World Economy

WB Ranks Least Costly Countries to Remit Money

WB Ranks Least Costly Countries to Remit MoneyWB Ranks Least Costly Countries to Remit Money

For many families overseas, the money sent by expatriates in the UAE and other countries worldwide have been the lifeline that helps them get by and pay for food, clothing and shelter.

The aggregate amount of money transferred abroad, mostly by expatriates, was estimated to be around $582 billion in 2014.

About $435 billion of that amount went to the developing countries, according to the World Bank, Gulf News reported.

However, it’s not just expatriates’ families and friends who are benefiting from remittances. Every year, billions of dirhams go to the pockets of money transfer operators, banks, governments and other service providers.

Sending money overseas is not free of charge, after all. And it’s no secret that remittance fees remain a burden to a lot of low-income senders.

 High Rates

In some places, the service fees are so expensive that a sender spends more than Dh100 out of his pocket just to send less than Dh1,000.

An expatriate in Australia who wishes to wire $200 to his family in Vanuatu, for example, can lose $41 or 20.61 percent of the total transaction, as a result of remittance fees and foreign exchange rate margins.

There have been calls to reduce the remittance charges, especially in areas where senders continue to face financial challenges. The World Bank estimates that by reducing fees by at least five percentage points, expats can save $16 billion a year.

Fortunately, for some people, transfer costs are not expensive across the board and can vary, depending on the region where the money is being sent to.

According to the latest World Bank report, which regularly tracks remittance price activity worldwide, South Asia is the cheapest region to send money to, while Sub-Saharan Africa is the most expensive.

  Remittance Corridors

A look at the transfer costs in different “corridors”, or country-to-country remittance, would show that sending money from the UAE to Pakistan is the cheapest in the world, costing only 1.86 percent of every $200 (DH734) transaction. That means an expat loses only around Dh13 when sending a little over Dh1,800 from UAE to Pakistan.

The second least costly remittance channel is between Singapore and Bangladesh, with transfer fees averaging at 2.18 percent.

Third on the list is sending money from Spain to Honduras, which can cost a sender around 2.58 percent.

The fourth cheapest corridor is between United States and Honduras (2.71 percent).

Sending money from the UAE to India is the fifth-cheapest in the world, with transfer charges costing about 2.91 per cent, on average.

The most expensive corridor to send money through is between Australia and Vanuatu (20.61 percent), followed by South Africa and Zambia (19.96 percent), South Africa and Botswana (18.79 percent), South Africa and Mozambique (18.41 percent), and South Africa and Angola (18.13 percent).