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

Presenting best practices for attracting remittances
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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.