Web Story
December 12, 2005
Making the grade - Scoring the performance of 50 remittance transfer companies
A new scorecard ranking money transfer companies can benefit those within the industry as well as remittance senders.
When discussing remittances to Latin America and the Caribbean, people often focus on the sheer amount of money being transferred to the region, with estimates seeming to increase overnight. But when looking beyond these staggering figures, a larger picture emerges of the various players involved in the transaction, including those companies sending the money.
Aware of the potential value of grabbing a share of migrant dollars, banks and transfer companies have already begun to approach migrants as consumers in the money-sending market. Competition for migrant business has increased, more financial services are now offered, and the formerly exorbitant costs of sending remittances have been halved over the past five years. However, fees still remain unnecessarily high.
But is the transaction cost the deciding factor for migrants when choosing between transfer companies? What about other variables like location of the business, additional financial services offered, and overall industry performance? Remittance expert Manuel Orozco of the Inter-American Dialogue is developing a remittance company scorecard using data collected from 50 money transfer companies. The score will be based on criteria including transfer fees, exchange rate commission, the mechanism used to send the money (electronic transfer, debit card, money order, etc.), business location, and partners in Latin America and the Caribbean (number of bank branches). Community relations, relationships with financial intermediaries, marketplace competition, compliance with regulations, and transparency will also be included in the company evaluations.
Information about pricing, transparency and relationships with financial intermediaries was gathered from August to November 2005, in part through interviews with transfer company representatives. Remaining criteria will be analyzed in the second stage of the project.
The scorecard can lead to a better understanding of the competition within the remittance industry, as it takes into account the many variables that influence companies’ decisions and affect consumer preferences, apart from just transfer costs. The scorecard can also help businesses to improve their services by providing a panorama of the competition and their strategies.
© 2005 Inter-American Development Bank. All rights reserved.
December 12, 2005
Making the grade - Scoring the performance of 50 remittance transfer companies
A new scorecard ranking money transfer companies can benefit those within the industry as well as remittance senders.
When discussing remittances to Latin America and the Caribbean, people often focus on the sheer amount of money being transferred to the region, with estimates seeming to increase overnight. But when looking beyond these staggering figures, a larger picture emerges of the various players involved in the transaction, including those companies sending the money.
Aware of the potential value of grabbing a share of migrant dollars, banks and transfer companies have already begun to approach migrants as consumers in the money-sending market. Competition for migrant business has increased, more financial services are now offered, and the formerly exorbitant costs of sending remittances have been halved over the past five years. However, fees still remain unnecessarily high.
But is the transaction cost the deciding factor for migrants when choosing between transfer companies? What about other variables like location of the business, additional financial services offered, and overall industry performance? Remittance expert Manuel Orozco of the Inter-American Dialogue is developing a remittance company scorecard using data collected from 50 money transfer companies. The score will be based on criteria including transfer fees, exchange rate commission, the mechanism used to send the money (electronic transfer, debit card, money order, etc.), business location, and partners in Latin America and the Caribbean (number of bank branches). Community relations, relationships with financial intermediaries, marketplace competition, compliance with regulations, and transparency will also be included in the company evaluations.
Information about pricing, transparency and relationships with financial intermediaries was gathered from August to November 2005, in part through interviews with transfer company representatives. Remaining criteria will be analyzed in the second stage of the project.
The scorecard can lead to a better understanding of the competition within the remittance industry, as it takes into account the many variables that influence companies’ decisions and affect consumer preferences, apart from just transfer costs. The scorecard can also help businesses to improve their services by providing a panorama of the competition and their strategies.
© 2005 Inter-American Development Bank. All rights reserved.
