‘Modern heroes’ seen coughing up $3.2B in bank remittance charges this year.
OVERSEAS Filipino workers (OFWs) are projected to pay up to $3.2 billion in bank remittance charges this year to send home $29.8 billion in cash, ACTS-OFW party-list said on Sunday.
“Philippine banks and their foreign correspondents are taking unreasonably high cuts out of the cash wired home by migrant Filipino workers,” said ACTS-OFW Rep. Aniceto Bertiz III.
Citing the World Bank’s periodic Remittance Prices Worldwide Report, Bertiz said that in the first quarter of 2019, banks remained the most expensive type of service provider, charging an average of 10.90 percent of the amount sent.
“We expect OFWs to send home an aggregate of $29.8 billion in cash via the banking system this year, up three percent from $28.9 billion in 2018,” said Bertiz.
“To transfer the entire $29.8 billion home, OFWs will be forking out 10.90 percent, or some $3.2 billion, to pay for bank fees,” said Bertiz.
Remittances represent a huge source of income for millions of Filipino families, and a key driver of national economic growth, according to Bertiz.
“If we can get banks to slash their remittance prices by one-half, this would mean an extra $1.6 billion (P83.2 billion) flowing into low- and middle-income Filipino households and into the economy,” Bertiz said.
The additional P83.2 billion every year would go a long way in enabling millions of remittance-dependent Filipino families to acquire new homes, send their children to college, buy health and life insurance protection, or to start small enterprises, Bertiz pointed out.
The United Nations has a social development goal to reduce the global average price of a remittance to just three percent of the amount sent, while the G20 has committed to help lower the cost to five percent.
Banks capture up to 85 percent of the remittances from OFWs. The rest is picked up by postal offices, money transfer operators (MTOs) and mobile money service providers, said Bertiz.
Bertiz said postal offices charged an average of 7.26 percent in remittance fees in the first quarter, while MTOs such as The Western Union Co. and MoneyGram International Inc. collected an average of 6.06 percent.
“Mobile money” service providers remained the cheapest, charging an average of only 2.92 percent, Bertiz said.
The Philippines ranks No. 4 among the world’s top five remittance recipients, receiving an estimated $34 billion in 2018, according to the World Bank. The amount includes some $5 billion coursed through non-bank channels.
The other top remittance recipients in 2018 were India ($79 billion), China ($67 billion), Mexico ($36 billion) and Egypt ($29 billion).