Remittance Prices Worldwide

An analysis of trends in cost of remittance servicesRemittance Prices WorldwideIssue 21, March 2017This Report reflects the latest trends observed in the data published in March 2017.Remittance Prices Worldwide is available at http://remittanceprices.worldbank.orgOverviewKey FindingsRemittance Prices Worldwide (RPW)monitors remittance prices across allgeographic regions of the world. Launchedin September 2008, RPW monitors thecost incurred by remitters when sendingmoney along major remittance corridors.RPW is used as a reference for measuringprogress towards global cost reductionobjectives, including the G20 commitmentto reduce the global average to 5 percent,which is being pursued in partnership withgovernments, service providers, and otherstakeholders.Since Q2 2016, RPW covers 48 The Global Average remained stable at 7.45 percent in Q1 2017,remittance sending countries and 105receiving countries, for a total of 365 compared to the 7.40 percent recorded in Q4 2016.The International MTO Index remained stable at to 8.25 percent inQ1 2017. This is the same figure recorded for this Index in Q1 2016.The Global Weighted Average remained to 5.65 percent.The Global SmaRT Average for Q1 2017 was recorded at 5.72percent.In Q1 2017, a total of 77 percent of all services recorded in RPW werebelow an average cost of 10 percent.South Asia remains the cheapest receiving region, with an averagecost of 5.40 percent. Sub-Saharan Africa experienced a slightincrease to 9.81 percent average in Q1 2017 from 9.48 percent in Q42016.Banks remain the most expensive Remittance Service Provider(RSP) type, recorded at 11.18 percent.country corridors worldwide. This Reportuses data from RPW’s most recent releaseto analyze the global, regional, and countryspecific trends in the average cost ofmigrant remittances.ContentsProgress tracker . 2Global trends. 2Trends in Corridor Average Total Costs. 5G8 and G20 countries. 6Regional trends . 10Costs by RSP Type . 11Costs by Sending and Receiving Method . 12Annex - Tables . 14Notes .17

Progress trackerRPW indicators are used to measure the progress towards targets of global efforts for the reduction of remittancecosts. The G8 (L’Aquila, 2010) and the G20 (Cannes, 2011 and Brisbane, 2014) committed to reduce the Global AverageTotal Cost to 5 percent. The UN SDGs have indicated a target of 3% for the Global Average to be reached by 2030.At the same time, the UN SDGs have also committed to ensuring that in all corridors remittances can be transferredfor 5% or less.The Global Average in Q1 2017 was recorded at 7.45 percent- the figure below summarizes the progress towards thesethree targets.7.45%Global AverageCost-2.45-4.45percentage pointsto achieve 5% G20objectivepercentage pointsto achieve 3% UNSDG41%corridors withSmaRT averagebelow 5%(UN SDG to reach100%)Global trendsGlobal Average Total Cost remains stableIn Q1 2017, the Global Average cost for sending remittances was 7.45 percent, just slightly above the value recordedin Q4 2016 (7.40 percent). The Global Average remains below 8.00 percent, as it has since Q3 2014 (see Figure 1 andTable 1 in the Annex). Overall this represents a decline of 2.22 percentage points since Q1 2009, when the figure wasrecorded at 9.67 percent. An increase of less than 0.1 percentage points can be observed over the last year betweenQ1 2016 and Q1 2017. The Global Average is used to monitored progress towards the G20 objective (5 percent) andUN SDGs (3 percent).International MTO IndexThe International MTO Index tracks the prices of MTOs that are present in at least 85 percent of corridors covered inthe RPW database.i In Q1 2017 the International MTO Index experienced an increase to 8.25 percent, which is exactlythe same figure reported for the Index in Q1 2016.Global Weighted AverageIn addition to the Global Average, a weighted average total cost is calculated, which accounts for the relative size ofthe flows in each remittance corridor.ii The Global Weighted Average of sending remittances, as illustrated in Figure 1(see also Table 1 in the Annex), has at times shown a different pattern from the simple average. The Global WeightedAverage has exhibited no change since Q4 2016, remaining at 5.65 percent.REMITTANCE PRICES WORLDWIDE – ISSUE 21, March 2017 2

Figure 1 Global Average Total Cost for sending USD 200iiiREMITTANCE PRICES WORLDWIDE – ISSUE 21, March 2017 3

Figure 2 Global Weighted AverageREMITTANCE PRICES WORLDWIDE – ISSUE 21, March 2017 4

Smart Remitter Target (SmaRT)To complement the Global Average and Global Weighted Averages described above, the World Bank introduced theSmaRT indicator in Q2 2016, which aims to reflect the cost that a savvy consumer with access to sufficientlycomplete information could pay to transfer remittances in each corridor.SmaRT is calculated as the simple average of the three cheapest services for sending the equivalent of USD 200 ineach corridor and is expressed as a percentage of the total amount sent. In addition to transparency, services mustmeet additional criteria to qualify for being included in the SmaRT calculation, including transaction speed (five daysor less), and accessibility, determined by geographic proximity of branches for services that require physical presence,or access to any technology or device necessary to use the service, such as a bank account, mobile phone, or theInternet.ivThe Global SmaRT Average was recorded at 5.72 percent in Q1 2017. This is a modest increase from the Global SmaRTAverage from Q4 2016, which is recorded at 5.54 percent. The same figure for Q2 2016 was recorded at 5.78 percentand at 5.52 percent in Q3 2016.The potential of SmaRT can be appreciated even more at the corridor level, where the indicators enable to informpolicy actions by identifying limitations at a more granular level. In Q1 2017, 55 of the 365 corridors had fewer than 3qualifying services in Q1 2017, indicating that in these corridors there is an issue with either access or reach of services,or a lower level of competition.The UN SDGs committed to ensure that, by 2030, it should be possible to send remittances for 5 percent or less. TheSmaRT averages are used as a reference for this indicator, reflecting the fact that in a given corridor there are at leastthree services available to customers and that meet the requirements described above, while also on average offeringa cost that is in line with the UN SDG. As of Q1 2017, 41 percent of all corridors covered in the RPW database hadSmaRT corridor averages below 5 percent.Trends in Corridor Average Total CostsFigure 3 shows that compared to Q1 2009, 14 percent more corridors have a total average cost of transparent servicesin the 5-10 percent category in Q1 2017. There are 9 percent more corridors in the 0-5 percent category in Q1 2017compared to Q1 2009. A total of 76 percent of all corridors exhibit total average costs below 10 percent. In Q1 2009,47 percent of corridors were in the cost categories above 10 percent. Since Q1 2009, this proportion has been halved,now recorded at 23 percent.Figure 3 Distribution of Average Total CostsREMITTANCE PRICES WORLDWIDE – ISSUE 21, March 2017 5

G8 and G20 countriesCost of sending remittances from G8 countries remains stableThe G8 countries include some of the major sending countries in the world. The average cost for sending remittancesfrom the G8 countries experienced a modest decrease from 7.02 percent in Q4 2016 to 6.99 percent in Q1 2017. Overthe year, this figure has decreased 0.07 percentage points (from 7.06 percent in Q1 2016).Figure 4 Total average in G8 countriesAs Figure 4 illustrates, there are significant disparities in the cost levels across these countries (see also Table 2 in theAnnex). The G8 countries that exhibit total average costs higher than the Global Average and the G8 average in Q12017 are the United Kingdom, Canada, Germany and Japan. G8 countries exhibiting lower than the Global and G8average in Q1 2017 are France, Italy, Russia and the United States.The largest decreases in total average cost to send remittances between Q4 2016 and Q1 2017 are seen in Canada(from 8.39 to 7.84 percent) followed by Italy (from 6.23 to 5.92 percent). The largest increase was seen in the UnitedKingdom, where the total average cost in Q4 2016 was 7.43 and was recorded at the slightly higher figure of 7.86 inQ1 2017. Taking a 5 year perspective (see Table 2), it is notable that one country achieved a reduction of almost 5percentage points in 5 years (France) consistent with the global cost reduction objectives.REMITTANCE PRICES WORLDWIDE – ISSUE 21, March 2017 6

Cost of sending remittances from and to G20 countriesThe cost of remitting from G20 countries remained stable, recorded at 7.58 percent in Q1 2017, as shown in Figure 5(also see Table 3 in the Annex). This is a slight decrease from the 7.61 percent average cost seen in Q1 2016.Figure 5 Average cost of sending USD 200 from G20 countriesSouth Africa remains the costliest G20 country to send remittances from (see Figure 6), and this is in spite of anoverall decrease from its peak in Q1 2013, when the cost of sending from South Africa was in excess of 20 percent.In Q1 2017, remitting from South Africa incurred an average cost of 17.78 percent. The cost of sending from thesecond most expensive G20 sending country – Japan – was recorded at 11.65 percent in Q1 2017. Russia remains theleast expensive G20 sending country, recorded at 2.09 percent, followed by the Republic of Korea (4.87 percent),Saudi Arabia (5.20 percent), the United States (5.76 percent), Brazil (5.86 percent) and Italy (5.92 percent).REMITTANCE PRICES WORLDWIDE – ISSUE 21, March 2017 7

Figure 6 Average cost of remitting from G20 countries, by CountryFigures 7 and 8 display the total average cost of sending USD 200 to G20 countries over time and in Q1 2017,respectively (see also Table 4 in the Annex). The average cost of sending money to the G20 countries that are includedin RPW as receiving markets was recorded at 7.52 percent in Q1 2017. Apart from a few quarters, the average costof sending money to the G20 countries has followed the pattern of the Global Average. Since Q2 2016 the cost ofremitting to G20 countries average cost has remained above the Global Average. The most expensive countries in thisgrouping to remit to were China (10.26 percent), followed by Indonesia (7.84 percent), Turkey (7.62 percent) and SouthAfrica (7.56 percent). India and Brazil exhibit total average costs of receiving remittances below 7 percent. Mexicoremained the cheapest receiving market in the G20 group, recorded at 4.85 percent total average cost.REMITTANCE PRICES WORLDWIDE – ISSUE 21, March 2017 8

Figure 7 Average cost of sending USD 200 to G20 countriesFigure 8 Average cost of remitting to G20 countries in Q3 2016REMITTANCE PRICES WORLDWIDE – ISSUE 21, March 2017 9