Workers' remittances are big money: in 2007, the World Bank estimates that $317 billion was sent internationally as remittance flows. Given the seeming inevitability of further migration, this amount should increase even further. Those with an interest in migration should welcome the news that the World Bank now has a new website comparing the rates for sending remittances internationally in 120 common North to South corridors. In remittance-speak, a corridor is simply a country pairing such as Italy-Serbia or US-Ecuador. The World Bank site complements the UK Department for International Development (DfID) site SendMoneyHome.org, which also makes price comparisons among different remittance providers. The World Bank's effort cites the following as reasons for putting up their webpage entitled "Remittance Prices Worldwide":Research and publication of remittance pricing worldwide will serve four important purposes:Visiting SendMoneyHome.org is still very much worthwhile for it links directly to the remittance services whose rates are being compared. However, this DfID site tends to have more information for corridors involving the UK as the sending country as you would expect. Moreover, the data presented does not indicate "all-in" fees as a percentage of the amount sent.
- 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.
There are a variety of providers now competing for the business still dominated by big operators such as Western Union and MoneyGram in certain corridors. For migrants' welfare, this sort of competition is good as it lowers the costs of sending money home. Hopefully, efforts such as these can help migrants sort out which are the most cost-effective means of sending home remittances. Of course, Internet access and computer literacy are prerequisites for taking advantage of these services--or tech savvy relatives receiving remittances can also use them to suggest to their emigres better ways of sending remittances.
There are all sorts of ways of sending remittances nowadays that promise to lower charges that migrants bear. I refer you to a (prize-winning!) International Finance Corporation / Financial Times submission by yours truly comparing the advantages and disadvantages of various technologies such as informal channels, banks, money transfer operators, prepaid cards, the Internet, and via cell phones. Happy reading...
