People sending remittances from G20 countries set to lose $11.5bn in fees in 2021

London, 23 September 2021 - In 2021, people in G20 sending countries are estimated to send over $215 billion in remittances across borders to support families and friends. A new analysis of World Bank data, conducted by global technology company Wise, now reveals that an estimated $11.5 billion in total will be lost to fees along the way. $5bn of these fees could be saved if the United Nations’ Sustainable Development Goal (UN SDG) had been achieved at the beginning of this year. 

Remittances are a lifeline to hundreds of millions of people around the world, and critical to finance education and health. The thirteen G20 sending countries, including the US, France, Germany and Saudi Arabia, power nearly half of global remittance flows; yet, it remains expensive for people in those countries to send money abroad. In the first quarter of 2021, the average cost for a transfer was 6.49%.

Key findings for the G20 sending countries

*based on World Bank data and Wise analysis

While UN SDG 10 stipulates that remittance fees should decrease to less than 3% on average by 2030 globally, the analysis shows that G20 sending countries will likely not reach it, even according to the most optimistic estimates. Since introducing the goal in 2015, the group of G20 countries only dropped average fees by one percentage point.

Some countries have made progress on lowering remittance prices - in Russia’s case, even going below the UN SDG - others have stagnated. A forecast model based on historic data projects that only Canada and South Korea might  currently be on track to reach the goal by 2030, though it’s unclear if recent drops likely resulting from digital adoption during COVID will continue at the same trajectory.

Transparency key to bring down costs

Several variables define the price for a money transfer, including upfront fees and foreign exchange margins that people are mostly unaware of. Previous research from the United Kingdom government found that once fully transparent pricing was introduced, with upfront fees and FX margins disclosed in a single amount (“total cost”), the percentage of first-time remittance senders choosing the best option doubled from 34.3% to 68.9%.

In 2020, the European Union took a big step towards price transparency. New rules required online and card providers to show the total costs of sending money upfront, including the exact amount of any exchange rate margins, on transfers within the EU. With vague language on cash payments, as well as payments outside the EEA exempt from the regulation, not all remittance senders benefit from increased transparency. 

Kristo Käärmann, CEO and co-founder of Wise says: “It’s alarming that the average fee to send remittances from the G20 went down by just one percentage point over the past six years. For millions of families around the world, they are a lifeline, especially in times of economic downturn. People still do not understand how much it costs to send money abroad. That’s because it is still common practice to make up prices with multiple variables, including upfront fees and margins hidden in inflated exchange rates.

The future of affordable remittances and achieving the UN SDG depends on transparency. 'Total cost' pricing allows people to understand the true cost of sending money abroad and shop around, as they can accurately compare prices. As part of the annual G20 summit in Italy, Governments should commit to tangible action to deliver on this goal.”

More information and the full report can be found here.