Methodology

In any market, transparency and dissemination of information is important, because it enables individuals to make informed decisions about which services to use, and it also helps to make the market as a whole more efficient. In the remittances market, in particular, the total cost might not always be clear to customers as there are a number of variables that go into it: the transaction fee, the exchange rate applied and the margin eventually charged, and the speed of the service, among others.

In principle, all these elements must be captured in the information to the consumer; in practice, this is not always the case. Therefore, combining all these elements to calculate which service is cheapest in a comparable way is difficult for most remittance consumers. In addition, it is difficult to measure improvements in remittance markets, as there is little data on cost and efficiency. For this reason, the World Bank is releasing this website, which will biannually report comparable remittance price data and service terms.

Currently, the database covers 134 corridors worldwide. The corridors studied flows from 14 major remittance sending countries to 72 receiving countries, representing around 60% of total remittances to developing countries. In most cases, data was captured from the main sending location/area for the corridor in question to the capital city or most populous city in the receiving market. Some service providers surveyed might not have additional geographical coverage for that corridor.

Data was collected by posing as customers and contacting individual firms within each corridor. Researchers collected data within each corridor on the same day, in order to control for fluctuations in exchange rates and other changes in fee structures. It should be noted that data in this database is intended to serve as a snapshot of a moment in time, and that pricing may vary over time.

The current on-line version launched in March 2009 shows the first update to the original database launched in September 2008. Users of this website can still retrieve the remittance prices shown in the September 2008 database by clicking on the relevant collection period. In subsequent updates of this site (approximately every 6 months) pricing trends over time will continue to be displayed.

Additional details on the methodology used for collecting data are as follows:

Firms Data was collected for 8-10 major service providers in each corridor, including both the primary Money Transfer Operator (MTO) and Banks active in the market. In some markets very few banks or MTOs operate. In these cases, the sample may include more MTOs than banks, or vice versa. In corridors where there were fewer market participants, efforts were made to survey as many providers as possible. Companies surveyed within each segment were selected to cover the maximum remittance market share possible.
Amounts: For the original database, two amounts were surveyed per corridor: the local currency equivalent of $200, and the local currency equivalent of $500. For the information collected in the first quarter of 2009, the original amounts in local currency were kept for comparability purposes. Due to currency fluctuations over the last six months, some of the local currency amounts differ from the $200 and $500 benchmarks.
Transfer fees: This is the most visible cost component, and can differ significantly among market players. This fee usually represents the charge the sender pays at the initiation point, and usually varies with the amount sent, within set bands. In some cases, there may be fees and taxes charged at the destination that have not been detected in this database.
Exchange Rate Fee: An important portion of the remittance cost is the exchange rate spread, which is not quoted in the transfer fee. Even though remittances can be paid in US dollars in some countries, the majority of remittance transactions are paid in local currencies, and, thus, an exchange operation is required. In this database, where remittances are paid in dollars, or where exchange rate information was not provided, this information may not be available. In these cases, the total costs might be higher than indicated in the database.
Speed of transfer: The survey covered mainly cash-to-cash transactions, or the quickest means available. The speed of transfer is noted for each product. Many banks will not make cash-to-cash transactions but handle account-to-account. In these cases the time taken for funds to be received will be more than "next day" and the speed was noted. For the March 2009 database the speed of transfer has been standardized in six broad categories: less than one hour, same-day, next day, 2 days, 3 to 5 days, and 6 days or more.
Network coverage: The March 2009 database also includes, for each company surveyed, a description of the network coverage in the receiving country. This additional variable complements the overall picture for price and convenience of the service offered by each RSP. The following categories are used to describe RSP coverage: nationwide, urban areas only, rural areas only, name of city (e.g. Manila only), nationwide (bank account only), ATM withdrawal, and home delivery.