SWIFT refers to the network used in sending standard international bank wires, which I am contrasting to the family remittance network, an ad hoc network that links entities that facilitate the capture and delivery of international family remittances.

Sending a standard international bank wire will cost $30-$50 typically, not $5-$10. I don't really know how that price is "justified" as such, except to say that any bank account that is sending international wires increases the AML compliance cost of that account for a bank, and because surprising aspects of the bank wire transfer system are manual, a human being will frequently need to get involved. I would imagine that the incremental cost of sending a bank wire is frequently tiny compared to the cost, but it probably varies significantly from bank to bank (for some, it might even be a loss-leader).

The fees associated with sending a wire via the more ad hoc family remittance network are determined by a competitive marketplace, and are typically $5-$10. Providers are not all banks (although banks do get involved in a large percentage of transactions) and include non-bank companies like Western Union, MoneyGram and Xoom, and smaller players like ViaAmericas (mentioned in the article). People who send money will shop around for the best deal (often, different services are offered within the same retail agent location), and senders will from one month to the next switch providers if the FX rate is better, or if the fees are lower. The bank oligopoly holds no sway here, and if prices could be lower, they would be lower.

Your reaction is a typical one, and one that I remember encountering repeatedly: "why do these transactions cost anything at all?" The truth is, there are significant costs that underlie a family remittance transaction. At least half of transaction fees, and often 80%, are claimed by the retail agents that capture or pay out the remittance. There, you have all of the costs associated with retail, combined with the costs of handling large amounts of cash. On the capture side, many banks will charge retail locations a percentage fee for processing the cash they deposit, and if armored car services are used, they will also change fees for handling. On the payment side, logistical challenges may be even greater, given local conditions.

The amount of money that remains goes to pay for secure and highly-available computer systems, AML compliance processes (which require a significant amount of human involvement), other regulatory compliance costs (security, bonding, record-keeping, reporting, examination fees and assessments), fraud coverage, customer service costs (a call center must be maintained), marketing, and general corporate overhead. Really, what you would imagine it would take to run a remittance network if you thought about it.

If you compare remittance fees as a percentage of a typical US-Mexico transaction ($5 to send $350), they are comparable to other retail payment transactions that involve similar levels of risk and require similar infrastructure. However, volumes are much, much lower than ATM or credit card transactions, so economies of scale yield a much lower benefit, which also adds to the cost.