The World Bank estimates that remittances totalled $443 billion in 2008, of which $338 billion went to developing countries, involving some 192 million migrants or 3.0% of world population. The money received is an important source of family (and national) income in many developing economies, representing in some cases a very relevant percentage of the GDP of the receiving countries.

In many cases, the cost to consumers of these remittance transactions is expensive relative to the often low incomes of migrant workers, the amounts sent, and the income of remittance recipients.

One large  factor leading to high remittance prices is a lack of transparency.  Comparing the cost of sending money home can be a daunting and difficult process because there are several variables that make up remittance prices. Sometimes fees can be charged for the transaction, a margin taken for the exchange rate, and sometimes a fee charged to the recipient of the money. Fees also vary in connection with other components such as how the money is paid or collected and speed of the transfer. Often opting out of the comparison game, consumers fall into the habit of using familiar, bigger companies, missing out on innovative and cheaper methods of sending money (online, for example). Often smaller companies are more localized, and don’t have to pay as many people along the way.

The World Bank has created a database in order to increase transparency in sending money home, as well as exposing some of the high costs companies are charging migrants around the world. Using this information, the World Bank hopes that government and public pressure will reduce remittance fees for migrants. An example of this has been the case of Latin America, where publication of remittance pricing was a factor in the reduction of total costs from 15%, on average, in the region in 2000, to 5.6% in 2006.

This resource is unparalleled and increase awareness around the study of remittances, but more importantly, lower costs and fees for transferring money internationally. Sending money home to Zimbabwe shouldn’t be an expensive process. Your remittances should be in the hands of those who need it, not the banks.

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