Remittances

How to sustainably lower costs & achieve the UN goal of 3% costs by 2030?

In 2023, the remittance sending countries in the G20 sent nearly $200 billion in remittances

Remittances contribute more than overseas development aid

According to the World Bank, “one of the most important factors leading to high remittance prices is a lack of transparency in the market. It is difficult for consumers to compare prices because there are several variables that make up remittance prices.” 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 an inflated exchange rate. This means it’s more expensive for remitters to send money and their loved ones end up with less than they bargained for.

Read the full report

In 2023, the remittance sending countries in the G20 sent nearly $200 billion in remittances

Dilip Ratha, Head of KNOMAD and Lead Economist, Migration and Remittances, Social Protection and Jobs Global Practice at the World Bank

"This Remittance Report comes as a timely reminder that we have no time to lose. G20 Governments need to intervene to reduce remittance costs if we want to keep the hope of meeting the UN SDG of 3% costs by 2030 alive. Lowering remittances costs is a crucial way to put more money into the pockets of people in lower and middle income countries and help them pay for food, healthcare, education and other basic needs. Price transparency will help us achieve this goal and I urge policymakers to make that happen by rallying behind a global standard that enables consumers to know exactly how much their remittances cost - including exchange rate mark-ups."

Sandra Sequeira, Associate Professor of Development Economics in the Department of International Development, London School of Economics

“Even in corridors with significant fee reductions due to increased competition and digitalization, consumers are still paying more than they should. This points to another pervasive problem: hidden fees or inflated foreign exchange margins that can confuse even the savviest and most knowledgeable of consumers. In some cases, consumers are not able to clearly determine the fees that are associated with a given transaction. In other cases, service operators obscure fees by incorporating them into their foreign exchange margins. This appears to be an increasing practice as since 2016, foreign exchange margins have increased by 0.5 percent even though fees have declined by 1.4% during the same period. More transparency on foreign exchange margins could go a long way in reducing overall costs and allowing consumers to identify the most cost-effective options.”

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.

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.

"As an early retired couple with strong ties to both Australia and Malaysia, international financial exchange plays a crucial role in our lives. My wife, a proud Malaysian, maintains strong connections to her homeland. Through our international transactions, we are able to provide direct support to her father in Malaysia and her mother in Indonesia. These connections reaffirm our commitment to family bonds that transcend borders.

I encountered hidden fees that impacted both my professional life and my family's finances. One area where these hidden fees had a significant impact was international transfers. Foreign exchange fees and undisclosed charges would often eat into a large portion of the transferred amount, leaving people frustrated. Even domestic transactions within Australia incurred unexpected fees, placing an additional burden on customers"

Colin, Australia

Share your story

Remittances

How to sustainably lower costs & achieve the UN goal of 3% costs by 2030? Join the fight against hidden fees globally here.

Read the full report