• Sending remittances home

Sending remittances home

This paper provides and overview of the global money transfer market. It intended to help Financial Service Providers (FSPs) to undertake a serious analysis which needed to decide whether and how to introduce a money transfer product.

The paper highlights the following points:

• because many people who send and receive money transfers are poor and do not use mainstream banks, they are a natural target market for pro-poor Financial Service Providers
• FSPs have a social interest in providing poor clients a crucial financial service at low cost and also have a potential financial interest in money transfers because the service may enable them to increase revenues, attract new clients, cross-sell existing services, and develop new linked products
• altogether there is a growing, multibillion-dollar market for money transfers, which is evolving quickly given changing technology, new market players, and increasing competition
• as transfer volumes, profits, and operators continue to increase, greater transparency on the costs and services of money transfer operators will be required
• before launching any new product, but especially a highly complex one like money transfers, FSPs must give careful consideration to the internal and external factors that shape a viable market entry, including client preferences, competition, and regulation
• policy- makers and donors can play a role in eliminating the bottlenecks in regulations, information, infrastructure, and existing services that currently prevent poor clients from deriving the maximum benefit from money transfers
• a viable money transfers strategy must be underpinned by a keen understanding of institutional capacity, the ability to launch a new product, thorough financial analysis, and a robust plan for marketing the service to current and new clients.

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