Share News Editorial: Gov’t should support money transfer bill

If you send $100 to Guyana, Jamaica or Trinidad using a remittance service, on average 10 per cent will go in fees to the money transfer company you use. Once the money reaches your loved ones, the daily exchange rate as decided on by a remittance service again lowers the amount the person you send it to actually receives.

A good number of the people using remittance services are low-wage earners supporting families back home, so high fees are a hardship both for those sending money from here and for those receiving less there.

The people who encounter these charges when using these remittance services see this as gouging. For this reason, New Democrat MPP Jagmeet Singh (Bramalea-Gore-Malton) has introduced a private member’s bill in the Ontario legislature to put limits on the fees charged by remittance companies such as Western Union, which has the biggest share of this particular service at 17 per cent, and Moneygram.

If you send $100 to Guyana, Jamaica or Trinidad using a remittance service, on average 10 per cent will go in fees to the money transfer company you use. Once the money reaches your loved ones, the daily exchange rate as decided on by a remittance service again lowers the amount the person you send it to actually receives.

A good number of the people using remittance services are low-wage earners supporting families back home, so high fees are a hardship both for those sending money from here and for those receiving less there.

The people who encounter these charges when using these remittance services see this as gouging. For this reason, New Democrat MPP Jagmeet Singh (Bramalea-Gore-Malton) has introduced a private member’s bill in the Ontario legislature to put limits on the fees charged by remittance companies such as Western Union, which has the biggest share of this particular service at 17 per cent, and Moneygram.

We support this. While these companies provide a much needed service, the people who use them, both senders and recipients, are among the poorest. They can least afford the high fees that reduce the amount sent home for things such as the education and care of children left behind, school fees, uniforms, books and food, and necessities for the caregivers and older relatives.

Singh’s bill aims to have remittance companies limit their fees to five per cent of the transfer and make other fees that result in further reduction of the amount that ends up in family members’ hands more transparent.

This is in keeping with the World Bank request to rich countries to reduce their rates to five per cent by 2014. Remittance companies make a lot of money and shouldn’t suffer terribly if their fees are regulated.

The World Bank puts the annual figure of the global remittance industry at between $325 and $400 billion, 75 per cent of which goes to families in developing countries. Compare that to just $129 billion in foreign development aid provided by nations in the Organization for Economic Cooperation and Development (OECD) to poorer countries. Globally, the number of migrants sending money to family members in those countries is some 215 million.

In Canada, somewhere between $7.5 and $15 billion flow through remittances with an estimated $500 million a year being fees. The World Bank estimates are that, in all, fees amount to $44.4 billion and that a five per cent cut in remittance fees would free $16 billion globally.

The importance of these remittances cannot be underestimated since, in some countries, they represent more than 10 per cent of gross domestic product. In countries like Jamaica they are even factored into the national budgets.

Yet, here in Canada, as in many other developed countries, no federal regulation of fees for international money transfers currently exists. And this is despite having an entrenched temporary foreign worker program that traditionally accepts low-skill, low-wage candidates, some 20,000 from Mexico and the Caribbean, mostly men, who come here to work in Canada’s agricultural sector in order to support families back home.

Ottawa has agreed in principle to the five per cent fee cap but has taken no action beyond that.

Private member’s bills usually don’t have much of a chance of passing in the Legislature, but this one deserves attention. Ontario’s Consumer Services Minister Margarett Best has said that the government is paying attention to this bill but has not made any clear commitment to it being passed. We believe it merits the government’s support.

Enacting this bill would send a message to low-wage earners in particular that they have the support of this provincial government.

Even if the bill is not passed – and we hope it is passed – remittance services that voluntarily adopt this five per cent fee will immediately benefit from the number of people who would choose their service over ones that have higher transfer fees which includes banks that can charge fees as high as 40 per cent.

http://sharenews.com/govt-should-support-money-transfer-bill/