AYS SPECIAL: How to lower the money transaction costs of remittances for people on the move?
“One million Syrian customers… Do you think they will ever forget Western Union? Never.”
Hikmet Ersek, Western Union CEO and President
As a volunteer, I accepted many Western Union (WU) transfers on my passport. Even though all that is needed is a valid ID, people on the move often do not have it since they lost any form of identification along the difficult journey. Being on the receiving end, I did not think about the cost of sending this money.
Most of the time, this support came from relatives or friends who were established in other European countries. Sometimes, but far less frequently, the transfers came from their countries of origin. For most, it was the only cash they were surviving on while on the road.
It wasn’t until I went to send money that I realized the extreme cost of the fees required for these transfers. A boy I met in Athens asked me to send money to his mother who was still in Syria. It cost €120 to send €100. This 20 percent transfer fee seemed excessive. Thinking about the many WU I had received for friends over the past year, I decided to do some research.
In the summer of 2014, WU noticed an increase in the number of money orders being sent to Greece, Jordan and Turkey. The reality is, when there are natural disasters, wars/conflicts, political unrest, or economic instability, WU and similar companies like MoneyGram, profit greatly. They fill a gap that is necessary to those residing in or fleeing areas affected. Without bank accounts or functioning civil services, people are beholden to companies that provide money transfers to function in their daily lives.
By watching the trends of individual people, WU knew which routes were being taken through Europe before it had become news. They prepared for this influx by opening more locations throughout the Balkans and other routes.
“Ersek persuaded his compliance committee to accept United Nations-issued refugee cards as legitimate proof of identity, and the company temporarily waived its fees for people who had them,” the story published in 2017 stated. A caveat on the Western Union Foundation website reads, “*Western Union makes money on the exchange of currencies,” even when transaction fees are waved during times of crisis.
“Remittances, usually understood as the money or goods that migrants send back to families and friends in origin countries, are often the most direct and well-known link between migration and development.”
In 2011 at the G20 Summit, Bill Gates said, “We must continue lowering the transaction costs of remittances, so that this growing pool of money has as big an impact as possible on the poorest.”
While there has been advocacy work done in the past in regards to lowering transaction fees worldwide, the discussion surrounding remittances sent specifically to refugees and internally displaced persons (IDPs) has been largely ignored.
Most articles discussing remittances are published in larger, business oriented news sites like Bloomberg Businessweek, EuroMoney, and Fast Company. However, in a policy brief published by KNOMAD in October of 2017, the authors, Ana María Ibáñez, Andrés Moya, Kirsten Schuettler noted that this discussion of remittances is primarily focused on economic migrants. “Knowledge about remittances sent to and from refugees and IDPs is scant… The current evidence on remittances in the context of forced displacement focuses on refugees and concentrates on a few case studies.”
Taking into account WU’s ability to predict refugee and migrant flows and the extreme lack of information available about the actual costs faced by family members and friends sending money to relatives and friends in danger begs the question: Why isn’t this information accessible? Farther, why isn’t this an issue being publicly discussed on a higher level by NGOs, volunteers, refugees and migrants and Government Bodies?
(By Keegan Nashan, an independent volunteer)
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