According to the World Bank, More than 215 million people live outside their countries of birth. Many of these expatriates send money to families back home, to the tune of approximately $534 billion per annum. The cost of sending or “remitting” money between countries can be significant, with The World Bank’s December 2013 Remittance Prices Worldwide report estimating the global average total cost for sending remittances at approximately 8.74%.
This amount varies significantly between countries; as an example, the following table outlines the World Bank average across the G8 countries.
|Country||Total average % cost|
Total cost includes the transaction fee and exchange rate margin. Source: remittanceprices.worldbank.org. Based on total cost of sending $USD200.
While some of the costs in the table above may seem high, the good news is that prices have been falling over the past few years and are tipped to reduce further. In 2009 the G8 adopted a “5×5 objective”: a commitment to reduce the global average total cost of migrant remittances by 5 percentage points in 5 years. In 2010, the G20 also committed to a “significant reduction in the cost of remittances” and established a Development Action for Remittances.
The World Bank estimates that reaching this “5×5”target could save over $16 billion annually in costs.
Costs do vary quite significantly between providers though, so it’s vital to shop around to ensure that you’re getting great value for money – and that as much money as possible is reaching its destination!