Rassel Mohammad pays a hefty price to help out his two widowed aunts and six school-age cousins in Bangladesh.
Once every three months, the Toronto man strolls into the Western Union outlet in his neighbourhood Money Mart to wire money to relatives — on top of supporting his mother, wife and four-month-old daughter here in Canada.
He sends $100 each time, but also ends up paying an $11 fee. Western Union’s fee rises to $17 if he sends the same amount using his cellphone.
“It’d be nice if they can keep the fee lower,” said Mohammad, 32, a warehouse shipping clerk.
“Many of our members are directly affected by the exorbitant fees banks and other financial institutions are charging for money transfers,” said ACORN [Canada] president Kay Bisnath. The group is petitioning Western Union to cap its remittance rate at 5 per cent.
Bisnath said the rate is recommended by the World Bank in light of a $325 billion yearly cash flow — $7.5 billion in Canada alone — from 215 million migrants sending money to family members in developing countries.
An ACORN International study last year showed the average cost of a $100 remittance ranged from $3.70 to $13.26 at MoneyGram and from $40.18 to $50.84 at Hong Kong and Shanghai Banking Corporation, depending on the speed and level of service. Western’s average rate internationally ranged from $13.47 to $21.07.
“There is no regulation of the fees. There are other hidden costs that clients don’t know about. Migrants have no choice because their loved ones depend on the money for survival,” said Bisnath.
The campaign is targeting Western Union first because of its large share — 17 per cent — of the global cross-border remittance market, and organizers hope it will take the lead in good corporate citizenship.
Western Union, with 470,000 agent locations worldwide, said remittance rates have come down steadily over the decade, a result of growing competition, operations efficiencies and new product options.
“Consumers know and trust our brand. We believe the convenience, speed and reliability offered by our company are just as important to consumers as price,” a Western Union spokesperson wrote in an email to the Star.
The company said its pricing depends on where a money transfer is sent from, where it is sent to, how quickly the funds need to arrive and other factors such as pricing promotions. However, globally, the administrative cost of its remittance service is about 5 to 6 per cent of the principal amount.
Mohammad was among a group of ACORN [Canada] members who met with Deputy Finance Minister Michael Horgan last month asking Ottawa to cap remittance rates and require banks to disclose fees. The federal government has so far been noncommittal.
“I have been to other banks but they are charging even more than Western (Union). We don’t have any option,” Mohammad said. “We are fighting to reduce the fee, so people can get more money to make a living.”
Largest remittance recipients in 2010 (in billions)
The World Bank
Original article available at: http://www.thestar.com/news/investigations/immigration/article/1040911--acorn-urges-cap-on-remittance-fees