Hugo Cuevas-Mohr puts together every year the 10 Most important Issues for the industry. To download the PDF go to Download/IMTC Publications.

Price to the public of industry services have been fairly stable during the year. MTOs interviewed have seen a slight upward trend even though they state that competition in every channel is fierce, more so in the exchange spread than in the fees. According to Remittance Prices Worldwide (RPW), the global average cost of sending remittances (including all fees and charges) remained basically the same in 2015 with a slight downward trend. RPW reports that the global average was 7.72% in 1Q, 7.68% in 2Q,  7.52% in 3Q and 7.37% in 4Q – a change of – 0.35% for the year).

The Migration and Development Brief 25, published by The World Bank and KNOMAD in October 2015, included this chart which shows the relative stability of the cost of sending $200 USD in 2014 and 2015. Dollar valuation impacts the cost of remittances, as was discussed in the IMTC WORLD roundtables. The Brief also gives us a detailed analysis on the effects of dollar valuation and its impact on remittances, “The impact of slow growth on remittance outflows measured in dollars is compounded by the valuation effects of the U.S. dollar appreciation against the currencies of remittance-source countries, especially the ruble.

Price Chart 2015

When the exchange rate in the paying country rises continuously, the exchange rate price competition subsides and volume sent increases. The Brief further ads that Euro Depreciation (around 20%) contributed to the projected two percentage point decline in the growth rate of remittances in dollar terms to the Middle East and North Africa, where countries receive substantial remittances from Europe. Euro depreciation also affected remittances to Latin America and the Caribbean and to Sub-Saharan Africa, to a more limited extent.

It is interesting that remittances to Albania fell by 2.5% and to Morocco by 13.9%, while remittances to Romania rose by 1.9%. However, if the euro-dollar exchange rate had remained fixed at the level of 1Q 2014, then remittances would have increased by 21% for Albania, 6.9% for Morocco, and 26.4% for Romania.

The Remittance Prices Worldwide (RPW) Issue #16 of December 2015 gives us additional information that should be taken in consideration by anyone analyzing the industry.
RSPS chart prices For example, in 4Q 2015. 80% of all corridors had an average total cost below 10 % compared to only 50% in 2009. Also in 4Q 2015, the cost of sending remittances from G20 countries was 7.46% (remaining stable) but the average cost of sending money to the G20 countries decreased ( 4Q 7.10% compared to 7.64% in 3Q. The changes in the cost of sending remittances by region weresmall for most regions: South Asia remains the !east costly region to send money to, 5.43% in 4Q while Sub-Saharan Africa remains the most expensive at 9.53% in 4Q. Another important information is that form the 3 types of Remittance Service Providers (RSPs) analyzed Bank continue to be the more expensive at 11.12% in 4Q 2015, while MTOs were at 6.24% and Post Offices at 6.24% in the same quarter.

Continue reading The 10 Most Important Issues of the International Money Transfer & Payments Industry for 2015 in this Blog or  To download the PDF go to Download/IMTC Publications.