Remittance Prices Worldwide (RPW) is an organisation, affiliated to the World Bank, that monitors the costs incurred by those sending money abroad, across all of the world’s major remittance corridors.
Since 2009, when the average global cost of sending money anywhere in the world was calculated at a high of 9.67% of the total amount sent, the figure has been in steady decline, and the good news is that the latest figure, for Q4 2017, records another decrease in price, from 7.21% in Q3 ‘17, to 7.09%.
The global average has been calculated at under 8% every quarter since Q3 2014, and since 2009 the price has now fallen by 2.58%. This is, of course, good news for anyone who has a requirement to move money from one country to another, but still some way short of the 5% target set by the G8 at L’Aquila in 2010, and by the G20 in Cannes in 2011 and Brisbane in 2014.
In addition, the UN has set Sustainable Development Goals indicating a target of just 3% total costs, to be reached by 2030, as well as promising to reduce the average cost across all corridors to less than 5%.
Besides the global average costs there are three other key numbers that are worth keeping an eye on. The first is the International Money Transfer Index, which tracks the prices of Money Transfer Organisations (MTOs), i.e. not banks, that are present in more than 85% of the world’s 365 country corridors that are officially recognised by Remittance Prices Worldwide.
This figure currently stands at 8.23%, and has actually increased slightly during the past quarter, from Q3 ‘17’s 8.16%.
The second figure to note is the global weighted average remittance cost, which accounts for the different volumes of remittances being sent to and from different regions of the world. This figure, of 5.29%, is significantly lower than the standard global average, and has decreased quarter on quarter from 5.46%, and is far closer to the targets set by the G20 and the UN’s SDGs.
The final figure will be of interest to all fintech firms attempting to “disrupt” the money transfer industry, by using cutting edge technology to reduce fees, speed up transaction times and use exchange rates that give better value to the customer. The “Smart Remitter Target”, or SmaRT for short, “aims to reflect the cost that a savvy consumer with access to sufficiently complete information could pay to transfer remittances in each corridor”, says RPW.
SmaRT is calculated by taking the average of the three cheapest services for sending $200 dollars in any given corridor, expressed as a percentage of total cost, and was recorded at 5.16% in Q4 ‘17, decreasing from 5.8% in Q3.
Amongst the G8 countries, which together record an average cost of remitting money of 6.66%, Japan, Canada, the UK and Germany all exhibit average costs that are higher than the global average, whilst France, Italy, the United States and Russia all record levels lower that the global average.
For the G20 countries, the cost of sending money abroad was slightly higher, at 7.2%, with South Africa being the highest, at 16.17%, although the price has decreased in all of the last 4 quarters, followed by Japan, 9.52%, with Russia the lowest, 1.75%, followed by South Korea, 5.03%, Saudi Arabia, 5.45, and the US (5.8%). In China, a significant drop, from 10% to 7.92%, was recorded in Q4.
Sub Saharan Africa is, according to RPW, the most expensive region to send money to, and South East Asia the cheapest, apart from Russia, where costs are so low that a separate calculation that excludes the region is also calculated, recording a global average of 7.23% when Russia is left out, compared to 6.61 when it is included.
Finally, using mobile money is now the cheapest way to pay for a money transfer, at 4.21%, followed by debit card, 6%, bank account, 7.04%, and lastly cash, 7.09%.Don’t forget, you can use the Money Cloud’s unique comparison engine to compare the costs of sending money abroad offered by some of the world’s best brokers and money transfer agencies, handpicked by our expert team. As RPW’s figures show, the world is slowly waking up to the fact that international money transfer is getting cheaper, quicker, and better, as befits a truly globalised world.