About Remittance Prices Worldwide

This website provides data on the cost of sending and receiving small amounts of money from one country to another. Called remittances, these international transfers are often initiated by migrant workers. The aggregate cash flows and the number of participants are enormous. In fact, the World Bank estimates that remittances totaled $443 billion in 2008, of which $338 billion went to developing countries, involving some 192 million migrants or 3.0% of world population. The money received is an important source of family (and national) income in many developing economies, representing in some cases a very relevant percentage of the GDP of the receiving countries. The site covers 167 "country corridors" worldwide. The corridors studied flow from 23 major remittance sending countries to 83 receiving countries, representing more than 60% of total remittances to developing countries.

In many cases, the cost to consumers of these remittance transactions is expensive relative to the often low incomes of migrant workers, the amounts sent, and the income of remittance recipients. Therefore, any reduction in remittance transfer price would result in more money remaining in the pockets of migrants and their families, and would have a significant effect on the income levels of remittance families. Indeed, if the cost of sending remittances could be reduced by 5 percentage points relative to the value sent, remittance recipients in developing countries would receive over $16 billion dollars more each year than they do now. This added income could then provide remittance recipients more opportunity for consumption, savings, and investment in local economies.

Remittance prices are high for many reasons, including underdeveloped financial infrastructure in some countries, limited competition, regulatory obstacles, lack of access to the banking sector by remittance senders and/or receivers, and difficulties for migrants to obtain the necessary identification documentation to enter the financial mainstream.

However, the single most important factor leading to high remittance prices is a lack of transparency in the market. It is difficult for consumers to compare prices because there are several variables that make up remittance prices. Prices for remittances are frequently made up of a fee charged for sending a certain amount, a margin taken on the exchange rate when remittances are paid and received in different currencies, and, at times, a fee charged to the recipient of the funds. These fee components may also vary according to how the receiver is paid (i.e. cash or by crediting an account), the speed of the transfer, and the ability of the sender to provide information about the recipient (i.e. bank account number).

In addition, a lack of transparency in the market has had the impact of reducing competition, as consumers tend to continue to patronize traditional market players because they are not aware of and cannot compare services, fees, and speed of their existing remittance service against other products.


Rationale for a World Bank sponsored database:

The World Bank enjoys a leading role in much of the global work on remittances.

It is important to note that remittances are, in essence, payments and therefore rely on domestic and international payment systems to flow from the sender to the recipient. Over the last 12+ years, the World Bank's Payment Systems Development Group (PSDG) of the Financial and Private Sector Vice-Presidency (FPD) has supported payment systems and remittance reforms in 100+ countries, using several tools, mostly managed under the umbrella of regional initiatives such as the Arab Payments Initiative (API), the Commonwealth of Independent States Payments Initiative (CISPI), the South Asia Payments Initiative (SAPI), the Southern African Development Community (SADC) Payment Systems Project, and the Western Hemisphere Payments and Securities Settlement Forum (WHF).

Specifically in the area of remittances the PSDG has used its experience in payment system development and its role in the international payment system community, to lead an effort, in cooperation with the Committee on Payment and Settlement Systems (CPSS) of the Bank for International Settlements (BIS) to develop the General Principles for International Remittance Services, to address the G-8 request to enhance the efficiency of remittance markets and reduce costs. The General Principles are the internationally agreed standards to address the payment system dimension of remittances. Diagnostics based on these principles are leading directly to technical assistance to support implementation and are being delivered quickly through the standing Regional Payments Initiatives, led by the World Bank. The PSDG also chairs the International Coordination Group of donors and multilaterals that work on improving the business environment for remittance services and leads a Private-Public Sector Partnership to enhance efficiency in the remittance market, as part of the G-8 mandated global effort on remittances.

The World Bank’s research department has taken the lead in bringing global attention to the phenomenon of remittances, and in producing more and more reliable data on remittance flows on a regular basis. The FPD Financial Integrity program supports the Financial Action Task Force and has pioneered methodologies for studying remittance corridors in order to move remittances into the regulated sector, and is supporting the development of proportionate Anti-Money Laundering-Counter Terrorism Financing policies. The Consultative Group to Assist the Poor (CGAP) has developed tools for micro-finance institutions (MFIs) that are seeking to move into the remittance business, and has co-founded a Remittances Fund and a Technology Fund to promote promising business models.

Most importantly, the World Bank Group's Financial Sector Strategy of March 2007 set as a goal the reduction of remittance costs, and called for the creation of this Remittance Price Database.

Currently, several independent initiatives seek to gather information on remittance prices in selected corridors. PROFECO's website in Mexico, Send Money Home and Moneymove in the U.K, and national databases in France, the Netherlands, Norway and Germany help consumers choose the best services for their needs. The IDB publishes occasional papers documenting the average prices for countries in the U.S.-LAC corridor. The government of the Philippines also releases occasional information on the cost to remit money home.

However, these programs do not share a unified methodology, do not collect similar data in all cases, and do not have global coverage; thus, the data that comes from them is not directly comparable across countries and regions. For example, data is collected for different base-line remittance amounts, making a direct comparison difficult. It is for this reason that existing data cannot simply be aggregated to form the database.

The World Bank data on remittance prices has been collected anew, using a unified methodology. Nevertheless, the World Bank, through the Private-Public Sector Partnership on Remittances, will seek to work with the managers of other similar databases to encourage inter-operability and joint efforts in the future, for improved global coverage and inter-comparability.

The World Bank's database is designed to monitor the evolution of costs to remitters and beneficiaries of sending and receiving money in major selected corridors. The Bank will oversee the collection of new data to update the site and expand its coverage in the future.

Research and publication of remittance pricing worldwide will serve four important purposes:

• First, updated periodically, this database will provide a benchmark proxy by which to measure improvements in transparency, efficiency, and competition within remittance corridors. Thus, the impact of projects designed to enhance these market characteristics will be measurable.
   
• Second, a streamlined database will allow for comparisons of markets across countries and regions. Regions/corridors in which markets are working well can be studied and inform reform efforts elsewhere.
   
• Third, simply the act of publishing this database may serve to reduce remittance transfer prices. Publication of prices in corridors in which they are high can bring government and public pressure to bear on companies to reduce their fees and other charges. An example of this has been the case of Latin America, where publication of remittance pricing was a factor in the reduction of total costs from 15%, on average, in the region in 2000, to 5.6% in 2006.
   
• Finally, the database may help consumers to better understand their local remittance market and inform their decisions regarding money transfer products. The utility of this function would be improved by increasing the frequency of updates after the first year.
  

The pricing data provided in this database are intended to serve as a snapshot of the cost of remittances on specific dates and time. Actual costs may vary. The World Bank provides no warranty, expressed or implied, as to the accuracy or completeness of the data furnished. The data and information provided herein should not be used as a substitute for actual pricing information that consumers should obtain directly from service providers.