Attracting Remittances: Practices to Reduce Costs and Enable a Money Transfer Environment

This report analyses the market of remittances from the United States to four Central American and Caribbean countries. It examines:

• The best business practices of remittance companies;
• The policies and practices that create an enabling environment to attract foreign currency while keeping lowest-possible cost of remittances;
• The practices in which money transfers takes place safely, quickly, and at least expense.

The study reports:

• A growing interest among government and private sector groups to reach out to migrants as economic agents;
• Lower prices and better services owing to competition among existing financial service companies and new remittance transfer entrepreneurs;
• That private sector can contribute to increased remittance flows by lowering transaction costs, and offering development alternatives;
• Positive future scenarios to attract and increase foreign migrant currency.

Finally, the paper makes recommendations to make remittances less costly and give them development leverage:

• Offer incentives to unbanked migrants in the U.S. to use formal financial institutions;
• Create a board that provides oversight for remittance companies and in particular their fees and exchange rates;
• Establish a customer rights office on the recipient side to educate recipients about costs and better measure effectiveness and efficiency of services;
• Create a task force on remittances and development to explore concrete possibilities for sending and recipient countries;
• Money transfer companies liaison with small banks and credit unions;
• Bank liaison with banks and credit unions;
• Expand debit card use and motivate recipients to open dollar accounts.