Each quarter, the World Bank produces a report called ‘Remittance Prices Worldwide‘ which, as the title suggests, tracks the costs of sending money from one country to another. It covers 365 ‘country corridors1‘- a corridor represents the transfer of money between two countries, for example from the USA to the Philippines.
The remittance industry is big business. According to the latest figures on the World Bank website, $582 billion was transferred in 20152. But often, the cost is relatively high in proportion to the amount being sent. So one of the reasons the World Bank publishes this report is to bring greater transparency to the industry. To put this into perspective, the World Bank claims that reducing the cost of transferring money by 5% would be worth an additional $16 billion each year to the receive countries3.
The global average cost
According to the report, the global average cost for sending money stood at 7.4% in the final quarter of 2016, roughly the same as the third quarter last year and the equivalent quarter in 2015. The average has remained consistently below 8% since 2014 and has dropped dramatically from 2009 when it hit 9.67%.
The report also says that 28% of country corridors charge between 0-5%, 11% more than 2009. Nearly half charge 5%-10%, up 13% since 2009, while those charging 10%- 15% has fallen from 29% in 2009 to 17% in 2016. These figures are important because they show a downward trend in the cost of transferring money.
Regional average cost
On the whole, the cost of remittances has remained stable in most regions. At an average of 5.31%, Southeast Asia was the cheapest region to send money to, whereas Sub-Saharan Africa was quite a bit more expensive at 9.48%. Eastern Europe and Central Asia has also stayed fairly constant at 6.3%. The one region which recorded an increase is the Middle East and North Africa, jumping to 7.63% in the fourth quarter of 2016 from just over 7% in the previous quarter.
Average cost by the service provider
The report tracks the average cost of transferring money via the main types of remittance services. Banks remained by far the most expensive at nearly 11%, while money transfer businesses and post offices were quite similar at 6.26% and 6.46% respectively. As you might have guessed, sending cash (6.9%) was cheaper than a bank account transfer (8%), but using a debit or credit card offered the best rate at 6.31%.
What these figures illustrate is that you have to shop around to make sure you’re paying the lowest fees. With a global average cost of just 2%, Xpress Money is among the most competitive money transfer businesses in the industry.
To transfer money today or to find out more, click here.