According to the World Bank, the global average charge for remittances in late 2022 was 6%. The percentage of remittances with a charge of less than 5% increased from 17% in 2009 to 42% in 2022. Thus, the UN’s target for 2030 of 3%, and none higher than 5%, are being approached.
But why are remittance charges high? The culprits include complexity in regulation, including anti-money laundering controls, underdevelopment of banking infrastructure, hidden fees such as exchange rate margins, immaturity of digital payment systems. Mobile phone digital payment systems such as Venmo account for roughly 1% of global payment value.
Here is a World Bank-run analysis of remittance vendors and charges for the U.S. to Nigeria. The charges range from zero to 6% and average 3%. For the U.S. to Honduras there are no costless methods and the average is 4.13%.
Competitors for low-cost remittances today include Azimo, Xoom and WorldRemit. To get a sense of how customers of regular remittances compare these vendors, see this analysis, which concludes “It’s impossible to nominate a winner in this category. While Xoom edges ahead on rates for some currencies, WorldRemit offers a slightly better deal on others.”