Depredatory Commissions Affect Remittances

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In addition to the financial crisis, people who receive and send money must face another difficulty: the high cost of remittance services.


Photo: www.avaaz.org

Attempting to bring international attention to this problem, the webpage www.avaaz.org asking the firm Western Union to stop what they call “excessive charging.”

According to the website, they are targeting primarily Western Union that is the costliest of all remittance services, charging up to a 20% commission to cover transfer costs.

That is for $100, Western Union takes $20.

The website says the World Bank recommends a charge of a maximum of 5%. Despite the World Bank calling for a maximum of 5% transaction fees, Western Union has never faced a public outcry to challenge its shameless profiteering.

Avaaz publishes a note to Western Union president, Hikmet Ersek: “As citizens from around the world committed to eradicating global poverty, we call on you to show true corporate leadership and take immediate steps to ensure crucial international remittances to the world’s poorest countries are subject to fair rates. Specifically, we ask you to lower your total fees to a maximum of 5% in all transfers sent home by workers to developing nations.”

Avaaz is asking to people to sign a petition, saying it has already collected 284.837 of its goal of 500.000.

In response to complaints, Western Union said its rates are in line with similar services of money transfer.

According to the Banco Central de Costa Rica (Central Bank) data, Costa Ricans living in other countries, mainly the United States, are sending less money home.

The Central Bank figures show that in the second quarter of 2010, us$134 million dollars in remittances were received, in the following quarter the number was down to us$131 million, while us$55 million and us$54 million went out during the same periods, most of it bound for Nicaragua.

According to the Central Bank, Costa Rica receives the greatest amount of foreign remittances from El Salvador, whose income exceeds the foreign investment.

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