The global average rate is 7.14%, but it really depends if you're looking by country, type of provider, or form of payment.
Global average
According to the World Bank, 574 Billion USD was sent in remittances globally in 2016. But how much is taken out in fees for sending this money? The global average rate for sending $200 was 7.14% as of Q3 of 2017. This has gone down by 1.47% from Q2 and 21.83% since Q3 2012.
Key points:
Total remittances worldwide in 2016: 574 Billion USD
Period
Global average rate to send $200
Percentage change
Q3 2017
7.14%
N/A
Q2 2017
7.25%
-1.55%
Q3 2012
9.10%
-21.55%
Average rate in countries
Commission rates are affected by the country that you are sending to or from
While the global average rate is 7.14%, this rate will change depending on the country you are sending money to or from. This is due to regulations, taxes and international relations.
Select the relevant year/s you are interested in from the below filter on the right and hover over a country to see their historical rates. Values are averaged over the time period selected in the ‘Year’ filter.
Remittance commission rates in the G8 countries
The below graph illustrates how the average rate of remitting from G8 countries have changed over time.
Key points:
Biggest increase/decrease since last quarter
Country
Q2 average rate
Q3 average rate
Percentage change
Russian Federation
1.78%
2.13%
19.91%
United Kingdom
7.58%
7.04%
-7.08%
Biggest increase/decrease since Q3 2012
Country
Q3 2012 average rate
Q3 2017 average rate
Percentage change
France
13.46%
6.46%
-51.99%
What about the average cost of remitting from G20 countries?
As of Q3 2017, the average fees for sending money from Australia, Canada, Germany, Japan and South Africa are above the global average.
Select the relevant period/s you are interested in from the below filter on the right. Values are averaged over the time period selected in the ‘Period’ or ‘Year’ filter.
Key points:
Biggest increase/decrease since last quarter
Country
Q2 average rate
Q3 average rate
Percentage change
Brazil
3.47%
4.64%
33.70%
Korea, Rep.
5.42%
4.81%
-11.30%
Biggest increase/decrease since Q3 2012
Country
Q3 2012 average rate
Q3 2017 average rate
Percentage change
France
13.46%
6.46%
-51.99%
Breaking it down by the region of the world
As of Q3 2017 the cheapest region to remit to is South Asia at an average rate of 5.45%. In contrast, the most expensive region is Sub-Saharan Africa at 9.12% whilst the global average is 7.14%.
Key points:
Biggest increase/decrease since last quarter
Region
Q2 average rate
Q3 average rate
Percentage change
Sub-Saharan Africa
9.39%
9.12%
-2.90%
Biggest increase/decrease since Q3 2012
Region
Q3 2012 average rate
Q3 2017 average rate
Percentage change
Latin America and Caribbean
8.02%
5.81%
-27.60%
The method of transfer makes a huge difference
Banks are and have always been by far the most expensive method to remit money compared to money transfer operators (MTO) and post offices when comparing Remittance Service Providers (RSP). Even so, we have seen bank rates decrease over the last few years. On the other hand, post office rates have been increasing.
Key points:
Changes since last quarter
RSP
Q2 average rate
Q3 average rate
Percentage change
Bank
10.84%
10.82%
-0.17%
MTO
6.26%
6.16%
-1.58%
Post office
5.84%
5.48%
-6.20%
Changes since Q3 2012
RSP
Q3 2012 average rate
Q3 2017 average rate
Percentage change
Bank
13.53%
10.82%
-20.03%
MTO
7.21%
6.16%
-14.51%
Post office
5.45%
5.48%
0.60%
The method of sending money is another important factor of cost
The average cost of remitting money from a bank account is currently 8.56% as of Q3 2017. This is the only method above the global average of 7.14%.
Key points:
Biggest increase/decrease since last quarter
Method
Q2 2017 average rate
Q3 2017 average rate
Percentage change
Cash
6.92%
6.99%
1.00%
Prepaid card
3.82%
3.65%
-4.50%
Biggest increase/decrease since Q3 2012
Method
Q3 2012 average rate
Q3 2017 average rate
Percentage change
Prepaid card
2.20%
3.65%
65.70%
Mobile money
4.72%
3.55%
-24.80%
The form of payment on the receiving end also needs to be considered
The average cost of receiving funds from a bank account from 2011 to Q3 2017 is once again the most expensive method at 10.99%.
Global average vs. weighted
The amount of money sent from individuals in the US to other countries totals $134.96 billion. These transactions are also known as remittances. But how much is taken out in fees? According to the World Bank, the global average rate is 7.40% when sending $200 if you counted each remittance corridor (flow of money between two countries) equally, and 5.68% when weighted according to the size of the corridors is considered.
Source: World Bank
Embed “Global Weighted Average”
And this is low compared to rates in 2009
Notice the trends in commission rate between Q1 2009, Q3 2016, and Q4 2016. Fees in the 0-5% range have been on the rise, and although those in the greater than 20% range have diminished since 2009 they are higher than last quarter.
Source: World Bank
Embed “Distribution of Average Total Costs”
Measuring rates if consumers were SmaRT
But what if you did your research? And actually found the best rates available? The World Bank developed the Smart Remitter Target (SmaRT) to measure this for Q2 2016. SmaRT takes the simple average of the three cheapest money transfer providers when it comes to sending $200. In addition to being cheap, these SmaRT providers need to transfer your money within 5 days and be readily accessible.
Quarter
Global SmaRT average
Difference between global average
Q4 2016
5.54%
-1.86%
Q3 2016
5.36%
-2.06%
Q2 2016
5.40%
-2.20%
Qualifying as a SmaRT provider is not always possible
In Q3 2016, 54 of the 365 corridors had less than 3 qualifying providers
In Q3 2016, 9 of the 365 corridors did not have any because they did not meet access criteria
What country you are sending money to/from affects commission rates
Due to regulations, taxes, international relations, and competition of money transfers in these countries the amount you’ll pay sending money to and from countries changes.
Remittance commission rates in the G8 countries
Compare Canada, France, Germany, Italy, Japan, Russia, UK, and US average cost of sending remittances from these countries.
Source: World Bank
Embed “Total Average in G8 Countries”
What about the average cost of remitting from G20 countries?
Sending money from Australia, Canada, Japan, and South Africa were above the global average with South Africa’s average rate being more than twice that. The majority other 16 countries had rates below the global average.
Source: World Bank
Embed “Average cost of remitting from G20 countries”
And the cost of sending remittances to the G20?
From 2009 to 2013, the cost of sending USD 200 to G20 countries was above the global average. Since then, the spread has narrowed with the G20 rates dipping below the average from quarter to quarter. Overall, both global average and G20 average has significantly decreased since 2009.
Source: World Bank
Embed “Average cost of remitting from G20 countries”
Let’s break it down by region of the world
EAP = East Asia Pacific, ECA = Europe & Central Asia, LAC = Latin American and Caribbean, MNA = Middle East & North Africa, SA = South Africa, SSA = Sub-Saharan Africa
Source: World Bank
Embed “Average total costs by region of the world”
Now method of money transfer makes a big difference
Banks are by far the most expensive method compared to Money Transfer Operators (MTO) and post offices when comparing Remittance Service Providers (RSP).
Source: World Bank
Embed “Total averages over time by RSP”
This is where they stand Q4 2016
Source: World Bank
Embed “Total average by RSP type”
The form of payment or instrument also matters when sending money
Sending from bank account is most expensive (probably because you’re likely sending with a bank), followed by cash, then debit/credit card, and mobile money. Pre-paid cards are the cheapest.
Source: World Bank
Embed “Average cost by instrument used to fund transaction”
The form of payment on the receiving end also matters.
Source: World Bank
Embed “Average cost by means of disbursing remittances”
Who should you send money with?
As you can see there are a lot of factors when sending money overseas to consider. It’s unfortunately more confusing than it should be, but we’ve been through it too. To learn more about international money transfers and how to save on your transfers check out this guide.
Olivia Chow specializes in prescriptive consumer and trend research. She's been a founding member of the Hanesbrands Inc. Global Trend and Innovation team, done consulting for the New York Times, and written for VICE and Intel’s Creator’s Project.
Xe is a leading company of currency solutions and it offers competitive international money transfer options to individuals and businesses around the world.
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