose from.  Oman is a classic example of a country that has completely abolished exclusivity, for a healthy remittance business.  Other important receive countries such as India, Bangladesh and Pakistan and some African countries like Nigeria, Ghana, Kenya, Rwanda, Ethiopia, and Tanzania have also followed suit and eradicated such monopolistic agreements.

The goal to have an open remittance market place can only be achieved, if the industry comes together to work towards the larger cause, rather than pursuing individualistic gains. Governments, regulators, banks, money transfer operators and all other organizations that are part of this industry, have to work towards this one common goal, to make this global change.


Written by – Sudhesh Giriyan, COO, Xpress Money