OFWs could have sent P6.75B more to their families this July alone, if only they used what was already at hand
Mobile money–the use of a mobile phone to remit funds–offers the cheapest way for overseas Filipino workers (OFWs) to send cash home.
Citing the World Bank’s latest Remittance Prices Worldwide (RPW) report, ACTS-OFW Rep. Aniceto Bertiz III said on September 23 that cash transfers via mobile operators cost a global average of only 3.20% of the amount sent in the second quarter of 2018, down from 3.29% in the same period in 2017.
“In contrast, remittances coursed through banks cost a global average of 10.41% of the amount forwarded in the second quarter of this year, down from 10.99% in the same period last year,” Bertiz said.
Remittances by means of money transfer operators such as Western Union and MoneyGram, as well as so-called “innovative financial technology players” cost a global average of 6.15% of the amount conveyed, down from 6.23% last year, according to Bertiz.
Bertiz said remittances passing through postal offices cost a global average of 6.81% of the amount dispatched, down from 6.85% last year.
“We have to push for the use of mobile technologies to make it cheaper and faster for OFWs to send money home,” Bertiz said, although he also acknowledged that the development of mobile money or “mobile wallets” has been slowed down by lack of harmonized regulations between countries.
At present, Bertiz said remittance markets are still dominated by banks that charge the highest transfer fees.
“In our case, OFWs still rely heavily on banks to send their money home, so we have to put more pressure on banks to reduce transfer charges,” Bertiz said.
“While we recognize that Philippine banks correspond with foreign partners that also collect high fees, our banks here can do their share in bringing down charges, primarily through innovation and new technologies,” Bertiz said.
The Bangko Sentral ng Pilipinas last week reported that the cash sent home by OFWs through banks in July alone reached $2.401 billion, up 5.2% from the $2.283 billion in the same month in 2017.
“Based on the 10.41% global average cost of remittances coursed through banks, we can easily estimate that in July alone, OFWs spent around $250 million to pay for (bank) transfer fees,” Bertiz said.
“Reducing bank charges to an average of 5.2% would easily translate into $125 million, or P6.75 billion in monthly cost-savings–additional wealth that should directly benefit the households here of our migrant workers and our overall economy,” Bertiz said.
The World Bank’s RPW quarterly report tracks remittance prices across all channels and across all geographic regions of the world, and is used as reference for measuring progress towards global cost reduction.
The United Nations’ Social Development Goals that seek to lessen inequality include the target of reducing the cost of a cash remittance to a global average of 3%.
The global average cost of a $200-remittance across all channels stood at 6.99% as of June 2018, according to RPW.