95582 REMITTANCE PRICES WO R L DW I D E THE WORLD BANK PAYMENT SYSTEMS DEVELOPMENT GROUP | FINANCIAL AND PRIVATE SECTOR DEVELOPMENT VICE PRESIDENCY ISSUE NO. 3 | NOVEMBER, 2011 AN ANALYSIS OF TRENDS IN THE AVERAGE TOTAL COST OF MIGRANT REMITTANCE SERVICES This Policy Note reflects the latest trends observed in the data collected during September 2011. Remittance Prices Worldwide is available on-line at remittanceprices.worldbank.org Overview The Remittance Prices Worldwide (RPW) database moni- ƒƒ The cost of remitting from G20 countries has followed the tors remittance prices across all geographic regions of the world. same pattern as the global average since the 3Q 2009. Accord- RPW was launched by the World Bank in September 20081, and ing to the latest data, the average is now 9.13 percent, slightly remains a key tool to monitor costs variation to remitters and lower than the global average (9.30). The cost of sending mon- beneficiaries from sending and receiving money along major ey to G20 remittance receiving countries is 9.80 percent. country corridors. The recently launched seventh iteration of RPW covers 213 country corridors worldwide originating from ƒƒ When looking at the regional trends, the LAC4 region shows 31 remittance sending countries to 91 receiving countries. the highest increase, from 6.82 percent in the last iteration to 7.68 percent in the 3Q 2011. The MENA and EAP region This policy note uses the data from RPW’s current iteration experienced slighter increases, respectively to 8.15 percent and to analyze the global, regional, and country specific trends in the 9.80 percent. Conversely, the averages for ECA, SA, and SSA average total cost of migrant remittances as well as the factors fell to 8.68, 6.15, and 12.41 percent. influencing these movements. These figures also measure the status of the “5x5” objective2 adopted by the G8 which is being ƒƒ Among different types of remittance service providers (RSPs), pursued in partnership with governments, operators, and inter- commercial banks remain the most expensive for sending re- ested stakeholders. mittances. The global average total cost for sending remit- tances through commercial banks was 13.68 percent in 3Q Main Findings 2011. MTOs lost their status of cheapest RSP type to the post offices. MTOs were charging on average 7.36 percent, while Based on the data collected for the 3Q 2011 iteration of post offices went down to 7.16 percent. RPW, and when compared to the previous iterations,3 the follow- ƒƒ Cash products are the most widely available ones (1,171) and ing main findings have been elaborated. All figures are intended their average price is 7.60 percent. Account-to-account prod- for sending USD 200 or the local currency equivalent. ucts are the most expensive, with an average cost of 14.52 per- ƒƒ The Global Average Total Cost increased from 8.89 percent cent; however, the price is significantly lower when considering in the 3Q 2010 to 9.30 percent in the 3Q 2011. Although this transfers within the same bank or to a partner bank. On-line still represents a reduction compared to the first iteration of and mobile services do not seem competitive yet in terms of RPW in 2008, the increase observed in the last year raises availability and cost. some concern. ƒƒ The International MTOs Index followed a different pattern in Global average total cost for migrant remittances the last year. This Index, which includes the Money Transfer increased during the last year Operators (MTOs) covering over 85 percent of the surveyed corridors, has experienced a slight increase compared to the The global average total cost5 for sending remittances in- 1Q 2011; however, when looking at the past year, the Index fell creased from 8.89 percent in the 3Q 2010 to 9.30 percent in the from 10.73% to 10.16%. 3Q 2011. The global average had dropped consistently from the ƒƒ The average price of sending money from the G8 countries launch of RPW in September 2008 to the 1Q 2010. The trend went up to 8.53 percent, from 8.40 recorded one year ago. has been inverted in the past three iterations, when the price This is still significantly lower than the price recorded at the went up from 8.72 to 8.89, then 9.06 in the 1Q 2011, and finally launch of RPW in 2008 (10.26 percent). Steep increases have 9.30 in the latest quarter. been experienced in Canada (9 percent increase over one year) The trend observed is somewhat different for the Interna- and France (nearly 30 percent increase). Italy, Japan, and Rus- tional MTOs Index.6 The Index has also shown a slight increase sia also went up; while prices were further reduced in the UK in the last six months; however, it dropped from 10.73 percent in and the US. The most expensive among the G8 countries is 3Q 2010 to 10.16 percent in 3Q 2011 (see figure 1). still Japan; the cheapest are Russia and the US. remittanceprices.worldbank.org AN ANALYSIS OF TRENDS IN THE AVERAGE TOTAL COST OF MIGRANT REMITTANCE SERVICES INAL DRAFT / November 2011 Visit Remittance Prices Worldwide: http://remittanceprices.worldbank.org For questions and comments email paymentsystems@worldbank.org Figure 1 - Global Average Total Cost for sending USD 200 Russia has the lowest total average cost across G8 countries. INAL DRAFT / November Figure 2011 1 - Global Average Total Cost for sending USD 200 Visit Remittance Prices Worldwide: http://remittanceprices.worldbank.org The average cost saw a nominal decline compared to the last For questions and comments email paymentsystems@worldbank.org reporting period, from 2.88 percent to 2.68 percent. As noted previously, Russia has a unique environment where cross bor- der remittances are mostly conducted in the same currency and Figure 1 - Global Average Total Cost for sending USD 200 possible additional cost deriving from a currency exchange are not known. The Russian market also benefits from relatively low fees charged by the providers when compared to the other G8 countries. Both the United States and the United Kingdom maintain an average total cost below the global average: 6.93 percent and 7.73 percent respectively. Both countries have seen a decline in the average total cost during the last year. Due to the high volume of remittance outflows, these markets have intense competition and there are a large number of financial products and services available to migrant workers. The United States and the United The trend for average total cost in G8 countries is consistent with the global average The trend for average total cost in G8 countries is Kingdom both benefit from an impressive number of RSPs sur- he G8 countries include the major sending countries in the world. However, there are significant veyed in the RPW database, respectively 67 and 69. cost structurewith isparities in the consistent across the theseglobal countries. average Figure 2 below shows distinct trends within these ountries. Particularly concerning are the results of the last data col- The G8 countries include the major sending countries in lection for France and Canada. In both countries, dramatic in- the world. The trend for average However, total cost inthere FigureG8 are countries 2 - Total significant average iscountries consistent in G8 disparities in the with the cost global average creases have been observed. In this quarter, France has registered structure across these countries. Figure 2 below he G8 countries include the major sending countries in the world. However, there are significant shows distinct the highest average cost since the launch of RPW in 2008: 11.63 isparities in the trends these countries. within across cost structure these countries. Figure 2 below shows distinct trends within theseup from 8.76 percent in the 1Q 2011. Similarly, Canada percent, ountries. has hit the record price of 11.87 percent, the highest in the last Figure 2 - Total average Figure 2in G8 countries - Total average in G8 countries two years. Germany and Italy have also experienced increases in the av- erage cost of sending remittances. In Germany, the cost went up to 12.64 percent, significantly higher than the 10.98 percent recorded in the previous iteration, but at the same time slightly lower than the figure recorded one year ago, 12.67 percent. In the past two years, Germany has shown a clear tendency to a seasonal trend, with highs regularly reached in the third quarters and lows recorded in the first quarters. Oppositely, for Italy this is the first increase since the 3Q 2009: the average cost went up from 7.57 percent in the last iteration to 8.18 percent. In September, shortly after the data collection for RPW was FINAL DRAFT / November 2011 Visit Remittance Prices Worldwide: http://remittanceprices.worldbank.org completed, a tax was introduced in Italy for all international For questions and comments email paymentsystems@worldbank.org money transfers. The tax is applied to all transfers outside the European Union and unless the sender is in possession of the tax identification code (“Codice Fiscale”) and social security 3 Table 1 - Total averages in1 -G8 card. The amount of the tax (2% of the amount sent) and the Table Total countries averages in G8 countries extension of its applicability are such to raise serious concerns 2008 1Q2009 3Q2009 1Q2010 3Q2010 1Q2011 3Q2011 on the cost for remittance services in Italy, due to both direct Canada 14.00% 13.28% 11.07% 10.18% 10.90% 10.31% 11.87% (additional cost due to application of the tax) and indirect (com- France 10.92% 11.50% 11.15% 10.01% 3 8.95% 8.76% 11.63% pliance costs, incentive to use of non-regulated channels) effects of the introduction of the tax. Germany 14.07% 13.53% 12.71% 11.85% 12.67% 10.98% 12.64% Italy 10.03% 7.36% 8.21% 8.11% 7.87% 7.57% 8.18% Japan is a market that was until very recently dominated by Japan 15.33% 18.24% 19.06% 17.34% 16.16% 17.54% 16.84% the commercial banks. The market was opened to non-bank Russia 3.22% 2.42% 2.99% 2.54% 2.52% 2.88% 2.68% RSPs by the Payment Services Act in late 2009. New players have been entering the country since then; however, the effect UK 10.26% 10.27% 9.05% 8.29% 8.07% 8.33% 7.73% on prices is still unclear. Japan continues to have the highest aver- USA 6.90% 7.21% 7.06% 7.57% 7.14% 6.67% 6.93% age total cost of all G8 countries. A decrease has been observed G8 10.26% 10.32% 8.80% 8.37% 8.40% 8.36% 8.53% in the last six months; however, the average cost is higher than it Global 9.81% 9.67% 9.40% 8.72% 8.89% 9.08% 9.30% was in the 3Q 2010. Russia has the lowest total average cost across G8 countries. The average costremittanceprices.worldbank.org saw a nominal decline 2 to the last reporting period, from 2.88 percent to 2.68 percent. As noted previously, Russia compared has a unique environment where cross border remittances are mostly conducted in the same currency and possible additional cost deriving from a currency exchange are not known. The Russian market also benefits from relatively low fees charged by the providers when compared to the other G8 countries. Figure 4 - Correlation between average cost and variation in G8 countries ISSUE NO. 3 | NOVEMBER, 2011 Figure 3 shows the spread between the minimum and maxi- Competition is an important factor for cost reduction in the mum amounts charged by individual RSPs in each country. In market for remittances. This intuitive finding is confirmed by the most countries, the significant difference between the two values analysis of the correlation between the number of RSPs sur- is due to the presence of costly services, in particular those ones veyed in each corridor and the average total cost for the same offered by commercial banks. It is interesting to notice how the corridor. For each corridor, RSPs representing 80 percent of the spread is lower in Russia, where banks do not operate in the mar- market are surveyed: if only a few providers alone represent the ket for remittances. The high spread for Japan may be due to the almost totality of the market, then it can be assumed that the fact that the market was recently opened to MTOs, hence costly is anlevel Competition of competition important is low; factor for cost conversely, reduction if many in the market for providers remittances.need This intuitive findin services still exist while cheaper once are being introduced by the by the is confirmed to be included analysis the samplebetween in correlation of the reach the to number in orderthe of 80 percent RSPs of in each corrido surveyed new players entering the market. market and the average total cost for thethis shares, sameis corridor. a sign thatForthere is a higher each corridor, competition RSPs representingin80 percent of th market are surveyed: few providers if only a Figure that market. alone represent 5 represents the examplethe almost of thetotality of the market, then UK, which can be assumed that the level clearly shows of competition how the price is conversely, is low; lower in the if many providers corridors thatneed are to be included i Figure 3- G8 countries spreads and averages the sample in order to reach the 80 percent of market shares, this is a sign that there is a highe serviced by a higher number of providers. All the G8 countries competition in that market. Figure 5 represents the example of the UK, which clearly shows how th price is lower in show a similar correlation, by the with exception Japan. of of 50% the corridors that are serviced a higher number providers. All the G8 countrie 45% show a similar correlation, with the exception of Japan. 40% Figure 5 - Correlation between number of RSPs and average cost in the UK 35% Figure 5 - Correlation between number of RSPs and average cost in the UK 30% 25% 20% 15% 10% 5% 0% Canada France Germany Italy Japan Russia UK USA Figure 4 shows that in the most expensive markets in the G8, prices tend to concentrate around the mean, while the cheaper sending countries experience a higher dispersion. In other words, when the average cost is higher, providers tend to offer their services at a price that is closer to the average. Conversely, when the average cost is lower, the prices offered are more differenti- Cost for migrant remittances 6 in the G20 countries ated among the providers. This may also be an index of how the The topic of remittances has gained a higher level of atten- receiving markets affect the price: for sending countries where tion in the agenda of the G20 countries. In particular, the G20 DRAFT / low prices are November possible, optimal 2011 market conditions need to be in discussion on the adoption of a target raises the need for an Visit Remittance Prices Worldwide: http://remittanceprices.worldbank.org place also on the receiving side inFor order the forand questions providers comments email to offer index that specifically monitors the price of remittances in the paymentsystems@worldbank.org cheap services. G20 members.7 Due to the heterogeneity of the sample, a single index can- Figure 4 - Correlation Figure between 4 - Correlation average between cost average cost and and variation in G8 in variation G8 countries countries not be calculated with the same methodology used for the G8. As a matter of fact, a single index would entail including in the same calculation figures that are different in nature, i.e. the cost of sending remittances from and to a country. This is due to the fact that some countries are included in the database as sending markets, while other countries are included in the sample as re- ceiving markets.8 For this reason, two different indexes are proposed here: (i) average for sending remittances from the G20 member countries (see figure 6); and (ii) average for sending remittances to the G20 member countries (see figure 7). The cost of remitting from G20 countries has followed the same pattern as the global average since the 3Q 2009. According to the latest data, the average is now 9.13 percent, slightly lower than the global average (9.30). tition is an important factor for cost reduction in the market for remittances. This intuitive finding rmed by the analysis of the correlation between the number of RSPs remittanceprices.worldbank.org surveyed in each corridor e average total cost for the same corridor. For each corridor, RSPs representing 80 percent of the 3 are surveyed: if only a few providers alone represent the almost totality of the market, then it assumed that the level of competition is low; conversely, if many providers need to be included in mple in order to reach the 80 percent of market shares, this is a sign that there is a higher act that some countries are included in the database as sending markets, while other countries are ncluded in the sample as receiving markets.8 or this reason, two different indexes are proposed here: (1) average for sending remittances from the AN ANALYSIS OF TRENDS IN THE AVERAGE TOTAL COST OF MIGRANT REMITTANCE SERVICES 20 member countries (see figure 6); and (2) average for sending remittances to the G20 member ountries (see figure 7). he cost of remitting from G20 countries has followed the same pattern as the global average since the Q 2009. According to the latest data, the average is now 9.13 percent, slightly lower than the global verage (9.30). Figure 6 - Average cost of sending USD 200 from G20 countries Figure 6 - Average cost of sending USD 200 from G20 countries Korea, Brazil and China are the most expensive receiving countries in the G20. Sending money to Korea costs 19 percent; however, it is important to notice that the only sending country captured for Korea is Japan, which is among the most expensive sending markets. FINAL DRAFT / November 2011 Visit Remittance Prices Worldwide: http://remittanceprices.world For Brazil the high cost is For also tocomments due and questions emailmargins the high paymentsystems@world charged by RSPs when exchanging the sending currencies into the Brazilian Real. In particular, providers generally use as a Korea, Brazil andreference the most China are the commercial expensive rate sending in whencountries receiving money the G20.to Sending Brazil; money to however, the parallel rate is commonly applied in the country costs 19 percent; however, it is important to notice that the only sending country captured for Ko the transactions. to retail Japan, which is among most expensiveFor markets.the parallel rate, which is this reason, sending more favorable for the sender, is also For Brazil the high cost is also due to the high margins used in charged by RPW to calculate RSPs when exchanging the se marginsReal. theBrazilian currencies into the charged by the providers. In particular, providers generally use as a reference the comm rate when sending money to Brazil; however, the parallel rate is commonly applied in the coun INAL DRAFT / November 2011 Figure 9 shows that Indonesia and Mexico are the cheapest Visit Remittance Prices Worldwide: http://remittanceprices.worldbank.org transactions. For this reason, the parallel rate, which is more favorable for the sender, is als retail that The average cost of sending money to the For questions G20 countries and comments receiving email paymentsystems@worldbank.org markets in the G20, with an average of 5.94 and 5.97 in RPW to calculate the margins charged by the providers. The average cost of sending money to the G20 countries that percent respectively. areof n the final declaration included the Cannes in RPW Summit as on receiving November 3 andmarkets is 9.80 4 2011, the percent G20 head Figure and of state 9 shows has committed that to work Indonesia and Mexico are the cheapest receiving markets in the G20, w towards e reduction of the average cost of transferring remittances from 10 to 5 percent by 2014. average of 5.94 and 5.97 percent respectively. INAL DRAFT G20/ not varied November significantly 2011 since 2008 (9.74). This figure has been he The average following cost of sending countries money are included toRPW. in the G20 countries Sending countries: Visit that are included Australia, Remittance Prices Canada, France, Worldwide:in RPW as receiving Germany, Figure 9is- Average cost of remitting to G20 countries in 3Q 2011 markets Italy, Japan, http://remittanceprices.worldbank.org ussia, andconstantly Saudi Arabia, .80 percent United Kingdom, has not higher varied and than the the United significantly global States. since average. Receiving For 2008 countries: questions (9.74).and comments ThisChina, India, figure emailIndonesia, has higher Figure 9 - Average cost of remitting to G20 countries in 3Q 2011 Mexico, Turkey. paymentsystems@worldbank.org been constantly ountries that are both sending and receiving: Brazil, Republic of Korea, South Africa. Argentina is not included in RPW. The han the global average. uropean Union does not appear as such in RPW, although most EU member countries are included in the database. Figure 7 - Average cost of sending USD 200 to G20 countries Figure 7 - Average cost of sending USD 200 to G20 countries 7 he average cost of sending money to the G20 countries that are included in RPW as receiving markets is .80 percent and has not varied significantly since 2008 (9.74). This figure has been constantly higher han the global average. Figure 7 - Average cost of sending USD 200 to G20 countries A specific analysis was Adedicated to India was specific analysis and China, dedicatedthe main receiving to India countries and China, theworldwide main by vol of remittances received. As Figure 9 clearly shows, China is among the most expensive receiving ma among thecountries while India rates receiving worldwide cheapest countries tobysendvolume money of to. remittances Sending money received. to China costs an outh Africa and JapanSouth Africa are the andremittance costliest the costliest Japan are sending remittance countries in the G20 sending group, with anAs Figure average 9 clearly shows, China is among the most expensive re- contradict average of 11.92 percent; sending money to India costs an average of 6.96 percent. This countries f respectively 17.73 in the and 16.84 G20 group, percent with an (see figure 8). average of respectively The cheapest sending 17.73 countries, finding, together otherwise ceivingwith markets, generally while confirmed, that therates India averageamong pricethe forcheapest countries to sending remittances is lower for Arabia ussia, are Saudi and (4.13) 16.84 and Korea percent figurefollowed (see(6.36), 8). The by the United cheapest States sending (6.93). countries, send money countries where higher volumes to. Sending are money transferred. The China tolevel of costs an average competition of 11.92 in sending countries also with8Russia, together Figure areofSaudi - Average cost Arabia remitting from G20(4.13) and countries in 3QKorea (6.36), 2011 seems to be very percent; similar for both India sending moneyand China: to Indiaif the common costs an average of countries sending are taken into 6.96 percent. outh Africa and Japan are the costliest remittance sending countries in the G20 an average group, withboth consideration, India and China are served by an average of seven providers per corridor. A followed by the United States (6.93). f respectively 17.73 and 16.84 percent (see figure 8). The cheapest sending countries, contradicts This with together the finding, otherwise generally confirmed, that difference can be observed in the coefficient of variation: the cost of sending money to India varies ussia, are Saudi Arabia (4.13) and Korea (6.36), followed by the United States (6.93). than the same value average the for price for China (1.01 for sending India, remittances 0.67 for China). This is finding lower seems for countries to demonstrate th Figure 8 - Average cost of remitting from G20 countries independence 3Q 2011 of remittance where higherprices volumes are transferred. on the receiving market: whenThe the level of competition receiving environment is favor Figure 8 - Average cost of remitting from G20 countries in 3Q 2011 prices vary more in sendingon depending countries also seems the providers very similar to becountry; and sending whenfortheboth India receiving environmen represent an obstacle to the reduction of cost, the variation is lower and China: if the common sending countries are taken into con- and prices tend to concentrate around the average. sideration, both India and China are served by an average of seven providers per corridor. A difference can be observed in the coeffi- 9 cient of variation: the cost of sending money to India varies more than the same value for China (1.01 for India, 0.67 for China). This finding seems to demonstrate the dependence of remittance prices on the receiving market: when the receiving environment is favorable, prices vary more depending on the providers and send- ing country; when the receiving environment represent an obstacle to the reduction of cost, the variation is lower and prices tend to concentrate around the average. 8 remittanceprices.worldbank.org 4 8 ISSUE NO. 3 | NOVEMBER, 2011 Cost for migrant remittances varies significantly across Banks are the costliest RSPs for sending migrant receiving regions remittances The cost for remittance services varies significantly depend- The RPW database captures the cost of sending remittanc- dbank.org ing on the region where the money is being sent (see table 2). As es based on RSP type including commercial banks, MTOs, and dbank.org in previous iterations, South Asia (SA) and Latin American and post offices. the Caribbean (LAC) are the least costly regions to send money Based on the data from this reporting period (see Figure to. The cost of sending money to SA has decreased in the last 9), commercial banks continue to be the costliest RSP type. o Korea year from 6.54 percent to 6.15 percent, confirming this region as Compared to the previous period, the average total cost for orea is the cheapest receiving market in the world. Conversely, LAC has this category has further increased from 13.14 to 13.58 per- experienced a dramatic increase in the last two quarters, from cent, reaching the negative record of the past two years. It ending mercial 6.82 to 7.68 percent. should be noted that banks are also one of the least trans- ntry to In the Eastern and Central Asia (ECA) region, two values parent types of RSP: out of 905 bank services included in so used have been considered: due to the peculiarity of the Russian mar- the database, 253 (28 percent) did not disclose the exchange ket and its heavy influence on the region, both an average in- rate applied to the transaction. As a consequence, the average with an cluding and an average excluding Russia have been calculated. In price reported here could be significantly higher if full infor- both cases, the average cost dropped over the last year, from 7.57 mation were provided. to 6.86 percent when all corridors are considered, and from 9.49 Compared to the previous period, post offices are the only toDRAFT FINAL 8.68 percent 2011Russia isVisit when / November excluded from Remittance Prices the Worldwide: calculation. http://remittanceprices.worldbank.org RSP type experiencing a price decrease, from 8.08 percent to For questions and comments email paymentsystems@worldbank.org The East Asia and Pacific (EAP) region has recorded an in- 7.16. However, the same issue mentioned above for banks crease, consistent with a trend observed in the last two years. The on transparency applies to the post offices, which detain the Costaverage for migrantcost for sending remittances variesmoney to EAP significantly acrosscountries receiving went regionsup from negative record of least transparent RSP in the sample (only cost forpercent The 9.48 remittancelast year services tosignificantly varies 9.80 percent in on depending thequarter. this region where the money is being 17 out of 38 post offices were able to disclose the exchange sent (see table 2). As in previous iterations, South Asia (SA) and Latin American and the Caribbean (LAC) The are the least Middle costly regions toEast andto. send money North Africa The cost of (MENA) sending money region to SA has decreasedcon- in the last rate margin). year from 6.54 percent to 6.15 percent, confirming this region as the cheapest receiving market in the firmed a seasonal trend that has seen slight increases in the world. Conversely, LAC has experienced a dramatic increase in the last two quarters, from 6.82 to 7.68 MTOs increased their average cost to 7.37 percent from third quarters followed by drops of the average costs in the percent. 6.94 percent in the previous period. MTOs are the most trans- first In the and Central The quarters. Eastern average Asia (ECA) price region, two valuesinhave beenregion this went considered: due toup from of the peculiarity parent RSP type, with 99 percent of the 1677 services disclos- the Russian market and its heavy influence on the region, both an average including and an average 8.00Russia excluding percent 8.15 in In to calculated. have been the last both six cases, themonths, but average cost a reduction dropped canfrom over the last year, ing full information to their customers. 7.57 be observed to 6.86 when percent when looking all corridors at the and are considered, figure recorded from 9.49 for the to 8.68 percent when3Q Russia is lume excluded from the calculation. 2010, 8.95 percent. Figure 10 - Total averages by RSP type arkets, The East Asia and Pacific (EAP) region has recorded an increase, consistent with a trend observed in the n The last two years. Sub-Saharan The Africa average cost for sending region money to EAPiscountries confirmed went up as fromthe 9.48most percentex- last year 16% ts the to 9.80 percent in this quarter. pensive region of the world to send money to. However, a lim- The Middle East and North Africa (MENA) region confirmed a seasonal trend that has seen slight 14% o itedin increases reduction been observed has followed the third quarters inaverage by drops of the this quarter compared costs in the first quarters.to Thethe average 12% priceprevious data in this region wentcollection: the average up from 8.00 percent to 8.15 inprice for the last remitting six months, but a to SSA is reduction can be observed when looking at the figure recorded for the 3Q 2010, 8.95 percent. 10% now 12.41 percent, compared to 12.82 percent in the 1Q 2011. It s more The Sub-Saharan Africa region is confirmed as the most expensive region of the world to send money to. he should However, a limited reduction that be noticed these has been figure observed are quarter in this still the highest compared recorded to the previous data 8% for the rable, collection: region the average infor price the past to remitting two SSA years. is now 12.41 percent, compared to 12.82 percent in the 6% 1Q 2011. It should be noticed that these figure are still the highest recorded for the region in the past nt 4% two years. e Table 2 - Total averages by regions of the world Table 2 - Total averages by regions of the world 2% 2008 1Q2009 3Q2009 1Q2010 3Q2010 1Q2011 3Q2011 0% EAP 11.05% 10.46% 10.38% 9.33% 9.48% 9.71% 9.80% 2008 1Q2009 3Q2009 1Q2010 3Q2010 1Q2011 3Q2011 ECA 5.96% 6.68% 7.19% 6.48% 7.57% 7.55% 6.86% Bank MTO Post Office Global Average ECA (no Russia) 11.03% 9.70% 9.42% 8.33% 9.49% 9.32% 8.68% LAC 8.37% 8.65% 7.63% 8.12% 7.27% 6.82% 7.68% MENA 11.10% 9.30% 9.58% 8.19% 8.95% 8.00% 8.15% SA 7.80% 7.31% 6.85% 5.99% 6.54% 6.56% 6.15% SSA 14.01% 13.07% 11.61% 10.86% 11.57% 12.82% 12.41% Global 9.81% 9.67% 9.40% 8.72% 8.89% 9.08% 9.30% Banks are the costliest RSPs for sending migrant remittances The RPW database captures the cost of sending remittances based on RSP type including commercial banks, MTOs, and post offices. remittanceprices.worldbank.org 10 5 AN ANALYSIS OF TRENDS IN THE AVERAGE TOTAL COST OF MIGRANT REMITTANCE SERVICES Cash services dominate the remittance market at Notes competitive prices 1 Several countries operate their own national databases to moni- For the first time in this iteration, a comprehensive analysis tor remittance price activity at the national level. The World of the price by product type was produced (see figure 10). Cash Bank certifies national and regional remittance prices databases products remain the most widely available ones (1,171) and compliant with the minimum mandatory requirements for re- their average price is 7.60 percent. Account-to-account services mittance databases. Currently, four databases have been certi- (511) are the most expensive, with an average cost of 14.52 fied (Italy, Central America, Australia/New Zealand, Africa). percent; however, it should be noted that the price falls to 6.47 For more information visit http://remittanceprices.world- percent when considering transfers within the same bank or to bank.org/National-Databases. a partner bank (56). 2 The 5x5 objective was adopted by the G8 in 2009, and it refers 261 on-line services were surveyed and the average total cost INAL DRAFT /was November 2011 Although not to reduction of the global average total cost of migrant remit- Visit Remittance Prices Worldwide: http://remittanceprices.worldbank.org 8.76 percent. widely available, pre-paid card For questions and comments email paymentsystems@worldbank.org services (68) and account to cash (44) were the cheapest product tances by 5 percentage points in 5 years. types, respectively at 4.20 and 4.91 percent. Only 10 mobile ser- 3 The first iteration of the database was released in September vices were recorded, for an average cost of 7.36 percent. 2008, after which the RPW database has been updated every espectively at 4.20 and 4.91 percent. Only 10 mobile services were recorded, for an average cost of 7.36 ercent. six months. The following releases were in 1Q and 3Q 2009, Figure 11 - Average cost by product type 1Q and 3Q 2010, 1Q and 3Q 2011. Figure 11 - Average cost by product type 4 The regions’ abbreviations are as follows: East Asia and Pa- cific (EAP), Europe and Central Asia (ECA), Latin America and the Caribbean (LAC), Middle East and North Africa (MENA), South Asia (SA), Sub-Saharan Africa (SSA). 5 The global average total cost is calculated as the average total cost for sending USD 200 with all RSPs worldwide; non- transparent RSPs (i.e. RSPs that do not disclose the exchange rate applied to the transaction) are excluded as well as corridors from Russia, since in these cases the exchange rates were not provided and cost could be higher if data were complete. 6 The International MTOs Index includes all MTOs that are present in over 85 percent of RPW corridors. Thus far, it has included Western Union and MoneyGram, which operate re- spectively in 98 percent and 93 percent of the country corridors covered in the database. 7 In the final declaration of the Cannes Summit on November 3 and 4 2011, the G20 head of state committed to work towards the reduction of the average cost of transferring remittances from 10 to 5 percent by 2014. 8 The following G20 countries are included in RPW. Sending countries: Australia, Canada, France, Germany, Italy, Japan, Russia, Saudi Arabia, United Kingdom, and the United States. Receiving countries: China, India, Indonesia, Mexico, Turkey. Countries that are both sending and receiving: Brazil, Republic of Korea, South Africa. Argentina is not included in RPW. The European Union does not appear as such in RPW, although most EU member countries are included in the database. remittanceprices.worldbank.org 6 12