After strong urging from Senators John Kerry (D-Mass.), Chairman of the Foreign Relations Committee, and Evan Bayh (D-Ind.), Chairman of the Banking Subcommittee on Security and International Trade and Finance, Western Union has agreed to reduce fees on money transfers to those devastated by last month’s earthquake in Haiti, and MoneyGram will contribute a small amount to relief efforts when a remittance is sent. MoneyGram’s relief contributions will continue through June, and Western Union will maintain its reduced fees through the end of the year.The link above features responses from the companies to these requests as well. Like others who study remittance platforms, I have been critical of these firms in the past since they are typically the highest cost options for those sending money home. Looking them up in the most informative source on sending remittances, the World Bank's Remittance Prices Worldwide comparison site, we find that pre-crisis, Western Union charges the highest fees in the US-Haiti corridor, while MoneyGram offers more competitive pricing when sending $200:
Last month, Senators Kerry and Bayh called on the two companies to reduce or eliminate fees on remittances to Haiti through June 2010 at a minimum. “It’s essential that MoneyGram and Western Union step up to do what’s right in this moment of devastation in Haiti,” said Chairman Kerry. “I appreciate both companies’ responsiveness to date, but there is much more to be done across the board. I plan to work with all parties and the Administration to find the best ways to get Haitians the support they desperately need.”
“All of us have a responsibility to help those in need during a humanitarian crisis,” Bayh said. “While Western Union and MoneyGram are acknowledging the need to help alleviate the suffering in Haiti, I hope the companies will continue to ensure the money sent through their services goes directly to those who need it the most.“
As a migrant worker myself, I need to transfer money on a regular basis and this World Bank site is a lot of help. I just hope others like our hard-hit Haitian friends can access this information as well. Typically, Western Union and MoneyGram do not offer very competitive prices, banking on name recognition to generate earnings. It's even worse in corridors or country sending-receiving pairs where competition is scarce. (See my essay covering these points which I've since turned into a more detailed journal article.) Sometimes, the least expensive services may not be accessible outside major urban centres, too. While this temporary reduction in fees is welcome, the real long-term solution is more competition to force down charges. Certainly, the MTOs won't keep them down out of the goodness of their hearts.