In 2022, these G20 countries sent nearly $212 billion in remittances
But nearly $11.6 billion was lost to fees along the way
The reason remittance prices remain high is the lack of transparency. Today, providers can tell consumers their transfers are “free”, include “0% commission” or cost just a low fixed fee of $5. In reality, however, the biggest cost is hidden in a terrible exchange rate. This hurts remittance senders and receivers.
If more progress had been made on lowering the cost of remittances to the 3% target set by the United Nations, the people on the receiving end could have ended up with over $5 billion more.
How can countries get to the 3% target?
The United Nations Sustainable Development Goal 10c aims to reduce the cost of remittances to less than 3% by 2030. However, the current average in G20 countries is more than double the target, and remittance costs have only dropped by 1 percentage point since the SDG was introduced in 2015.
To lower costs in line with the UN’s 3% target, more transparency in the market is necessary. Banks and foreign exchange providers must disclose the total costs in a single upfront amount, including fees at both ends and foreign exchange rate margins. Allowing for a truly competitive market to emerge will lead to lower prices.