Global Remittance Industry Choking Billions Out Of Developing World

A handful of firms are exerting a stranglehold over the global remittance industry by charging huge fees on money sent from friends and family abroad, choking an annual half a trillion dollar lifeline for countries that face sweeping economic challenges.  Remittances generate three times more money every year than the total global aid budget, according to the World Bank, which projects that $436bn (£261bn) will be sent overseas this year.

The value of transfers often overshadows huge sectors of a country’s economy: Filipinos, for example, received $25bn in remittances last year, eclipsing the total value of the country’s $22bn electronics industry. In Vietnam, cash transfers worth $11bn nearly equalled all petroleum exports, which were valued at $12bn, according to World Bank data.

But fees of up to 29% are still being charged on money transfers between some countries, despite a pledge by the G8 at the L’Aquila summit in 2009 to halve the world’s mean remittance fee to 5% (pdf). Such a reduction would save poorer countries as much as $16bn a year, the World Bank says.  The average transfer fee is more than 8% (pdf). The average surcharge from the G8 group of rich countries is just 0.5% lower, with Japan the most expensive country to send money from, and Russia the cheapest...