!

!

!

January!

2014!

Remittances!market!in!the!Netherlands!
Daniëlle!de!Winter!|!Laudra!Archangel!|!Gerd!Junne!|!Jane!Martie<Chatlein!
!!!!!!

2!
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REMITTANCES!MARKET!IN!THE!NETHERLANDS!

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Preface!
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!
The! present! study! has! been! initiated! by! the! Ministry! of! Foreign! Affairs! of! the! Netherlands!
and! has! been! financed! by! the! Ministry! and! by! contributions! from! the! Dutch! Banking!
Association! (NVB)! and! from! the! Dutch! Central! Bank! (DNB).! It! has! been! carried! out! in! the!
period! between! September! and! December! 2013.! The! research! team! was! supported! by! a!
steering! committee,! which! assisted! with! the! gathering! of! information,! interview! contacts,!
and!critical!comments.!Members!of!the!steering!committee!were!Lidy!Navis,!Jaap!Smit,!and!
Richard!Dons!from!the!Ministry!of!Foreign!Affairs,!Meike!Kramer!from!the!Dutch!Ministry!of!
Finance,! Ayse! Zoodsma<Sungur! (DNB),! Marc! van! der! Maarel! (NVB),! and! Vyash! Misier! from!
the! Dutch! Association! of! Money! Transfer! Institutions! (NVGTK).! ! In! addition,! we! received!
valuable! advice! and! contributions! from! Nanette! Farwerck<Bergwerf! (INTL! Global!
Currencies!Ltd).!We!thank!the!members!of!the!steering!committee!and!our!advisors!for!their!
active! support! and! contribution.! The! authors,! however,! are! solely! responsible! for! any!
mistake!or!misunderstanding,!which!the!study!may!contain.!
!
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!
Amsterdam,!January!2014!
!
Daniëlle!de!Winter!(DBMresearch)!!!<!!!!danielle@dbmresearch.com!
Laudra!Archangel!(LAC!Support!!!<!!!!!laudra@lac<support.eu!
Gerd!Junne!(The!Network!University)!!!<!!!gjunne@gmail.com!
Jane!Martie<Chatlein!!(former!Director!of!IntEnt)!!!<!!!jemcurr@yahoo.com!!
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©!!The!Network!University!(TNU),!Amsterdam,!The!Netherlands,!January!2014!
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REMITTANCES!MARKET!IN!THE!NETHERLANDS! 3!
!

Executive!Summary!
!
1. This!study!has!been!initiated!and!partly!financed!by!the!Ministry!of!Foreign!Affairs!
of! the! Netherlands! to! contribute! to! the! “5x5”! initiative! of! the! G20! to! reduce! the!
costs! of! remittances! to! an! average! of! not! more! than! 5! percent! of! the! transfer!
amount! within! five! years.! The! study! has! been! coPfinanced! by! the! Dutch! Central!
Bank! and! the! Dutch! Banking! Association.! Both! organizations! have! also! been!
supportive!in!accessing!information.!!!
!
2. The! focus! of! the! study! is! on! remittances! to! four! African! countries,! since! costs! of!
remittances! to! SubPSahara! African! countries! are! still! the! most! expensive! due! to!
issues! related! to! efficiency,! competition,! innovation! and! compliance! in! both!
sending! and! receiving! countries.! The! four! countries! selected! show! very! different!
characteristics:!Ethiopia!does!not!have!a!convertible!currency,!Ghana!took!steps!to!
introduce!mobile!payments,!Nigeria!will!supply!every!new!citizen!with!a!MasterCard,!
and!Somalia!lacks!a!fully!functioning!banking!system.!!
!
3. Dutch! banks! play! a! limited! role! in! the! remittances! market.! Money! Transfer!
Organizations! are! the! main! players! with! regard! to! money! transfers! by! migrants!
through!formal!channels.!A!very!large!part!of!remittances,!however,!is!sent!through!
informal! (not! necessarily! illegal)! channels,! which! are! seen! as! speedy,! reliable,! and!
not!too!expensive!by!remittance!senders.!!
!
4. Technologies!for!new!forms!of!international!money!transfer!develop!at!a!very!high!
speed,! and! many! new! players! build! up! positions,! not! only! telecommunication!
companies,!but!also!the!“big!powers”!in!mobile!communications,!including!Google,!
Facebook!and!Apple.!In!the!Netherlands!only!few!alternative!service!providers!offer!
their!services!to!the!Dutch!market.!
!
5. The! Netherlands! form! a! classical! example! of! the! “handicap! of! a! head! start”:!The!
very! fact! that! the! Netherlands! are! relatively! advanced! in! cashless! (electronic)!
payments,!compared!to!many!other!European!countries,!has!reduced!the!urgency!to!
agree! on! common! standards! for! mobile! payments! and! to! actively! support!

4!
!

REMITTANCES!MARKET!IN!THE!NETHERLANDS!
innovations! in! the! sector.! The! Netherlands! therefore! run! the! risk! to! become! a!
country!with!comparatively!high!remittances!prices!in!the!future.!!
!
6. Money! transfer! operators! are! under! pressure! from! many! sides! to! reduce! their!
tariffs.! They! will! still! hold! a! strong! position! in! the! future,! because! of! their!
widespread! networks! of! agents! in! the! Netherlands! and! in! receiving! countries,! the!
still!general!preference!of!clients!for!cash<based!transactions,!and!because!of!their!
willingness! to! engage! in! new! forms! of! cooperation! with! telecommunication!
operators.!
!
7. The! informal! sector! probably! still! plays! a! very! large! role! and! will! probably! profit!
from! stricter! regulations! of! international! payments! at! global! and! European! level.!
The!informal!sector!is!by!no!means!a!“traditional”!sector;!it!has!quickly!adopted!new!
means! of! communication! and! transfers! (“e<hawala”).! Formal! channels! could!
probably!learn!from!innovative!initiatives!taken!by!actors!in!this!sector.!
!
8. Migrants! apply! many! other! criteria! than! price! alone! in! their! selection! of!
remittances! channels.! Lower! prices! by! some! players! on! the! remittances! market!
would! therefore! not! lead! to! quick! shifts! and! a! fast! reduction! of! remittances! costs.!
Linkages!of!remittances!to!other!financial!products!(insurance,!pensions,!mortgages,!
direct! payment! of! bills! in! the! country! of! origin)! could! make! specific! remittances!
channels! more! attractive.! These! value<added! services! seem! especially! attractive! to!
highly!educated!and/or!second<generation!migrants.!!
!
9. The! everPstricter! regulation! of! international! money! transfers! is! regarded! as! no!
longer! proportionate! to! the! risks! of! money! laundering! and! the! financing! of!
terrorist! organizations,! by! many! professionals! in! the! market,! and! as! not! very!
effective! to! mitigate! these! risks.! It! threatens! to! become! counterproductive! in!
postponing! the! introduction! of! mobile! money! with! an! easy! to! follow! trail! of!
information! on! sender! and! receiver,! pushing! remittances! flows! into! informal!
channels,! and! unnecessarily! increasing! the! costs! of! formal! remittances! service!
providers.!!

!

Continuing!cross>sectoral!discussions!

Support!to!price>comparison!website!

!

!

Support!to!innovative!transfer!schemes!

Encouraging!mobile!money!transfer!

Support!to!Financial!Services!Deepening!
in!receiving!countries!

Support!to!micro>finance!institutions!as!
remittances!payment!agents!

!

Cooperation!in!international!organisations! Develop!innovative!financial!services!for!
‘circular!migrants’!

*

More*transparency*

Preparation*of*transfer,*easier*access*

*

Reduction*of*transfer*costs*

*

Strengthening*of*financial*system*in*
receiving*countries*

Reduction*of*costs*at*the*receiving*side**

*

Development*of*new*financial*services*
for*migrants**

Engage!more!with!recipients!of!
remittances!

Link!remittances!to!other!financial!
services!

Support!to!partner!banks!in!introducing!
mobile!accounts!

!

Negotiate!reduction!of!“OUR”!costs!!

1%!development!fund!

Reduction!of!perceived!thresholds!for!
migrants!

Include!migrants!into!MOB!
(Maatschappelijk!Overleg!
Betalingsverkeer)!

!

Support!to!financial!literacy!programmes!
2.0!

Know!your!customer!for!product!
development!–!renewed!investigation!of!
market!dynamics!

Financial*institutions*

Dutch*government*
*

*

*

Market!migrant!communities!as!
specific!market!segment!

!

Influence!on!financial!systems!in!
receiving!country!

Support!for!opening!bank!accounts!by!
family!member!!

!

!

!

Aggregation!of!remittances!to!assure!
lower!transfer!costs!

!

!

Financial!literacy!programmes!2.0!

Migrant*organizations*

*

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 5!

Better*information*on*market*and*
better*market*research*

*

Summary*Recommendations*

!

6"
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS!

!

Table"of"Contents"
"
Preface"..................................................................................................................."2!
Executive"Summary"................................................................................................"3!
Summary"Recommendations".................................................................................."5!
Table"of"Contents"...................................................................................................."6!
Abbreviations"........................................................................................................."7!
I."Introduction"........................................................................................................."8!
II."Remittance"market"in"the"Netherlands"............................................................."11!
II.1! Size!of!remittances!corridors!.........................................................................!11!
II.2! Remittance!services!providers!.......................................................................!14!
II.3!!!!!Comparison!of!prices!.....................................................................................!25!
II.4! Regulatory!framework!...................................................................................!37!
III."Migrants’"preferences"......................................................................................"42!
III.1!!!!Frequency!of!transfers!..................................................................................!42!
III.2!!!!Amounts!sent!................................................................................................!43!
III.3!!!!Receivers!of!remittances!in!country!of!origin!...............................................!44!
III.4!!!!Preference!for!remittances!channels!............................................................!46!
III.5!!!!Needs!for!additional!financial!products!........................................................!50!
IV."Cost"reduction"of"remittances".........................................................................."52!
IV.1! Elements!of!the!remittance!transfer!.............................................................!53!
IV.2! Structure!of!costs!of!remittance!transfers!....................................................!55!
IV.3!!!International!agreements!on!cost!reduction!.................................................!57!
IV.4!!!Opportunities!for!cost!reduction!...................................................................!60!
V."Recommendations"............................................................................................"83!
V.1!!!!!Recommendations!for!the!Dutch!government!.............................................!84!
V.2!!!!!Recommendations!for!regulators!.................................................................!87!
V.3!!!!!Recommendations!for!financial!institutions!.................................................!89!
V.4.!!!!Recommendations!for!migrant!organizations!...............................................!91!
References"............................................................................................................"93!
Annex"–"Table"of"Contents"...................................................................................."96!
Annex!1:!List!of!interviewees!..................................................................................!97!
Annex!2:!Settlement!of!Remittance!Transfer!.........................................................!99!
Annex!3:!Toolbox!for!General!Principles!...............................................................!104!
!
!
!

"
!

"

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 7!
!

Abbreviations"
"
AFM!
AML/CFT!
ATM!
CGAP!
DMA!
DNB!
EMA!
EU!
FATF!
FIU!
G20!
G8!
GMTS!
GP!
GSMA!
IBRD!
IFAD!
LDC!
MFI!
MLD4!
MTO!
NVB!
NVGTK!
P2P!
PSD!
RSP!
UNCTAD!
WU!

Autoriteit!Financiële!Markten!
AntiYmoney!laundering/Combatting!Financing!of!Terrorism!
Automatic!Teller!Machine!
Consultative!Group!to!Assist!the!Poor!
Developing!Markets!Association!
De!Nederlandsche!Bank!
Electronic!Money!Authority!
European!Union!
Financial!Action!Task!Force!
Financial!Intelligence!Unit!
Group!of!Twenty!
Group!of!Eight!
Global!Money!Transfer!Summit!
General!Principle!
Groupe!Spéciale!Mobile!Association!
International!Bank!of!Reconstruction!and!Development!
International!Fund!for!Agricultural!Development!
Least!Developed!Countries!
Micro!Finance!Institute!
Money!Laundering!Directive!4!
Money!Transfer!Operator!
Dutch!Banking!Association!
Dutch!Money!Transfer!Association!
People!to!People!
Payment!Services!Directive!
Remittance!Services!Provider!
United!Nations!Conference!on!Trade!and!Development!
Western!Union!

"
!

!

8"
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REMITTANCES"MARKET"IN"THE"NETHERLANDS!

I."Introduction"
!
!
With! the! increase! in! international! labour! mobility1,! and! increasing! ease! with! which! money!
can! be! sent! around! the! globe,! the! worldwide! volume 2 !of! remittances 3 !has! grown!
tremendously!in!the!past!two!decades.!The!volume!of!remittances!in!2012!reached!USY$!529!
billion! according! to! the! World! Bank4!(having! quadrupled! from! USY$! 132! in! the! year! 2000),!
which! is! more! than! four! times! the! total! volume! of! official! development! aid.5!Remittances!
keep!millions!of!people!out!of!poverty,!stimulate!demand!in!local!markets!in!the!receiving!
countries,! and! finance! the! creation! of! companies.6!Some! even! say,! “Remittances! may! well!
be!the!best!single!way!to!foment!development.”7!
!
However,!not!all!the!money!migrants!spend!on!remittances!reaches!the!receivers.!Sending!
money!costs!money.!The!average!cost!of!sending!money!home!is!actually!about!10!percent!
of! the! amount! sent! by! migrants.8!If! these! costs! could! be! halved,! an! additional! amount! of!
roughly!USY$!20!billion!would!reach!the!receivers,!Y!which!is!more!than!three!times!the!total!
Dutch!development!aid!budget.9!
!
Reducing! the! price! of! money! transfers! is! therefore! a! policy! priority! of! many! governments.!!
At!their!July!meeting!in!2009,!the!Heads!of!States!G8!have!proclaimed!the!“5x5!objective”:!!
The! global! average! costs! of! transferring! remittances! should! decline! from! 10! percent! to! 5!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1

!According!to!the!UN!Department!of!Economic!and!Social!Affairs!(UNYDESA)!232!million!people,!or!3.2!percent!of!
the!world’s!population,!live!abroad!worldwide,!compared!with!175!million!in!2000!and!154!million!in!1990.!
(Figures!released!ahead!of!the!highYlevel!global!summit!on!migration!and!development!to!be!held!by!the!General!
Assembly!in!New!York!on!3!and!4!October!2013,!see!
http://www.un.org/en/development/desa/news/population/numberYofYinternationalYmigrantsYrises.html#moreY
10473).!
2
!The!published!figures!do!not!only!reflect!the!increase!of!transfers,!but!probably!also!an!increasing!percentage!of!
payments!that!flows!through!formal!channels,!and!thus!a!higher!percentage!of!transfers!that!are!incorporated!
into!official!statistics.!!
3
!Remittances!are!for!the!purpose!of!this!report!perceived!as!private!capital!flows!made!by!migrants!to!their!
family!and!friends!in!the!country!of!origin.!
4
!World!Bank!Press!release!of!19!April!2013,!see!http://www.worldbank.org/en/news/pressY
release/2013/04/19/worldYbankYlaunchesYinitiativeYonYmigrationYreleasesYnewYprojectionsYonYremittanceYflows.!
5
!Member!countries!of!the!Development!Assistance!Committee!(DAC)!of!the!OECD!provided!USY$!125.6!billion!in!
net!official!development!assistance!(ODA)!in!2012.!See!
http://www.oecd.org/dac/stats/aidtopoorcountriesslipsfurtherasgovernmentstightenbudgets.htm.!
6
!This!study!will!not!discuss!the!impact!of!remittances.!!For!literature!on!that!topic,!see!Nijkamp!et!al.!(eds.),!2012.!
7
!Nancy!Birdsall,!President,!Center!for!Global!Development,!cited!in!Kitroeff!2013.!
8
!Average!percent!was!estimated!to!be!9.3!%!in!2011,!!Y!actually!higher!than!in!2010,!Y!see!Dia!Kamgnia!&!
Murinde!2012,!Table!1:!Evolution!of!remittance!costs!worldwide.!!
9
!Presentation!World!Bank!EU!DEVCO!meeting!15!November!2013!!

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 9!
!
percent!in!5!years.10!In!2010,!the!G20!committed!to!a!“significant!reduction!in!the!costs!of!
remittance!services”!and!established!a!Development!Action!for!Remittances.11!!
!
The!World!Bank!has!been!monitoring!the!latest!trends!in!the!average!total!cost!of!migrant!
remittance! services! worldwide! since! the! adoption! of! the! 5x5! initiative.! For! the! second!
quarter! of! 2013,! it! reported! that! the! global! average! total! cost! for! sending! remittances!
continued! to! decline! and! now! stands! at! 8,85! percent.! The! Dutch! average! was! measured!
slightly! lower! than! the! global! average! at! 8,51%! in! 2012! based! on! the! World! Bank’s!
Remittances!Prices!Worldwide!index!(Isaacs,!2012).!However,!the!World!Bank!statistics!also!
show!that!still!great!effort!is!needed!to!reach!the!expected!goal!of!5!percentage!points!in!5!
years!time.!
It! is! in! line! with! this! objective! that! Minister! Lilianne! Ploumen! promised! the! Dutch!
parliament12!to!study!ways!and!means!to!reduce!the!transfer!costs!and!to!engage!with!the!
relevant!stakeholders!in!the!Netherlands!to!bring!the!costs!down.!The!present!study!is!part!
of! this! endeavour.! It! has! been! initiated! by! the! Dutch! Ministry! of! Foreign! Affairs! and! is!
supported!by!the!Dutch!Central!Bank!and!the!Dutch!Banking!Association.!!
!
The! objective! of! this! study! is! to! identify! steps! that! can! be! taken! to! reduce! the! costs! of!
transferring!remittances.!!Several!(groups!of)!actors!share!the!responsibility!for!reaching!this!
ambitious!goal:!the!Remittances!Services!Providers!(RSPs),!the!governments!of!the!sending!
and! of! the! receiving! countries,! and! the! migrant! communities! themselves.! The! study! will!
therefore!present!a!range!of!recommendations!for!each!of!them.!
!
The! Migration! and! Remittances! Factbook! published! by! the! World! Bank! (2011)! defines!
remittances!as!the!sum!of!workers’!remittances,!compensation!of!employees,!and!migrants’!
transfers.13!Based! on! this! definition,! the! World! Bank! has! compiled! data! on! remittances! for!
the!past!decades.!Yet,!in!practice,!many!countries!gather!their!data!in!different!ways,!which!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
10

!http://go.worldbank.org/7RKUKJF3Q0!!
!http://siteresources.worldbank.org/INTECA/Resources/June2ECARemittance.pdf.!
12
!See!the!letter!of!Minister!Lilianne!Ploumen!and!Secretary!of!State!Fred!Teeven!to!the!Dutch!Parliament!
(Tweede!Kamer)!of!3!July!2013!on!“Voortgangsrapportage!Migratie!en!Ontwikkeling”.!!See!also!the!“Besluit!van!
de!Minister!voor!Buitenlandse!Handel!en!Ontwikkelingssamenwerking!van!9!november!2012,!nr.!DCM/MAY
154/2012,!tot!vaststelling!van!beleidsregels!en!subsidieplafond!Migratie!en!Ontwikkelingsprogramma!2013”.!
13
!Workers’!remittances!are!current!private!transfers!from!migrant!workers!who!are!considered!residents!of!the!
host!country!to!recipients!in!the!workers’!country!of!origin.!If!the!migrant!has!lived!in!the!host!country!for!less!
than!one!year,!their!entire!income!in!the!host!country!should!be!classified!as!compensation!of!employees.!
Migrants’!transfers!are!the!net!worth!of!migrants’!assets!that!are!transferred!from!one!country!to!another!at!the!
time!of!migration!(for!a!period!of!at!least!one!year).!(from!Migration!and!Remittances!Factbook!2011,!xviYxvii)!
11

10"
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REMITTANCES"MARKET"IN"THE"NETHERLANDS!

leads!to!differing!results!and!interpretations!of!remittances!data.!The!Dutch!Central!Bank!for!
example! does! not! have! a! specific! definition! for! remittances,! but! refers! to! Eurostat’s!
interpretation,!which!is!similar!to!but!not!the!same!as!the!World!Bank’s.!The!figures!on!the!
average!price!of!sending!remittances!give!also!rise!to!conceptual!concerns.!The!World!Bank!
calculates! these! prices! on! the! basis! of! an! unweighted! average! of! the! prices! quoted! by!
different!remittance!service!providers,!irrespective!of!the!volume!of!their!transactions.!This!
can!provide!a!distorted!picture!of!the!price!that!migrants!pay!on!average,!e.g.!if!especially!
high!or!low!prices!are!included!of!providers!who!are!only!responsible!for!a!very!thin!flow!of!
remittances.!Such!considerations!need!to!be!taken!into!account!when!reading!through!the!
report,!and!have!been!taken!into!consideration!where!possible.!
!
The!focus!of!this!study!is!on!four!remittances!corridors,!linking!the!Netherlands!with!Ethiopia,!
Ghana,!Nigeria!and!Somalia.!Reasons!for!this!selection!are!that!
!
(a) the!transfer!costs!for!remittances!to!Africa!are!the!highest,!compared!to!other!world!
regions14,!
(b) a! number! of! recent! studies15!have! covered! other! corridors! that! are! important! for!
remittances!sent!from!the!Netherlands.!
!
This!study!will!provide!an!overview!of!the!remittances!market!in!the!Netherlands!in!part!II.!
Part!III!presents!the!results!of!interviews!with!migrants!from!the!four!chosen!countries!and!
of! the! main! issues! discussed! during! a! number! of! focus! group! meetings.! Against! this!
background,! part! IV! will! analyse! the! different! measures! that! could! be! taken! to! reduce! the!
costs!of!remittances.!Finally,!part!V!will!present!recommendations!for!the!Dutch!government,!
for!financial!institutions!in!the!Netherlands,!and!for!migrants.!!
!

!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
14

!!Kamerbrief!Voortgangsrapportage!Migratie!en!Ontwikkeling,!3!July!2013!
!Recent!studies!on!other!important!corridors!include!the!studies!on!the!NetherlandsYMorocco!(van!Waes,!2009),!
the!NetherlandsYSurinam!(Unger!and!Siegel,!2006)!and!the!NetherlandsYAfghanistan!(Evtimova!&!Koekoek,!2013).!!!

15

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 11!
!
"II."Remittance"market"in"the"Netherlands"
!
Each! day! 440! immigrants! are! registered! in! the! Netherlands.! They! make! up! approximately!
21%! of! the! total! population! in! the! Netherlands! (CBS! reports! a! little! over! 3,5! million!
immigrants! living! in! the! Netherlands! in! May! 2013).! Many! migrants! from! developing!
countries!remain!connected!to!their!countries!of!origin,!and!often!are!expected!to!financially!
support!those!left!behind.!To!facilitate!the!transnational!financial!needs!of!foreign!residents!
in! the! Netherlands,! a! market! has! developed! that! meets! their! requirements:! offering!
remittances!services!that!allow!migrants!to!transfer!their!funds!to!family!and!friends!in!their!
countries!of!origin.!!
!
However,! there! is! little! recent! data! available! on! the! different! remittance! corridors,! on! the!
types!of!services!on!offer,!or!on!the!regulations!that!ensure!sound!business!practice!in!the!
remittances!market!in!the!Netherlands16.!This!chapter!will!therefore!zoom!in!on!these!three!
factors!that!make!up!the!industry:!(i)!size!of!corridors,!(ii)!remittance!service!providers,!and!
(iii)!regulations.!!
!

II.1"

Size"of"remittances"corridors"

!
The!total!volume!of!remittances!flowing!out!of!the!Netherlands!in!2012!has!been!estimated!
to! amount! to! 10.674! US! million17.! In! the! most! recent! World! Bank! Factbook! (2011),! the!
Netherlands! was! ranked! 10th! out! of! the! global! top! remittanceYsending! countries.! The! ten!
most! important! remittance! corridors! served! by! the! Dutch! market! (in! the! first! quarter! of!
2013)!were!the!following18:!
!
!
!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
16

!Previous!studies!on!the!remittance!market!in!the!Netherlands!are!Mohogu!(2006)!‘African!Remittance!Market!
in!the!Netherlands’,!NCDO!(2009)!‘Het!Geefgedrag!van!nietYwesterse!allochtonen’,!Kosse!(2013)!‘Migrants’!choice!
of!remittance!channel:!do!general!payment!habits!play!a!role?’,!and!the!corridor!studies!referred!to!in!footnote!
11.!
17
http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/0,,contentMDK:22759429~pagePK:
64165401~piPK:64165026~theSitePK:476883,00.html!Y>!annual!remittances!data!(outflows)!
18
!Data!provided!by!De!Nederlandsche!Bank.!

12"
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS!

Top"10"send"countries"Q1V2013"

Corridor"

Total"volume"in"EUR"

1!

Morocco!

11.682.979,69!

2!

Surinam!

11.496.074,47!

3!

China!

9.723.835,08!

4!
5!

Philippines!
Turkey!

9.275.525,07!
8.956.390,05!

6!

Dominican!Republic!

5.811.828,90!

7!
8!

Bulgaria!
Colombia!!

4.431.236,73!
4.425.201,70!

9!

Ghana!

4.369.783,35!

10! Brazil!

3.748.802,52!

!Source:!DNB!statistics!
!
Three! of! the! corridors! in! the! top! ten! represent! the! biggest! migrant! populations! in! the!
Netherlands,!namely!Turkey,!Surinam!and!Morocco,!as!shown!below!in!the!table.!!
!
Top"3"migrant"populations"Q1V2013"

Population"
Turkey!
Morocco!
Surinam!
Source:!CBS!data!!

Total"#"in"the"Netherlands""
395.302!
368.838!
347.631!

!
In! this! study,! specific! attention! goes! out! to! four! corridors! in! SubYSaharan! Africa,! namely!
Ghana,! Nigeria,! Somalia! and! Ethiopia.! CBS! statistics! show! that! Somalis! form! the! largest!
group!residing!in!the!Netherlands,!and!the!Nigerian!population!is!the!smallest!out!of!the!four!
corridors!under!study.!!
!!!
!
!
!
!
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 13!
!
"
Population"statistics"for"SubVSaharan"Africa"corridors"Q4V2013"

Population"

Nigeria" Somalia"

Total!living!in!the!Netherlands!
Male!
Female!
!
1st"generation"immigrants"
1st!generation!immigrant!
!
2nd"generation"immigrants"
Total!2nd!generation!
One!parent!born!abroad!
Both!parents!born!abroad!
!
Place"of"residence"
North!
East!
South!
West!
Source:!CBS!data!

11.466!
6.107!
5.359!
!
!
6.153!
!
!
5.313!
3.495!
1.818!
!
!
!
!
!
!

34.631!
18.420!
16.211!
!
!
24.597!
!
!
10.034!
652!
9.382!
!
!
2.618!
5.307!
18.071!
8.635!

Ethiopia"

Ghana"

12.270!
6.408!
5.862!
!
!
7.897!
!
!
4.373!
1.196!
3.177!
!
!
572!
1.657!
1.253!
8.788!

22.263!
10.982!
11.281!
!
!
13.626!
!
!
8.637!
2.418!
6.219!
!
!
316!
2.200!
1.407!
18.340!

!
The!sent!amount!in!the!first!quarter!of!2013!for!the!four!corridors!under!study!amount!to!
the!following!net!volume!in!euro:!
!
Four"SubVSaharan"Africa"corridors"Q1V2013!

Corridor"
1! Ghana!
2! Nigeria!
3! Somalia!!
4! Ethiopia!
Source:!DNB!statistics!

Total"volume"in"EUR"
4.369.783!
2.742.606!
955.471!
488.864!

!
The!Dutch!Central!Bank!did!comment!that!these!volumes!include!potential!transfers!that!fall!
outside! of! the! official! definition! of! workers’! remittances. 19 !This! could! include! business!
investments!and!entrepreneurial!financial!activities.!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
19

!The!IMF!and!World!Bank!have!defined!workers’!remittances,!as!defined!by!the!IMF!in!the!Balance!of!Payments!
Manual,!are!current!private!transfers!from!migrant!workers!who!are!considered!residents!of!the!host!country!to!
recipients!in!the!workers’!country!of!origin.!Often,!the!distinction!between!the!two!categories!‘compensation!of!
employees’!or!‘worker!remittances’!appears!to!be!entirely!arbitrary,!depending!on!country!preference,!
convenience,!and!tax!laws!or!data!availability!(Migration!and!Remittances!Factbook!2011).!!

14"
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS!

II.2"

Remittance"services"providers"

!
Migrants! in! the! Netherlands! have! full! access! to! the! financial! system! and! have! various!
options!for!sending!money!to!their!home!countries.!First,!they!can!send!remittances!using!
standard!international!money!transfers!offered!by!banks,!although!none!of!the!Dutch!banks!
offers!dedicated!remittance!services.!However,!there!are!various!foreign!banks!active!in!the!
Netherlands!that!provide!a!range!of!remittance!services.!
!
Second,! remittances! may! be! sent! through! Money! Transfer! Operators! (MTOs)! that! are!
officially!registered!under!the!Financial!Supervision!Act!(Wet!op!het!Financieel!Toezicht)!and!
subject! to! the! monitoring! by! the! Dutch! Central! Bank,! DNB.! Most! commonly! used! MTOs! in!
the!Netherlands!are!Western!Union!and!Money!Gram.!In!addition!to!these!two!large!players,!
some!fifteen!other!officially!registered!MTOs!were!active!in!the!market!at!the!beginning!of!
2013.!!
!
In! addition,! new! players! are! accessing! the! market! place! and! offering! their! money! transfer!
services!via!new!technologies.!However,!eYservice!providers!and!mobile!money!technologies!
have!not!yet!penetrated!the!Dutch!market!significantly.!Industry!players!such!as!Azimo!and!
Xoom,!which!are!promising!in!the!UK!and!US,!for!example,!currently!do!not!(yet)!serve!the!
market! in! the! Netherlands.! Still,! as! eYservices! are! expanding! their! reach! over! the! coming!
years,!their!services!are!worth!investigating!to!understand!better!its!potential!and!expected!
trends.!!!
!
And! lastly,! several! informal! organizations! offer! remittances! services! in! the! Dutch! market!
(Kosse!et!al!2013:!9).!Offering!services!that!require!few!identification!requirements!and!little!
costs,!informal!channels!are!still!widely!used!by!migrants!to!transfer!money!across!borders.!
!
These! types! of! service! providers! are! categorized! as! Remittances! Services! Providers! (RSP),!
which!are!defined!as!any!business!that!transfers!money!across!borders!for!an!individual.!The!
description!includes!MTOs,!banks!and!alternative!service!providers!(such!as!eYservices!or!mY
services).!In!the!following!sections!we!will!go!into!each!type!of!service!provider.!!!
!
!
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 15!
!
II.2.1!Money!Transfer!Organizations!
!
MTOs!on!the!Dutch!remittance!market!are! those!of!Dutch!origin!and!foreign!MTOs,!which!
have!entered!the!Dutch!market!via!the!passporting!regime!(for!further!details!on!regulatory!
requirements! please! refer! to! II.4).! There! are! approximately! 900! registered! payment!
institutions! throughout! the! Netherlands.! Most! of! them! are! agencies! from! Western! Union!
and!MoneyGram.!In!addition!to!these!two!large!players,!some!15!other!officially!registered!
MTOs!were!active!in!the!market!at!the!beginning!of!201320.!The!pie!chart!below!shows!the!
five!most!present!MTOs!in!the!Dutch!market.!
!
!

Main"players"remi[ances"market"in"the"Netherlands"
57!

3!

59!
Western!Union!
Money!Gram!

330!
200!

SURIYCHANGE!
MoneyTrans!
KaahYExpress!

!
!
The!three!MTOs!that!hold!the!largest!market!share!in!the!Netherlands!are!Western!Union,!
MoneyGram,!and!SuriYchange21.!These!three!market!leaders!all!have!their!own!specialization,!
offer!their!services!worldwide!and!are!focused!on!specific!countries.!!
!
Important!corridors!for!the!five!most!well!known!MTOs!offering!services!in!the!Netherlands!
are!22:!
!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
20

!http://www.dnb.nl/en/binaries/Working%20Paper%20375_tcm47Y287555.pdf!
!Market!share!information!is!not!easily!obtained!due!to!the!competitive!nature!of!the!data.!!Therefore!the!
Information!here!is!obtained!from!several!interviews!conducted!by!market!players!in!the!Netherlands.!
22
!Information!obtained!from!interviews!
21

16"
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS!

Important"corridors"for"MTOs"in"the"Netherlands!

MTO"

Important"corridors"

Western"Union"

Morocco!
Turkey!

Money"Gram"

Surinam!
Morocco!
Ghana!
Nigeria!

SuriVChange"

Surinam!

Moneytrans"

Surinam!
Morocco!
Turkey!
The!Philippines!

KaahVExpress"

Somalia!

!
!
These!MTOs!also!provide!remittances!to!the!four!corridors!of!specific!interest!to!this!study,!
namely!Somalia!(except!for!Moneytrans),!Ethiopia,!Ghana!and!Nigeria.!Moneytrans!expects!
to!offer!transactions!to!Somalia!from!2014!onwards.!!
!
Difference(across(MTOs((
The! MTOs! argue! their! strengths! are:! reliability,! accessibility,! targeted! service,! simplicity,!
speed!and!low!fee!rates.!These!are!elements!with!which!they!try!to!distinguish!themselves!
from!their!competitors.!However,!from!interviews!we!learn!that!in!practice!there!is!actually!
little!difference!between!the!distinguishing!strengths!provided!by!the!different!MTOs,!as!is!
shown!in!the!following!table.!!
!
!
!
!
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 17!
!
Strengths"of"MTOs"in"the"Netherlands!
MTO"

Corridor"

Strength"

Western"Union"

Somalia,!Ethiopia,!
Ghana,!Nigeria!

Speed,!pricing,!reliability,!physical!
accessibility,!low!fee!rates,!simplicity!!

!
Money"Gram"

Ethiopia,!Ghana,!
Nigeria!

Speed,!pricing,!physical!accessibility,!low!fee!
rates!

SuriVChange"

Somalia,!Ethiopia,!
Ghana,!Nigeria!!

Speed,!pricing,!transparency,!low!fee!rates,!
simplicity!

Moneytrans"

Ethiopia,!Ghana,!
Nigeria!

Speed,!pricing,!reliability,!low!fee!rates,!
targeted!services!!

KaahVExpress"

Somalia,!Ethiopia,!
Ghana,!Nigeria!!

Speed,!pricing,!physical!accessibility,!low!fee!
rates!

!
MTOs!argue!that!the!current!model!for!remittance!services!has!proven!most!effective,!and!
thus!adopted!across!the!sector.!!
!
Serving(the(Dutch(market!
The!MTOs!aim!predominantly!at!migrants,!who!send!money!to!support!friends!and!family,!
and/or!(international)!students!who!come!to!withdraw!money!that!has!been!sent!by!family.!
Furthermore,!MTOs!report!that!entrepreneurs!also!make!use!of!their!services.!These!clients!
make!use!of!their!services!for!business!transactions.!Migrants!are!specifically!approached!in!
their! respective! languages! or! in! Dutch.! MTOs! market! their! services! through! the! media,! at!
churches!or!mosques,!or!at!festivals!and!concerts.!Clients!are!also!referred!to!MTOs!by!word!
of!mouth.!!
(
Clients!can!visit!an!affiliate!or!an!agent!of!a!MTO!or!can!make!use!of!the!Internet.!MTOs!try!
to! expand! their! accessibility! for! their! target! groups! by! joining! in! partnerships! in! both! the!
Netherlands! and! abroad.! Accessibility! is! important! because! MTOs! realize! that! travelling!
costs!time!and!money!for!their!clients.!On!average,!people!can!collect!the!received!sum!after!
10Y20!minutes.!!
!
None!of!the!MTOs!in!the!Netherlands!collaborates!with!banks,!while!this!does!appear!to!be!
the!case!in!other!countries.!However,!in!the!beginning!of!2014,!Western!Union!will!start!a!
pilot!project!in!collaboration!with!the!Royal!Bank!of!Scotland/ABN!Amro.!The!nature!of!the!

18"
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS!

pilot! will! be! revealed! in! the! first! quarter! of! 2014.! And,! Moneytrans! does! promote! bankY
related!services,!such!as!the!recent!offer!of!free!services!for!bankYtoYbank!deposits!within!24!
hours! to! the! Philippines.! Recently! other! types! of! partnerships! have! emerged! such! as! the!
cooperation! between! MoneyGram! and! PostNL,! allowing! the! Dutch! postal! network! to! offer!
remittance!services!through!their!network.23!
!
The! MTOs! have! reported! to! be! satisfied! with! the! workings! of! the! Dutch! market.! Factors!
attributed! to! their! satisfaction! are! (i)! space! to! grow,! (ii)! a! healthy! competition! and! (iii)!
enough! room! for! the! smaller! MTOs.24!! MTOs! state! that! they! feel! it! is! important! to! stick! to!
laws! and! regulations.! The! laws! and! regulations! such! as! the! European! Payment! Services!
Directive! (PSD)! and! the! Dutch! Financial! Supervision! Act! (Wft),! to! which! MTOs! must! abide,!
have!positive!yet!also!negative!effects.!In!part!II.4!we!will!turn!to!the!regulatory!framework!
in!more!detail.!!
"
Effects"of"laws"and"regulations"

Positive"effects"

Negative"effects"

Services!are!well!structured!

Clients!are!unaware!of!the!prescribed!
documents!they!need!to!bring!

Offers!possibilities!to!curb!illegal!services!

Additional!administrative!costs!

Offers!possibilities!to!utilise!the!Dutch!
license!in!other!European!countries!
(European!Passport)!

Y

Implementation!and!execution!cost!time!
and!effort!

Y

Executing!control!slows!down!the!
process!

[reference:!Information!obtained!from!interviews!with!MTOs]!
(
Additional(services(
Because! a! large! portion! of! the! receivers! abroad! does! not! have! a! bank! account,! the! MTOs!
handle! an! important! share! of! the! remittances! market.! This! offers! opportunities! to! expand!
the! services! with! additional! services! such! as! insurance! and! savings! possibilities.! Western!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
23

!More!information!on!the!newly!established!partnership!can!be!retrieved!here!
http://www.postnl.nl/voorthuis/postkantoor/MoneyGram/.!!
24
!Information!is!compiled!from!interviews!with!several!MTOs!offering!their!services!on!the!Dutch!market!
between!October!and!November!2013.!!

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 19!
!
Union! for! example! now! offers! Mobile! Payment! online25,! provided! this! is! offered! in! the!
receiving! country,! which! could! imply! a! plethora! of! additional! service! possibilities! such! as!
mobile! bill! payments.! Current! additional! services! offered! by! the! MTOs,! which! are! offered!
besides!remittances,!are:!
"
Additional"services"offered"by"MTOs"

MTO"

Services"

Western"Union"

Delivery!in!mYwallets!(receiving!money!in!a!mobile!(or!online)!
wallet)!

SuriVChange"

Ordering!of!foreign!currencies,!payment!of!acceptgiro,!Home!
delivery!of!money!free!of!charge,!send!money!to!mobile!
(service!offered!to!Ghana)!

Moneytrans"

VIPYService!for!investors!(documents!do!not!have!to!be!
shown!during!each!transaction),!and!pilot!CashYToYHealth!
(client!can!send!money!directly!to!a!hospital)!

KaahVExpress"

Payment!of!acceptYgiros!

!
From! the! aboveYmentioned! services,! it! follows! that! there! are! currently! no! insurance! or!
savings! possibilities! being! offered! by! the! large! MTOs.! Though,! due! to! the! partnership! with!
Surichange!Bank!(SCB)!in!Surinam,!transferred!funds!can!be!utilized!for!loans!to!the!Surinam!
community!concerning!investment!credits,!student!loans,!personal!loans,!car!finances,!and!
deposit! credits.! This! approach! shows! that! remittances! can! prove! valuable! in! confirming!
creditYworthiness!of!customers!and!have!lead!to!cross!selling!of!other!financial!services.!!
!
II.3.2!Banks!
!
The!three!major!Dutch!banks!–!ABN!AMRO,!ING,!and!the!Rabobank!Y!play!a!limited!role!in!
the! remittances! market.! Their! precise! market! share! is! difficult! to! assess,! because! the!
absolute! size! of! the! remittances! market! is! not! really! known,! and! because! the! banks!
themselves! do! not! always! distinguish! between! remittances! and! other! international!
payments! by! private! customers! in! their! internal! statistics.! Migrants! are! not! targeted! as! a!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
25

!The!service!offered!by!Western!Union!provides!consumers!with!the!option!to!send!and!receive!funds!in!three!
ways:!(i)!cash!to!mobile,!(ii)!mobile!to!cash,!and!(iii)!mobile!to!mobile!(if!the!mobile!operator!cooperates!with!
Western!Union)..!For!more!information!on!their!corporate!strategy,!refer!to!
http://corporate.westernunion.com/Mobile_Money_Transfer_Fact_Sheet.html!.!

20"
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS!

distinct! group! of! customers.26!They! are! welcome! as! everybody! else! to! open! a! payment!
account!and!make!use!of!the!services!of!the!banks,!but!there!are!hardly!any!specific!services!
that! meet! the! special! needs! of! migrants.! Given! the! limited! number! of! potential! customers!
from! certain! African! countries! such! as! Nigeria! and! Somalia! within! the! Netherlands,! this!
market!segment!is!perceived!as!not!very!commercially!attractive!for!banks.!!
Banks! only! play! a! role! in! remittances! sent! from! bank! account! to! bank! account.! Since!
relatively! few! people! in! the! countries! of! origin! of! migrants! possess! a! bank! account,! their!
market! share! is! inherently! limited.! Orozco! underlines! the! importance! of! having! a! bank!
account! and! argues! that! banks! show! a! “lack! of! understanding! of! the! financial! behavior!
among! remittance! senders! and! recipients,! unwillingness! to! work! with! lowYincome! or! rural!
customers,!limited!coverage!in!rural!areas,!high!costs!of!formal!banking!services,!or!financial!
illiteracy!among!remittance!receivers!and!senders.”!(Orozco!2013,!103)!This!statement!does!
not!necessarily!apply!to!banks!in!the!Netherlands,!but!also!for!Dutch!banks,!there!is!certainly!
‘room!for!improvement’.!!
International! payments,! furthermore,! are! not! a! very! lucrative! business.! Bank! departments!
responsible! for! international! payments! are! actually! fully! absorbed! by! the! intricacies! of! the!
introduction! of! SEPA,! the! Single! Euro! Payments! Area! (on! the! 1st! of! February! 2014);! the!
remittances! market! and! the! limited! business! opportunities! in! this! field! do! not! get! much!
attention.!!
In! comparison! to! the! speedy! delivery! of! funds! by! money! transfer! operators,! transfers!
through! banks! outside! the! EU! can! take! several! days,! depending! on! factors! such! as! the!
transfer! mechanism! used! and! the! procedures! of! the! receiving! bank! (Mohogu! 2006:! 23).!
However,! in! some! cases! transferring! remittances! through! banks! is! cheaper! than! using! the!
services! of! MTOs,! which! could! counterbalance! the! delay! in! delivery! of! the! funds! for!
remitters!and!receivers.!As!will!be!shown!in!part!III,!the!speed!of!service!is!mentioned!as!one!
of!the!influential!factors!determining!the!choice!of!channel!by!migrant!remitters.!!
!
Globally,! banks! seem! however! to! become! more! wary! to! offer! remittance! services.! Only!
recently,!Barclays!has!withdrawn!from!offering!remittance!services!in!Somalia.!The!country!
is! now! left! with! no! banks! that! offer! remittance! services.! Barclays! presumably! fears! its!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
26

!With!the!exception!that!the!Rabobank!applies!a!lower!transaction!provision!to!transfers!to!those!countries!
where!large!numbers!of!immigrants!come!from!(see!table!below),!and!ING!Bank!applies!especially!low!“OUR”!
costs!to!almost!the!same!range!of!countries.!In!that!way,!they!do!offer!special!conditions!to!remittances.!!

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 21!
!
continued!involvement!in!such!services!could!leave!it!open!to!accusations!of!aiding!terrorists!
and! money! laundering.! Last! year,! the! US! authorities! posed! a! $1.9! billion! fine! on! HSBC! for!
example,!for!poor!money!laundering!controls,!prompting!the!bank!to!run!down!its!activities!
in!the!moneyYservice!sector.27!!
Initiatives! within! Dutch! banks,! such! as! the! proposals! developed! by! ABNYAMRO’s! Dialogues!
Incubator! in! 2010! (to! develop! a! PreYPaid! Family! Card28)! and! in! 2013! (to! explore! “Mobile!
Money!as!an!Option!for!Facilitating!Remittance”29)!did!not!see!a!followYup,!because!of!other!
priorities.!!
!
The!role!of!banks!in!the!remittances!market!could!increase!if!it!became!easy!to!send!money!
from!a!Dutch!bank!account!to!a!mobile!phone!in!another!country.!This!is!possible!by!sending!
money!online!to!one!of!the!platforms!(see!part!IV),!which!are!linked!to!mobile!operators!and!
can! credit! the! mobile! wallets! of! their! clients.! Such! facilities! would! probably! be! used! much!
more,! if! they! could! also! be! accessed! by! phone.! If! clients! were! used! to! mobile! banking! for!
domestic! payments,! they! would! also! more! easily! choose! this! channel! for! international!
remittances.!!
!
Banks!in!the!Netherlands,!however,!show!symptoms!of!the!“handicap!of!the!headstart”.!The!
very!fact!that!cashless!(“pin”)!payments!are!more!common!in!the!Netherlands!than!in!many!
other! European! countries! has! reduced! the! pressure! (and! increased! the! obstacles)! to!
introduce! a! mobile! wallet.! Vodafone,! KPN,! Rabobank,! ABN! AMRO! and! ING! did! sign! a!
cooperation!agreement!in!November!2011!to!jointly!introduce!mobile!payments!at!the!Point!
of!Sale!in!the!Netherlands,!Y!a!move!that!followed!the!signing!of!a!letter!of!intent!between!
the! five! banks! and! mobile! network! operators,! along! with! TYMobile,! in! September! 2010.!!
However,!the!soYcalled!“Sixpack”!plan!for!a!joint!venture!company!was!abandoned!again!in!
2012,!though!the!partners!were!said!to!be!looking!for!different!forms!of!cooperation.30!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
27

!More!information!on!the!withdrawal!by!Barclay!can!be!found!http://www.somculned.com/moYfarahYpleadsY
withYbarclaysYnotYtoYendYremittancesYtoYsomalia/!
28
!Business!Case:!Remittances.!Presentation!by!Timo!Mulder,!Divya!S.!Chadha!and!Jaspar!Roos,!Dialogues!
Incubator,!ABNYAMRO,!1!June!2010.!
29
!A.!Evtimova,!R.!Koekoek!–!Mobile!Money!as!an!Option!for!Facilitating!Remittances.!Case!Study:!!Research!
within!the!Afghan!community!in!the!Netherlands,!Dialogues!Incubator,!Amsterdam,!May!2013.!
30
!!See!http://www.nfcworld.com/2011/11/30/311666/dutchYbanksYandYcarriersYtoYlaunchYnfcYinY2013/!and!
http://www.nfcworld.com/2012/07/19/316969/dutchYbanksYandYcarriersYabandonYsixpackYnfcYjointYventureY
plan/!

22"
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS!

A!followYup!is!actually!given!to!this!plan!in!the!form!of!a!pilot!project!in!Leiden.31!ABN!AMRO,!
ING!and!Rabobank!–!in!cooperation!with!MasterCard,!KPN!and!the!city!of!Leiden!experiment!
with!mobile!payment!in!the!period!from!the!1st!of!September!2013!to!the!end!of!the!year.!
About! 1000! consumers! and! more! than! 100! shops! participate! in! the! experiment.! More!
widespread!use!of!mobile!phones!for!domestic!payments!would!facilitate!the!introduction!of!
mobile!payments!for!international!money!transfer.!!
!
II.3.3!Alternative!service!providers!
New!technologies!and!solutions!to!(international)!remittances!are!introduced!worldwide!in!
order! to! facilitate! sending! and! receiving! remittances,! often! accompanied! with! a! cost!
reduction! of! services.! These! services! range! from! more! efficient! traditional! services! (i.e.!
riamoneytransfer.com),!newly!developed!and!innovative!technologies!to!facilitate!transfers!
(i.e.!worldremit.com),!and!the!introduction!of!specific!remittances!products!(i.e.!regalii.com).!
Large!technology!players!such!as!Apple,!Google!and!Facebook!are!developing!online!money!
transfer!services!to!meet!the!needs!of!their!online!customers.!
!
However,! currently! only! few! actors! serve! the! Dutch! remittance! market! with! alternative!
services! for! sending! and! receiving! remittances,! nor! are! such! providers! actively! marketing!
their! service! in! the! Netherlands.! From! interviews! and! discussions! with! the! business! sector!
outside! of! the! EU,! the! decision! to! enter! the! EU! market! is! stalled! partly! because! of! the!
unfamiliar!regulatory!environment.!!
!
USYbased! alternative! providers,! such! as! Remitly,! or! remittanceYoriented! banks! such! as!
Wellsfargo! provided! ‘size! of! the! corridor’! as! one! of! the! reasons! for! their! interest! in! the!
business,! as! some! states! within! the! US! have! heavily! concentrated! migrant! populations.!
(from! interview! with! Remitly,! Nov! 2013,! and! Wellsfargo,! Dec! 2013)! Such! clear! market!
segmentation! seems! to! create! better! incentives! for! business! engagement! than! the! more!
dispersed!migrant!populations!across!the!EU.!!
!
The!services!that!are!provided!are!to!date!still!mostly!corridor!specific!and!are!in!most!cases!
limited!by!the!need!of!having!a!bank!account!to!transfer!funds!through!their!online!services.!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
31

!https://www.mobielbetaleninleiden.nl/!

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 23!
!
In!addition,!from!interviews!with!migrant!representatives,!such!alternative!providers!were!at!
the!time!of!research!not!presented!as!a!commonly!used!method!for!transferring!funds.!
!
II.3.4!Informal!service!providers!
!
The!World!Bank!estimate!of!the!actual!value!of!remittance!flows!in!2012!of!USY$!529!billion!
already!includes!estimates!of!the!large!part!of!flows!through!unrecorded!informal!channels.!
These! include! savings! brought! home! on! return! and! transfers! through! unregistered!
intermediaries.!!
!
“Informal! fund! transfer! systems”! refers! to! any! network! or! mechanism! that! can! be! used! to!
transfer! funds! from! place! to! place! either! without! leaving! a! formal! paperYtrail! of! the! entire!
transaction,!or!without!going!through!regulated!financial!institutions!(Passas,!2003).32!Such!
systems!include!practices!such!as!hawala!(Arabic!for!‘transfer’)!or!hundi.!It!is!primarily!used!
by! migrant! workers! abroad! to! send! earnings! back! home,! and! are! mostly! legitimate!
operations!with!legitimate!clients.!(Shah,!2007)!The!Dutch!remittance!industry!also!includes!
such!informal!providers!of!services.!!
!
The!terms!“hawala”!or!“hundi”!refer!to!traditional!systems,!but!these!systems!can!be!very!
modern,!which!would!justify!the!term!“eYhawala”!for!many!of!these!transactions.!As!far!as!
speed!and!convenience!are!occurred,!these!transactions!can!easily!compete!with!the!formal!
system.! The! biggest! advantage! of! the! informal! service! providers! for! the! senders! of!
remittances!is!that!they!do!not!require!specific!additional!information!such!as!identification!
of!the!money!sender.!In!addition,!some!do!not!charge!any!transaction!fees!in!certain!cases!
and! the! recipient! does! not! need! to! have! a! bank! account.! Another! advantage! of! informal!
providers!is!that!they!disburse!the!transaction!sums!immediately!and!in!some!cases!even!in!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
32

!“A!distinction!is!often!made!amongst!remittance!flows!based!on!the!transmission!mechanism!of!the!money.!It!
is!common!to!group!these!transactions!in!binary!categories,!which!may!include:!official!versus!unofficial,!formal!
versus!informal,!regulated!versus!unregulated,!legal!versus!illegal!and!recorded!versus!unrecorded.!These!binary!
categories!reflect!different!things.!For!instance,!“informal!remittances”!are!usually!defined!as!transfers!initiated!
outside!the!formal!banking!system!and!outside!the!main!money!transfer!businesses!(e.g.!Western!Union).!Many!
informal!remittances,!such!as!hand!carried!money,!could!still!be!legal.!“Unrecorded!remittances”!are!those!that!
do!not!appear!in!official!government!statistics,!either!because!the!flows!are!sent!through!informal!channels!
where!there!is!no!record!of!the!transaction!or!because!the!government!has!decided!not!to!collect!these!data!in!a!
systematic!way.“!(Isaacs!2012,!p.!23!paragraph!2.7)!!

24"
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS!

advance! (the! money! is! already! being! disbursed,! while! the! money! of! the! client! is! not! yet!
received).33!!
!
Despite! the! potential! advantages! of! informal! remittance! channels! in! terms! of! cost,! speed,!
accessibility! and! anonymity,! informal! channels! have! increasingly! been! debated! due! to!
concerns! about! potential! misuse! for! criminal! ends,! including! money! laundering,! the!
financing!of!terrorism!and!smuggling.!Moreover,!with!regard!to!safety!and!security,!informal!
channels! are! generally! perceived! to! be! more! risky! because! they! often! rely! on! informal!
contracts!and!entail!a!higher!risk!of!theft!or!loss.!This!is!why!many!authorities!try!to!channel!
remittances!through!the!formal!sector.34!!
!
Licensed!Money!Transfer!Operators!fear!that!informal!services!are!given!low!priority!by!the!
Dutch!authorities.!During!discussions!with!MTO!representatives,!the!following!aspects!of!the!
informal!sector!were!said!to!negatively!influence!the!remittance!business:!!
Y Registered!offices:!unfair!competition!
Y Consumers:!no!protection!
Y Government:!No!insight!in!financing!of!criminal!activities!
!
If! we! look! at! the! official! figures! for! remittances! sent! from! the! Netherlands! to! developing!
countries!(see!page!12),!they!are!so!low!that!it!is!obvious!that!there!must!be!quite!dramatic!
omissions.35!If!we!look!at!individual!countries,!it!becomes!even!more!obvious!that!informal!
channels! probably! dominate! a! number! of! corridors.! To! send! money! to! Somalia! via! official!
channels! has! been! quite! difficult! for! a! while.! ! In! a! country! like! Ethiopia,! where! the! street!
value!of!foreign!exchange!is!considerably!higher!than!the!official!value,!because!the!currency!
is! not! freely! convertible,! it! would! be! astonishing! if! the! majority! of! transfers! would!
nevertheless! take! place! through! formal! channels.! Even! for! Ghana,! which! has! a! developed!
banking! system,! longYstanding! habits! of! diaspora! groups! to! send! money! through! informal!
channels!are!difficult!to!change,!as!interviewees!told!us.!
!
There!are!also!many!transactions!which!could!be!counted!as!the!transfer!of!remittances,!but!
in!which!no!money!leaves!the!country,!Y!for!example!if!the!money!is!used!to!buy!goods!(e.g.!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
33

!It!is!difficult!to!say!anything!about!the!prices!of!informal!fund!transfer!systems.!They!often!can!be!cheaper!than!
the!official!providers,!because!they!do!not!have!to!maintain!the!same!administration!and!infrastructure,!but!
MTOs!also!report!cases!in!interviews!in!which!MTOs!are!actually!less!expensive!than!the!informal!providers.!
34
!http://www.dnb.nl/en/binaries/Working%20Paper%20375_tcm47Y287555.pdf!
35
!Some!estimates!of!the!omissions!at!the!European!level!are!contained!in!Leon!Isaacs!et!al.,!p,!23.!

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 25!
!
cars),! which! are! then! shipped! abroad! and! sold! there,! with! the! proceeds! accruing! to! family!
members! in! the! country! of! origin,! which! otherwise! would! have! been! the! beneficiaries! of!
money!sent!directly.!
!
There! is! anecdotal! evidence! of! a! great! variety! of! ingenious! mechanisms! to! transfer! value!
from! diaspora! groups! to! countries! of! origin! (from! interviews! with! migrant! organizations).!
Research! on! such! a! topic! is! by! definition! difficult,! but! it! might! reveal! some! innovative!
solutions!for!money!transfers,!which!could!also!be!interesting!for!formal!remittance!service!
providers.!
!
The!very!fact!that!the!official!figures!on!remittances!are!relatively!low!and!have!to!leave!out!
the!unknown!transfers!via!informal!channels!contributes!to!the!lack!of!interest!of!financial!
institutions! to! develop! special! products! for! migrant! populations,! because! the! size! of! the!
streams!involved!do!not!seem!to!be!very!attractive.!However,!only!services,!which!offer!an!
added! value! to! remittances,! might! be! able! to! get! a! larger! percentage! of! the! informal!
transmittances!out!into!the!open!and!channel!them!through!formal!institutions.!!

"
II.3"Comparison"of"prices"
!
Different! types! of! remittance! service! providers! charge! different! costs! across! the! services!
they! offer.! These! costs! depend! on! their! commercial! interest! in! the! remittance! sector,! the!
type!of!services!they!offer!and!the!network!they!can!tap!into.!As!recent!data!on!pricing!of!
remittances! for! the! three! types! of! RSPs! (MTOs,! banks,! alternative! service! providers)! is! not!
readily!available,!the!following!section!presents!an!upYtoYdate!overview!of!costs!related!to!
international!payments.!For!the!purpose!of!this!research,!data!has!been!retrieved!for!each!
corridor!at!the!four!biggest!MTOs!serving!the!Dutch!market!via!mystery!shopping.!The!data!
on!banks!and!alternative!service!providers!can!be!found!on!their!respective!websites.!!
!
II.3.1!Money!Transfer!Operators!
Below!an!overview!of!the!mystery!shopping!data!is!provided!for!each!corridor!under!study!at!
the!four!biggest!MTOs!serving!the!Dutch!market.!The!overview!provides!recent!data!on!fees!
for!the!three!most!common!transfer!amounts.!!

26"
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS!

The! customers! of! the! MTO! pay! for! the! services! through! a! fee! per! transaction! (some!
depending!on!the!size!of!the!amount)!and!for!additional!costs!that!are!incorporated!in!the!
exchange!rate.!MTOs!publish!this!information!online,!in!brochures!and!at!the!counter.!The!
applied!rate!and!the!exchange!rate!will!eventually!be!listed!on!the!transaction!form.!!
"
Ethiopia!(mystery!shopping!data!of!19!November!2013):!

MTO"

Fee"in"€"

For"a"payment"of"€"100,00"
MoneyGram!
10,50!
Western!Union!
17,00!
Moneytrans!
8,00!
SuriYChange!
5,00!
!
!
For"a"payment"of"€"250,00"
MoneyGram!
17,50!
Western!Union!
20,50!
Moneytrans!
8,00!
SuriYChange!
5,00!
!
!
For"a"payment"of"€"500,00"
MoneyGram!
28,00!
Western!Union!
32,50!
Moneytrans!
8,00!
SuriYChange!
5,00!
"
"
"
Ghana!(mystery!shopping!data!of!19!November!2013):!

MTO"
For"a"payment"of"€"100,00"
MoneyGram!
Western!Union!
Moneytrans!
SuriYChange!
!
For"a"payment"of"€"250,00"
MoneyGram!
Western!Union!
Moneytrans!
SuriYChange!
!
For"a"payment"of"€"500,00"
MoneyGram!
Western!Union!
Moneytrans!
SuriYChange!

Fee"in"€""
8,00!
6,90!
5,00!
5,00!
!
9,00!
14,90!
5,00!
5,00!
!
15,00!
19,90!
5,00!
5,00!!

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 27!
!
"
Nigeria!(mystery!shopping!data!of!19!November!2013):!

MTO"

Fee"in"€"

For"a"payment"of"€"100,00!
MoneyGram!
8,00!
Western!Union!
6,90!
Moneytrans!
5,00!
SuriYChange!
5,00!
!
!
For"a"payment"of"€"250,00!
MoneyGram!
9,00!
Western!Union!
14,90!
Moneytrans!
5,00!
SuriYChange!
5,00!
!
!
For"a"payment"of"€"500,00!
MoneyGram!
15,00!
Western!Union!
19,90!
Moneytrans!
5,00!
SuriYChange!
5,00!
"
"
"
"
"
Somalia!(mystery!shopping!data!of!19!November!2013):!

MTO"
For"a"payment"of"€"100,00!
MoneyGram!
Western!Union!
Moneytrans!
SuriYChange!
Kaah!Express!
!
For"a"payment"of"€"250,00!
MoneyGram!
Western!Union!
Moneytrans!
SuriYChange!
Kaah!Express!
!
For"a"payment"of"€"500,00!
MoneyGram!
Western!Union!
Moneytrans!
SuriYChange!
Kaah!Express!
!

Fee"in"€""
Not!possible!
6,90!
Not!possible!
5,00!
6,00!
!
Not!possible!
14,90!
Not!possible!
5,00!
12,50!
!
Not!possible!
19,90!
Not!possible!
5,00!
25,00!

28"
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS!

All! MTOs,! except! for! Western! Union,! maintain! one! exchange! rate! per! day.! Western! Union!
maintains!three!exchange!rates!per!day!(morning,!afternoon,!evening).!The!transaction!costs!
are!stated!on!the!MTOs’!websites.!The!exchange!rates,!however,!are!not!mentioned!on!all!
websites.! Concurrently,! when! MTOs’! request! fees,! these! are! made! public,! but! exchange!
rates! often! are! not.! When! making! the! transaction,! the! MTO! states! the! sum! that! the!
beneficiary!will!receive!on!the!deposit!receipt.!!
!
The!MTOs!offer!the!possibility!to!withdraw!the!money!in!a!different!currency!than!the!local!
currency!that!is!in!Euros!or!Dollars.!Due!to!regulations!there!is!a!special!situation!in!Ethiopia.!
The!money!that!is!to!be!withdrawn!is!first!converted!into!US!Dollars!in!The!Netherlands!and!
this!sum!is!stated!on!the!deposit!receipt.!In!Ethiopia!the!money!that!is!to!be!withdrawn!is!
then!converted!into!local!currency!(Birr).!
MTO(experience(with(reducing(fees(
The!effects!of!significant!fee!reductions!are!diverse.!Two!MTOs!have!reduced!their!start!fees!
by! nearly! half! in! the! past! ten! years,! which! has! led! to! an! increase! in! the! number! of!
remittances! made.! A! different! provider,! which! had! initiated! substantial! fee! reduction! as! a!
temporary! action,! only! witnessed! a! small! increase! in! the! number! of! remittance! transfers.!
What! was! noticeable,! however,! was! that! the! size! of! the! transfer! amount! increased! when!
fees!were!reduced.!A!fourth!provider!did!not!reduce!its!fees!last!year!at!all,!as!it!felt!that!the!
provider’s!margin!is!already!relatively!small.!Each!year!however!during!special!holidays,!such!
as!Christmas!or!religious!events,!special!fee!rates!are!offered!by!MTOs.!!
!
MTOs! indicated! that! lowering! fee! rates! have! advantages! and! disadvantages.! An! advantage!
would!be!the!shortYterm!commercial!benefits!it!could!bring!and!the!clear!advantage!it!has!
for! clients.! The! disadvantage! is! that! smaller! MTOs! will! not! be! able! to! survive,! which! will!
leave!a!group!of!traditionally!large!MTOs!to!serve!the!market.!These!will!most!likely!control!
the!market,!and!determine!the!fee!rates.!!
!
II.3.2!Banks!
!
In! cases! where! both,! sender! and! receiver! have! a! bank! account,! the! costs! of! international!
payments!through!banks!are!competitive.!The!basic!transfer!provision!for!payments!in!Euro!
outside!SEPA!(and!all!international!payments!in!other!currencies)!are!relatively!low:!

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 29!
!
"
Basic"transfer"provision"for"payments"in"Euro"outside"SEPA"

ABN"AMRO"

ING"Bank"

Rabobank"

0,1!%!of!the!transferred!
amount!minus!€!4,!with!a!
minimum!of!€!5,50!and!a!
maximum!of!€!55!

0,1!%!of!the!transferred!
amount,!with!a!minimum!of!
€!6!and!a!maximum!of!€!50!

€!10!(€!7!for!transfers!to!
Turkey,!Morocco,!Suriname,!
Curacao,!Sint!Maarten,!
Bonaire,!Sint!Eustatius,!Saba!
and!Aruba)!

!
!
However,!the!total!costs!also!include!the!costs!of!the!banking!services!at!the!receiving!end.!
Senders! can! choose! whether! sender! and! receiver! both! pay! their! bank! (“SHA”! for! “sharing!
the!costs”),!or!whether!the!sender!pays!all!transaction!costs!(including!the!costs!of!bank!in!
the!receiving!country!–!an!“OUR”!transaction),!which!is!probably!the!case!for!most!senders!
of! remittances.! For! a! “SHA”! transaction,! only! the! basic! transfer! provision! is! paid.! But! for!
“OUR”! transactions,! the! charges! can! differ! considerably! from! bank! to! bank,! and! from!
receiving!country!to!receiving!country.!
!
The! table! below! shows! the! “OUR”! costs! for! payments! to! different! African! countries! as!
indicated! on! the! websites! of! ABN! AMRO! and! ING! Bank.! The! Rabobank! does! not! charge! a!
fixed! sum,! but! instead! 0,1! %! of! the! transferred! amount! (with! a! minimum! of! €! 7,50),!
irrespective!of!the!destination!country!of!the!transfer.!For!most!remittances,!these!charges!
are!therefore!considerably!below!the!“OUR”!charges!of!the!other!two!banks.!The!Rabobank!
therefore!offers!the!most!advantageous!conditions!to!migrants.!
!
!
!
!
!
!
!
!
!
!
!
!

30"
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS!

“OUR”"costs"charged"by"ABN"AMRO"and"ING"Bank"

"

ABN"AMRO"

ING"Bank"

"

ABN"AMRO"

ING"Bank"

Angola"

€!12,50!

€!25,00!

Mauritius"

€!12,50!

€!15,00!

Botswana"

€!25,00!

Mozambique"

€!12,50!

€!25,00!

Burundi"

2,5!promille,!
min.!!!€!4,00!
max.!€!20,00!
€!12,50!

€!25,00!

Namibia"

Cameroun"

€!12,50!

€!50,00!

Nigeria"

3!promille,!min.!!!! €!15,00!
€!5,00!max.!€!
20,00!
€!12,50!
€!50,00!

Egypt"

3!promille,!min.!!!! €!15,00!
€!1,50!max.!€!
20,00!
7,5!promille,!
€!50,00!
max.!€!20,00!

Somalia"

€!12,50!

South"Africa"

Ghana"

€!12,50!

€!50,00!

Tanzania"

3!promille,!min.!!!! €!25,00!
€!5,00!max.!€!
50,00!
€!12,50!
€!25,00!

Ivory"Coast"

not!included!

€!25,00!

Tunesia"

Kenya"

€!10,00!

€!50,00!

Morocco"

1,5!promille,!
min.!!€!10,00!
max.!€!12,50!

€!!!9,00!

Ethiopia"

€!50,00!

€!25,00!

Uganda"

2,5!promille,!
min.!!!!€!3,50!
max.!€!12,00!
€!12,50!

Zambia"

€!12,50!

€!50,00!

€!50,00!

"

From:!http://www.ing.nl/zakelijk/betalen/internationaalYbetalingsverkeer/wereldbetaling/ourYopslag/index.aspx!!
(12!November!2013)!and!!https://www.abnamro.nl/nl/zakelijk/betalen/tarieven/buitenlandsY
betalingsverkeer.html"

!

!
The!Rabobank!also!offers!a!somewhat!more!advantageous!exchange!rate!than!the!other!two!
banks.! The! exchange! commission! is! the! third! cost! element! of! remittances! (beside! the!
transfer! provision! and! “OUR”! costs).! Normally,! the! receiving! bank! does! the! conversion! of!
payments!in!Euro!into!local!currency,!and!the!bank!of!the!sender!has!little!influence!on!the!
exchange!rates.!!!
!
The! Remittances! Price! Database! of! the! World! Bank! provides! a! detailed! comparison! of! the!
costs!for!a!number!of!corridors.!We!include!here!the!comparison!of!prices!for!transfers!to!
Ghana! and! Nigeria.! However,! this! comparison! does! not! take! the! “OUR”! costs! into! account!
and!thus!provides!a!somewhat!distorted!picture.!

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 31!
!
Ghana"(data"of"16"July"2013)36:""
Bank"

Fee"

ABN"AMRO"
ING"Bank"
Rabobank"

!!5,50!
!!6,00!
10,00!

ABN"AMRO"
ING"Bank"
Rabobank""

!!5,50!
!!6,00!
10,00!

Exchange"
Total"Cost"
Rate"Margin*" (%)"
(%)"
For"a"payment"of"€"140,00"
!
3,93!
!
4,39!
!
7,14!
For"a"payment"of"€"345,00"
0!
1,59!
0!
1,74!
0!
2,90!

Total"Cost"
(€)"

!

!!5,50!
!!6,01!
10,00!

!
!
!

!!5,49!
!!6,00!
10,00!

!
!
!

*No! “exchange! rate! margin”! is! given,! because! the! money! is! transferred! in! Euro,! and! the! receiving! bank! in! the!
receiving!country!does!the!exchange!into!local!currency.!Depending!on!the!banks!in!the!receiving!country,!it!can!
thus!vary.!By!not!including!information!on!the!exchange!rate!margins,!the!table!provides!a!more!positive!picture!
for!the!banks!than!might!be!justified.!

!
!
Nigeria"(data"of"16"July"2013)37:""
Bank"

Fee"

ABN"AMRO"
ING"Bank"
Rabobank"

!!5,50!
!!6,00!
not!included!!

ABN"AMRO"
ING"Bank"
Rabobank"

!!5,50!
!!6,00!
not!included!

Exchange"
Total"Cost"
Rate"Margin*" (%)"
(%)"
For"a"payment"of"€"140,00"
!
3,93!
!
4,29!
For"a"payment"of"€"345,00"
0!
1,59!
0!
1,74!

Total"Cost"
(€)"

"

!!5,50!
!!6,01!

!
!
!

!!5,49!
!!6,00!

!
!
!

*No! “exchange! rate! margin”! is! given,! because! the! money! is! transferred! in! Euro,! and! the! receiving! bank! in! the!
receiving!country!does!the!exchange!into!local!currency.!Depending!on!the!banks!in!the!receiving!country,!it!can!
thus!vary.!By!not!including!information!on!the!exchange!rate!margins,!the!table!provides!a!more!positive!picture!
for!the!banks!than!might!be!justified.!

!
!
The! data! provides! the! wrong! impression! that! the! Rabobank! is! the! most! expensive.! If! the!
different! “OUR”! costs! are! taken! into! account,! the! Rabobank! is! on! the! contrary! the! most!
advantageous.!
!
The!prices!of!banks!as!indicated!in!the!World!Bank!comparison!cannot!easily!be!compared!
with! those! by! the! MTOs.! ! While! the! MTOs! indicate! the! exchange! rate,! the! information! on!
banks! shows! a! zero! conversion! rate,! because! they! send! the! money! denominated! in! Euros.!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
36

!http://remittanceprices.worldbank.org/en/corridor/Netherlands/Ghana?order=field_coverage&sort=asc#tabY1!
!http://remittanceprices.worldbank.org/en/corridor/Netherlands/Nigeria!

37

32"
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS!

The!money!still!has!to!be!converted!into!the!local!currency!of!the!receiving!country.!This!is!
done!by!the!receiving!bank!and!adds!to!the!total!costs!of!the!transaction,!not!included!in!this!
comparison.! This! shows! that! even! the! international! efforts! to! compare! the! prices! of!
different! RSPs! have! not! contributed! to! more! transparency! and! often! can! be! outright!
misleading.!
!
II.3.3!Alternative!service!providers!
!
Based! on! an! Internet! search! of! online! service! providers,! the! following! average! fees! for!
alternative!RSPs!could!be!collected:(
"
Comparison"of"average"fees"of"innovative"RSPs""

Remittance"Service"Provider"

Average"Fee"in"€""

!

!

For"a"payment"of"€"250,00"
WorldRemit*!

9,99!

Azimo*!(only!from!UK,!Germany,!Ireland)!

5,98!!

Transferwise!**!

1,24!

Xoom!(only!from!US)!

3,68!

Remitly!(only!from!US!to!Philippines)!

Basic!service!(3!days)!:!free!
Express!service!(immediate)!:!!
3,09!–!3,68!
!

!
For"a"payment"of"€"500,00"
WorldRemit*!

12,99!

Azimo*!(only!from!UK,!Germany,!Ireland)!

5,98!

Transferwise!**!

2,49!

Xoom!(only!from!US)!

3,68!

Remitly!(only!from!US!to!Philippines)!

Basic!service!(3!days)!:!free!
Express!service!(immediate)!:!
3,09!–!3,68!

*!need!bank!account!to!send!money!
**!only!bank!to!bank!!
!
!
While! often! propagated! as! solutions! to! traditional! payment! services,! these! alternative!
remittance!service!providers!at!first!glance!do!have!some!essential!limitations.!While!overall!
costs!for!financial!transactions!are!considerably!lower!than!for!example!the!fees!requested!
by! MTOs,! the! necessity! for! the! sender! to! have! a! bank! account! for! three! out! of! five!

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 33!
!
alternative!providers!might!limit!its!use!by!certain!migration!populations!with!a!preference!
to!cashYbased!transaction.!!
!
In! addition,! the! corridorYspecific! services! that! are! offered! at! the! moment! (services! offered!
only!in!specific!sending!countries)!poses!limitations!to!the!potential!use!for!migrants!beyond!
its! current! reach.! However,! as! such! technologies! do! not! require! the! presence! of! a! vast!
network! of! physical! locations,! the! expansion! of! their! services! might! pose! less! initial!
investment! and! different! regulatory! challenges.! Currently,! the! services! of! WorldRemit! and!
Transferwise! are! the! only! two! available! options! presented! in! this! list! for! remitters!
transferring! funds! from! the! Netherlands.! Especially! for! US! based! alternative! service!
providers,! the! regulatory! framework! determining! international! payments! from! European!
countries! are! unclear! and! could! pose! as! a! barrier! to! new! players. 38 !In! part! IV,! more!
information!is!provided!on!the!type!of!providers!and!services!on!offer.!
!
Comparing(prices39(
An! interesting! development! over! the! past! years! is! the! rise! of! national! price! comparison!
websites! that! allow! for! more! transparency! regarding! remittance! costs! across! different!
corridors.! The! World! Bank! offers! a! remittance! price! comparison! website,! which! provides!
data! on! the! cost! of! sending! and! receiving! small! amounts! of! money! from! one! country! to!
another.40!Their! site! covers! 220! country! corridors! worldwide,! from! 32! remittance! sending!
countries! to! 89! receiving! countries.! It! offers! a! picture! of! general! trends,! and! collects! data!
through! mysteryYshopping! (until! recently! every! 6! months)! for! each! corridor! available! on!
their! website.! While! relevant! for! understanding! global! trends,! these! prices! are! not! upYtoY
date.! Therefore,! countries! have! developed! their! own! priceYcomparison! sites! to! offer!
migrants!transparency!over!the!remittance!market.!
(
The! argumentation! behind! the! websites! is! that! they! not! only! provide! a! more! transparent!
overview!of!remittance!services!across!the!largest!corridors,!they!also!serve!the!purpose!of!
stimulating!competitive!pricing!across!RSPs.!The!industry!prices!are!exposed!out!in!the!open!
and! thus! allow! consumers! to! choose! the! most! favourable! rating.! This! in! turn! should! bring!
down! prices! for! those! offering! higher! deals.! According! to! the! Italian! Ministry! of! Foreign!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
38

!Information!gathered!from!discussions!with!alternative!service!providers!at!the!GMTS!and!through!interviews.!
!For!an!overview!of!the!different!price!comparison!websites!and!their!characteristics!refer!to!the!final!report!
presented!by!Isaacs!et!al!(2012)!page!38.!!
40
!http://remittanceprices.worldbank.org/en!
39

34"
!

REMITTANCES"MARKET"IN"THE"NETHERLANDS!

Affairs,! remittance! prices! in! Italy! have! halved! since! the! launch! of! their! website!
www.mandasoldiacasa.it.41!Yet!in!other!countries!the!success!rate!of!the!websites!is!not!as!
clearYcut.!!
!
Until!recently,!the!Dutch!market!was!served!by!the!website!www.geldnaarhuis.nl.!The!Dutch!
site! offered! an! overview! of! remittance! prices! across! 34! corridors,! offered! by! eight! service!
providers,!namely:!ABN!AMRO,!DHB,!ING,!MoneyGram,!Rabobank,!SNS!Bank,!Western!Union!
and!Chaabi!Bank.!The!site!also!offered!an!overview!of!the!exchange!rates.!As!an!exception!to!
other! European! price! comparison! websites,! geldnaarhuis.nl! offered! the! site! in! 5! different!
languages! (including! Dutch,! English,! Portuguese,! French,! and! Arabic).! The! site! averaged!
monthly!hits!of!8.900!visitors,!totalling!89.771!visitors!from!August!2012!to!May!2013.42!!
!
It!is!important!to!note!the!manner!in!which!the!average!prices!for!countries!are!recorded.!
These! might! not! necessarily! be! representative,! because! the! prices! given! are! not! based! on!
weighted! averages.! The! World! Bank! does! not! include! market! share,! or! average! size! of!
amount!sent!per!corridor!as!a!variable.!While!understandable!from!the!perspective!of!bulk!
data!collection,!it!does!give!a!somewhat!distorted!picture!of!the!actual!setting.!!
!
Let!us!take!the!example!of!the!corridor!between!Ghana!and!the!Netherlands.!According!to!
the! World! Banks! site,! the! average! cost! is! 8,37%! over! a! sum! of! €140.! This! average! is! taken!
from! all! services! on! offer! for! that! specific! corridor.! The! relatively! low! cost! is! thus! also!
influenced! by! the! low! percentage! offered! by! banking! services,! or! the! services! offered! by!
innovative! players! such! as! Skrill! (at! 0,3%).! While,! from! interviews! with! Ghanaian! migrant!
representatives,! Ghanaians! appear! to! prefer!Unity! Monetary! Services! due! to! their! corridor!
specific!services,!rating!at!an!average!of!10,37%.!Actually,!banks!are!reported!the!least!used!
when! transferring! remittances! to! family! and! friends! in! Ghana.! Therefore! their! low!
percentage! over! remittance! costs! technically! should! not! weigh! as! much! as,! say! Unity!
Monetary!services,!which!appears!to!have!a!large!market!share!over!the!corridor!at!a!higher!
rate.!!
!
(
(
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
41

!EU!Technical!Workshop!on!Reducing!the!cost!of!Remittances,!15!November!2013!
!Maastricht!University!has!conducted!a!midYterm!evaluation!study!of!the!price!comparison!website!
geldnaarhuis.nl.!At!the!time!of!research!the!website!was!offline!due!to!the!foreclosure!of!IntEnt.!

42

REMITTANCES"MARKET"IN"THE"NETHERLANDS" 35!
!
Price(difference(across(corridors(
Prices!per!corridor!differ!considerably!as!the!costs!are!influenced!by!contextYrelated!factors!
such!as!the!receiving!and!sending!country’s!regulatory!environment,!financial!infrastructure,!
and!size!of!its!migrant’s!population,!to!name!some.!From!surveys!and!interviews!of!RSPs!in!
key!migrant!destination!countries!(France,!the!UK!and!the!US),!Mohapatra!and!Ratha!(2011)!
were!able!to!reveal!three!key!factors!that!determine!the!high!costs!of!transferring!money!to!
Africa:!(i)!lack!of!access!to!formal!financial!services!and!required!identification,!(ii)!exclusive!
partnerships,! and! (iii)! regulations! related! to! antiYmoney! laundering! and! combating! the!
financing! of! terrorism! (AML/CFT). 43 !The! following! page! offers! an! overview! of! the! four!
receiving!countries!of!the!corridors!under!study!and!their!approach!to!the!three!key!factors!
as!set!forth!above.!(
Surprisingly,! we! have! seen! that! the! Asian! remittance! corridors! have! actually! managed! to!
arrange! the! lowest! remittanceYrelated! costs! globally! by! addressing! some! of! these! factors!
headYon.! UNCTAD! (2012)! reports! that! the! proYactive! institutional! arrangements! by! Asia’s!
Least! Development! Countries! (LDCs)! have! lead! to! the! reduction! of! overall! costs! across! the!
continent.! Some! of! the! factors! that! have! been! attributed! to! reducing! these! costs! in! Asian!
markets!are:!!(i)!a!large!number!(higher!than!average)!of!RSPs!per!sending!country;!(ii)!lower!
average! exchange! rate! margin! costs;! (iii)! major! MTOs! face! greater! competition! due! to! the!
absence! of! exclusivity! agreements;! and,! (iv)! proliferation! of! new! technology! (i.e! mobile!
phone!transfers!and!debit!cards).!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
43

!Tightened!regulations!after!9/11!have!made!it!more!difficult!for!smaller!RSPs!to!access!banking!and!settlement!
facilities!for!the!transfer!of!remittances!to!Africa.!And,!as!mainstream!banks!appear!wary!to!engage!in!the!
remittance!business,!the!range!of!remittance!services!provided!remains!small!for!the!African!market.!(Mohapatra!
and!Ratha,!2011:!29Y31)!

REMITTANCES#MARKET#IN#THE#NETHERLANDS!

-

-

-

-

-

-

-

-

-

Selected!means!of!identification!
forms!accepted!(yet!not!all!citizens!
have!ID)!
!
Community!contacts!and!clanObased!
system!used!as!mode!of!
identification!

Lack!of!financial!infrastructure!
Hawala!system!dominates!
economy!

Selected!means!of!identification!
forms!accepted!(yet!not!all!citizens!
have!ID)!

National!ID!is!required!in!all!cases!

Identification#requirement#

innovations!taking!place!in!
mobile!banking!!
strong!informal!sector!
little!regulatory!oversight!

low!level!of!developed!financial!
sector!(i.e.!lack!of!access!to!
clearing!and!settlement!
systems)!
strong!informal!sector!

strongly!developed!financial!
sector!
limited!penetration!of!new!
technology!
large!portion!of!remittances!
through!informal!sector!
capital!requirement!for!RSPs!is!
entry!barrier!

Financial#infrastructure#

O!

Exclusivity!agreements!are!outlawed!
but!‘oligopolistic’!remittance!
industry!to!date!

Exclusivity!agreements!are!outlawed!
but!strong!partnership!networks!
remain!

strong!partnerships!of!a!few!MTOs!!

Exclusivity#agreements#

Source:!drawn!from!Mohapatra!and!Ratha!(2011),!and!interviews!with!embassy!representatives!for!Somalia!and!Ghana!

Somalia#

Nigeria#

Ethiopia#

Ghana#

#

Overview#of#four#key#factors#determining#costs#of#remittances#to#Ghana,#Ethiopia,#Nigeria#and#Somalia#

36#
!

AML!requirements!limit!
currency!exchange!holding!

No!major!challenges!for!the!
business!

Somali!corridor!flagged!as!high!risk!
due!to!lack!of!regulatory!oversight.!

Nigerian!corridor!flagged!as!high!risk!
due!to!limited!oversight.!

Strict!foreign!exchange!regulations!
due!to!foreign!exchange!shortages!

-

-

AML/CFT#requirements#

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 37!
!

II.4*

Regulatory*framework*

!
The! regulatory! framework! overseeing! remittance! service! providers! in! the! Netherlands! is!
perceived!as!advanced!by!industry!players!and!central!banks!across!Europe!in!comparison!to!
other! European! countries. 44 !Early! cases! of! misconduct! in! the! international! remittance!
industry!lead!Dutch!regulatory!bodies!to!develop!a!system!of!oversight!that!outpaced!many!
other! countries! in! the! European! Union.! When! the! Payment! Services! Directive! was!
introduced!in!2009,!it!became!clear!that!the!Dutch!market!was!already!well!organized!and!
for!a!great!deal!in!line!with!the!newly!introduced!European!regulations.45!(DNB!interview!7!
October!2013,!Ministry!of!Finance!interview!1!November!2013)!
!
International!and!domestic!laws!and!directives!such!as!the!Payment!Services!Directive!and!
Money! Laundering! Directive! at! European! level,! and! the! Financial! Supervision! Act! in! the!
Netherlands!influence!regulations!of!the!remittance!industry.!The!Financial!Supervision!Act!
(Wet!op!het!financieel!toezicht!–!Wft)!adopted!in!2007!defines!the!rules!and!regulations!for!
the! financial! markets! and! the! corresponding! overseeing! bodies.! The! responsibility! for!
oversight! is! divided! between! two! institutions:! the! primary! supervision! for! payment!
institutions! falls! under! the! guidance! of! the! Dutch! Central! Bank,! De! Nederlandsche! Bank!
(DNB);!and!the!business!supervision!(gedragstoezicht)!falls!under!the!workings!of!the!AFM!
(Authority!Financial!Markets).!Payment!institutions!report!back!to!DNB!and!all!AML!control!
is!executed!by!DNB.!
!
The!AFM!takes!on!a!riskYbased!approach,!and!has!prioritized!those!areas!that!it!perceives!are!
posing!the!biggest!threat.!This!implies!that!AFM!monitors!market!development!and!analyses!
risks!constantly!in!order!to!prioritize!their!supervisory!roles.!Such!an!approach!is!required!as!
the!AFM!indicates!that!it!is!not!feasible!nor!economically!viable!to!execute!oversight!on!all!
areas.! At! this! moment,! no! indicative! risks! have! been! identified! for! remittances! services!
providers,!and!no!relevant!complaints!have!reached!the!AFM!of!the!sector.!!
!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
44

!Both!at!the!Global!Money!Transfer!Summit!in!London!(October!2013)!and!during!the!EU!DEVCO!meeting!in!
Brussels!with!EU!representatives!of!the!remittance!industry,!the!Netherlands!was!brought!forward!as!having!a!
solid!regulatory!environment!that!met!the!PSD!criteria!at!an!early!stage.!During!discussions!at!the!Dutch!Ministry!
of!Finance!such!sentiments!were!confirmed.!!!
45
!Changes!in!the!regulatory!framework!followed!the!realization!that!fx!bureaus!had!to!then,!1995,!little!oversight!
over!its!services,!which!arguably!eased!money!laundering!practices.!After!9/11!the!Dutch!government!argued!
that!remittance!service!providers!could!have!facilitated!such!terrorist!activities,!and!therefore!argued!in!favour!of!
tightening!regulations.!More!information!on!the!development!of!the!legislation,!refer!to!
https://zoek.officielebekendmakingen.nl/kstY28229Y3.pdf!(Dutch!version).!!

38*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

!
European1regulations1
European! regulations! such! as! the! Payment* Services* Directive! and! the! Money* Laundering*
Directive! influence! the! Dutch! regulatory! framework! for! a! great! deal.! The! PSD! was!
introduced!in!2009!to!guarantee!fair!and!open!access!to!payments!markets!and!to!increase!
consumer!protection!across!Europe.46!It!aimed!to!create!a!single!market!in!payment!services!
through! harmonization! of! rules,! i.e.! by! introducing! ‘passporting’! as! a! means! to! encourage!
greater! competition,! greater! choice! for! consumers,! and! lower! prices! of! services! on! offer!
because!of!that.!!!
!
The!remittance!industry!is!influenced!by!the!introduction!of!the!PSD!in,!but!not!limited!to,!
three!core!areas:!
-

it! allows! companies! other! than! banks! (e.g.! money! remitters,! retailers! and! phone!
companies)! to! provide! payment! services.! A! new! category! of! payment! service!
providers!was!introduced:!Payment!Institutions.!

-

it!obliges!payment!service!providers!to!process!payments!within!limited!timeframes,!
and!to!ensure!the!recipient!has!immediate!access!to!the!funds.!

-

it!increases!clarity!over!services!as!RSPs!are!obliged!to!offer!transparency!over!the!
services! provided! with! detailed! terms! and! conditions,! this! includes! transparency!
over!processing!time,!spending!limits,!charges!and!refund!rights.!

!
The! PSD! has! the! objective! to! ensure! the! same! rules! apply! across! 30! European! countries!
(including!the!EU,!Iceland,!Norway!and!Liechtenstein).!In!practice,!each!country!has!the!right!
to! interpret! the! directive! autonomously! within! the! framework.! This! has! influenced! the!
practical! implementation! of! the! directive! across! borders! and! has! limited! the! harmonizing!
effect! to! a! certain! extent.! From! the! perspective! of! MTOs! for! example,! the! Netherlands!
maintains!one!of!the!strictest!interpretation!of!the!PSD!across!Europe,!and!adhering!to!the!
requirements! of! the! directive! is! reported! as! costly! in! comparison! to! other! countries! (from!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
46

!For!more!information!on!the!PSD!and!SEPA,!refer!to!
http://ec.europa.eu/internal_market/payments/framework/index_en.htm.!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 39!
!
interviews!with!MTOs).47!The!scheme!below!offers!a!SWOT!analysis!of!the!European!market!
under!the!PSD,!which!provides!an!overview!of!the!impact!the!PSD!has!had!on!the!business!of!
RSPs.!!
!
*
SWOT*analysis*of*MTO*perspective*of*the*European*market*under*the*PSD*
Strengths:*

Weaknesses:*

-

harmonized!legal!status!for!all!
MTOs!

-

enhanced!management!and!
internal!controls!for!all!PIs!

-

more!secured!IT!infrastructure!!

-

additional!prudential!requirements!and!
costs!associated!to!PSD!status!

!

Opportunities:*

Threats:*

-

eased!integration!between!
different!companies!belonging!to!a!
same!Group!

-

lack!of!harmonization!in!practice!and!
asymmetric!supervision!across!the!EU!
(creating!“unfair!competition”)!

-

facilitated!access!to!new!territories!
using!a!European!passport!

-

-

possibility!to!offer!new!
complementary!payment!services!!

own!lecture!made!by!the!Banks!of!the!
PSD!requirements,!leading!to!additional!
regulatory!requirements!and!hence!
increasing!the!differences!across!the!EU!

Figure1is1drawn1from1the1Moneytrans1presentation1at1the1GMTS120131in1London.11
!
!
Currently!the!PSD!is!under!revision,!and!the!PSD2!is!expected!to!take!hold!in!2014!under!the!
Greek!presidency!of!the!European!Union.!Some!changes!will!be!made!to!the!Directive!that!
will! influence! the! remittance! industry! considerably.48!To! name! some! of! the! expected! and!
relevant!changes:!!
!
(i)

transparency! and! information! requirements! will! also! apply! to! corridors! with!
countries! outside! of! the! EU,! the! soYcalled! oneYleg! transactions.! This! will! be! of!
interest! to! the! corridors! with! receiving! countries! in! Sub! Sahara! Africa! that!
receive!special!interest!in!this!report.!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
47

th

!The!European!Commission’s!proposal,!dated!24 !July!2013,!for!a!revised!Directive!2007/64/EC!on!Payment!
Services!(“the!PSD2”)!incorporates!an!increased!degree!of!harmonization!because!of!the!incorporated!reduction!
of!options!for!individual!Member!States.!
48
!For!a!full!overview!of!main!proposed!changes,!refer!to!London!Economics’!Study1on1the1impact1of1Directive1
2007/64/EC1on1Payment1Services1in1the1Internal1Market1and1on1the1application1of1Regulation1(EC)1NO1924/20091
on1crossRborder1payments1in1the1Community’!for!EC!DG!Internal!Market!

40*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!
(ii)

transparency! will! have! to! be! provided! over! all1 currencies! (and! not! just! EU!
currencies).!This!could!lead!to!fewer!fluctuations!in!foreign!exchange!rates!and!
potential!hidden!costs.!!

(iii)

to! limit! the! number! of! companies! that! split! their! services! over! several! smaller!
companies!to!avoid!regulations,!the!threshold!for!small!payment!institutions!will!
be!changed!from!€3!to!€1!million!per!month.!This!will!level!out!competition!and!
limit!‘cowboys’!in!the!industry.!

!
At! the! same! time,! the! Money! Laundering! Directive! is! up! for! revision,! and! the! MLD4!
implementation! is! expected! to! take! place! in! 2015.! According! to! the! Electronic! Money!
Association! (EMA),! creditYinstitutions,! payment! institutions! and! eYmoney! issuers! may! face!
more! difficulties! if! the! new! MLD! is! introduced! in! its! proposed! form.! As! it! stands! now,! the!
MLD3!allows!for!a!simplified!customer!due!diligence!regime!for!lowYvalue!transactions.!This!
means! for! all! electronic! payments! that! no! upfront! identification! is! required! for! customers!
that!transact!less!than!total!of!€2.500!transfers!a!year,!and!cashYout!that!is!limited!to!€1.000!
a!year.!This!allows!for!the!industry!to!offer!services!with!a!low!threshold!to!their!customers.!
However,! in! the! new! MLD! this! simplified! regime! is! deleted! and! therefore! requires! full!
customer!identification!upfront,!regardless!of!the!transaction!or!turnover!amount.!
!
According! to! EMA,! this! could! mean! that! it! hampers! all! low! value! payment! transactions! in!
Europe! in! the! area! of! eYmoney! services! and! electronic! remittances.! The! proposed!
elimination!of!simplified!due!diligence!does!not!take!into!account!that!the!electronic!forms!
of!payment!are!being!audited!and!could!be!used!to!monitor!and!combat!fraud!if!it!occurs.!
This! could! offer! authorities! the! opportunity! to! alternatively! track! the! responsible! culprit!
when! suspicious! activities! have! been! reported.! The! cash! auditYtrail! of! cashYbased! service!
providers! for! example! could! be! perceived! as! more! limited! in! oversight! opportunities! and!
perhaps! even! more! sensitive! to! fraud.! In! addition! electronic! money! issuers! may! apply!
further! contextYbased! information! of! their! customers! to! safeguard! and! monitor! the!
transactions.!!!
!
The! tendency! towards! stricter! controls! seem! to! derive! from! a! realization! that! there! is! a!
minority! of! small! businesses! deliberately! nonYcomplying! leading! to! (in! the! UK)! 2! billion!
pounds!to!be!laundered!through!the!sector!annually.!(National!Crime!Agency!UK)!Therefore!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 41!
!
regulators!and!their!executing!bodies!take!on!a!riskYbased!approach!that!seems!to!respond!
to!a!somewhat!damaged!reputation!of!the!remittance!industry!because!of!“a!few!cowboys!
who!are!ruining!the!business!for!us!all”,!as!a!speaker!at!the!Global!Money!Transfer!Summit!
in! London! described! it.! The! EMA! for! example! argues! that! in! its! own! monitoring! and! its!
contacts! with! the! local! FIUs! in! Europe,! it! finds! only! anecdotal! evidence! of! fraud! in! this!
industry,!but!not!the!systematic!structural!frauds!that!the!regulators!seem!to!fear.49!!

*

*

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
49

!The!Electronic!Money!Association!(EMA)!is!a!European!Trade!Body!for!electronic!money!issuers!and!payment!
institutions.!It!represents!40!players!and!was!set!up!when!the!electronic!money!directive!was!introduced!in!2001!
in!Europe.!Information!from!EMA!gathered!from!interview!with!Dutch!representative!on!18!November!2013.!

42*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

III.*Migrants’*preferences*
!
Ghanaians,!Nigerians,!Somalis!and!Ethiopians,!are!the!largest!African!migrant!populations!in!
the! Netherlands,! after! Moroccans.! Remittances! represent! the! most! widespread! and!
important!migrant!economic!activity.!These!international!payments!are!a!key!component!of!
the!migrant!lifestyle!and!reality.!Nonetheless,!the!percentage!of!migrants!who!remit!varies!
by!region.!In!Western!industrialized!nations,!almost!70%!of!migrants!remit.!(Orozco,!2013)!In!
the!following!paragraphs!the!frequency!of!transfers,!amounts!sent,!receivers!of!remittances,!
preferences! for! remittances! channels! and! needs! for! additional! financial! products! will! be!
analysed!for!the!Dutch!context.!!!!!
!

III.1*Frequency*of*transfers*
!
In!the!Netherlands,!a!relevant!distinction!can!be!made!between!first!and!secondYgeneration!
migrants!when!analysing!the!frequency!of!remittance!transfers.!Irrespective!of!the!country!
of! origin,! the! first! generation! migrants! have! strong! ties! with! and! feel! responsible! for! their!
families!in!their!homeland.!Arguably,!they!send!money!out!of!a!moral!obligation.!They!send!
money!frequently,!if!possible!on!a!monthly!basis!to!cover!basic!(consumption)!needs!of!the!
receivers!(Migrant!Organizations,!interviews!Oct/Nov/Dec!2013!and!Ghana!focus!group,!Dec!
2013).!!
!
This! bears! resemblance! with! the! remittance! behaviour! of! Nigerians! in! the! U.S.A,! and!
Ghanaians! in! the! U.K.! and! Germany:! they! send! money! 13! times! a! year! (Orozco,! Migrants!
Remittances!and!Development,!2013).!
!
In!general,!second!generation!migrants!do!not!feel!as!responsible!for!the!family!members!in!
their! countries! of! origin.! They! are! integrated! in! the! Dutch! community! and! either! send! on!
special! occasions,! like! holidays,! or! do! not! send! money! at! all! to! their! family! (IntEnt! Maroc.!
Interview,! Oct! 2013).! The! second! and! third! generation! migrants! in! the! Netherlands! do! not!
share! the! interest! of! the! first! generation! in! sending! ‘common’! individual! remittances,Y!
referring!to!the!remittances!used!for!immediate!use!sent!on!a!monthly!basis.!Rather,!they!
send!money!occasionally!for!the!purpose!of!supporting!social!projects,!entrepreneurship!or!
investments.! In! general,! they! seem! to! disagree! with! the! concept! of! regular! remittances! as!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 43!
!
they!feel!it!increases!dependence!and!creates!unwarranted!expectations!(HIRDA,!interview,!
Oct!2013).50!!
!
Undocumented! migrants! tend! to! send! money! more! frequently! than! the! ones! with! a! legal!
status,! because! of! the! risk! of! being! caught! by! the! police! and! sent! back! to! their! country! of!
origin,! without! being! able! to! access! their! money! in! the! Netherlands! (Goodwill! Homage!
Foundation,!interview,!Nov!2013).!!
*

III.2*Amounts*sent*
!
Most!remitters!send!money!on!a!monthly!basis,!the!amount!sent!depends!on!their!monthly!
income.! (from! interviews! with! migrant! organizations! and! focus! group! discussions)! Senders!
with!a!high!education!in!general!have!a!higher!income!and!do!send!more!than!the!ones!with!
lower!education!levels.!The!financial!situation!of!the!remitter!is!thus!crucial!to!the!amount!
that! is! transferred.! Not! only! the! income! level! determines! the! amount! sent,! but! their!
financial!stability!is!crucial!as!well.!It!is!argued!that!the!longer!a!migrant!has!been!established!
in!the!Netherlands,!the!greater!the!chance!that!he/she!is!in!a!stable!financial!situation!and!is!
able! to! send! more! than! the! newcomers! (Ghanaian! migrant,! interview,! Nov! 2013).! This!
statement! is! confirmed! by! Orozco! (2013)! for! Ghana! and! Nigeria:! “Amounts! sent,! increase!
over!time,!while!the!frequency!of!sending!continue!apaceY!in!contrast!with!other!corridors”.!!
!
Next!to!the!income!level!and!the!financial!stability!of!the!migrant,!a!third!factor!reported!to!
contribute!to!the!level!of!the!amount!sent!is!the!ties!with!the!family!in!the!country!of!origin.!
Orozco! states! in! “Migrant! Remittances! and! Development! in! the! Global! Economy”! that!
Ghanaians! and! Nigerians! send! primarily! to! their! parents,! and! secondarily! to! children.!
Ghanaian!migrants!send!15%!of!their!income!to!relatives.!Ghanaians!tend!to!remit!more!the!
longer! they! stay! abroad! (Orozco,! 2013).! ! According! to! Orozco! as! of! 2007! Ghanaians! in! the!
Netherlands!sent!on!average!$340!on!a!regular!basis.!He!states!that!Nigerian!and!Ghanaian!
remittance!senders!are!wellYeducated.!
!!!
From!discussions!with!members!of!migrant!communities,!it!appears!that!women!are!more!
likely! to! send! money! than! men,! even! though! men! in! general! have! a! higher! income! than!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
50

!For!more!detailed!information!on!the!interest!of!second!generation!migrants!in!supporting!their!countries!of!
origin,!refer!to!the!report!published!by!HIRDA!foundation!on!Engaging1youth1migrants1and1second1generation1
Somali1in1the1Development1of1Somalia!(2012).!!

44*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

women.!In!the!case!of!illegal!employment!of!migrant!men!and!women!however,!it!appears!
that! women! have! easier! access! to! illegal! jobs! and! will! therefore! have! higher! earnings! and!
thus!be!able!to!send!more!money!home!(Vital!Aid!Foundation).!!
!
According!to!an!MTO,!fee!rates!are!experienced!as!‘high’!because!clients!transfer!generally!
small!sums!of!money,!which!make!the!transaction!fee!a!large!portion!of!the!total!sum.!This!is!
why!clients!are!sometimes!advised!to!wait!with!their!transaction!until!the!transaction!sum!
has!increased.51!!In!the!case!of!migrants!that!are!sending!money!for!business!purposes,!the!
amounts!are!larger!than!the!remittances!intended!for!consumption.!!
!

III.3*Receivers*of*remittances*in*country*of*origin*
!
Globally,! over! 40! percent! of! remittance! recipients! reside! in! rural! areas! (IFAD! 2009,10).!!
Remittance!recipients!have!an!almost!26!percent!higher!median!income!than!nonYrecipients!
and!reportedly!they!save!twice!as!much!as!nonYrecipients.!Remittance!recipients!have!more!
years!of!schooling!on!average,!with!the!majority!of!recipients!having!at!least!a!high!school!
education.! Recipients! are! more! likely! to! have! more! savings! and! are! more! likely! to! have! a!
relationship! with! a! financial! institution.! One! indicator! of! the! demand! among! clients! for!
crossYselling!of!other!financial!services!is!the!current!use!of!loan!products.!(IFAD,!2009)!
!
Factors!likely!to!increase!the!level!of!remittances!include!the!amount!of!savings,!the!number!
of!people!in!the!household,!and!ownership!of!a!bank!checking!account.!Variables!that!tend!
to!decrease!remittance!levels!are!the!holding!of!an!extra!job,!ownership!of!a!debit!card!or!a!
credit!card!and!the!desire!to!migrate.!(IFAD,!2009)!
1
For!the!corridors!under!study,!many!receivers!depend!on!remittances!to!pay!their!bills!and!
to!buy!daily!necessities.!In!most!of!the!cases!the!receivers!are!close!relatives!of!the!remitters.!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
51

!Paul!Collier!offers!in!his!recent!book!“Exodus”!(2013,!156)!a!reason!why!migrants!are!not!easily!convinced!to!
follow!this!advice:!…”migrants!who!wish!to!honor!their!commitment!may!wish!regularly!to!signal!to!their!family!
back!home!that!they!are!doing!their!best.!This!may!explain!one!of!the!current!paradoxes!in!the!analysis!of!
remittances,!namely!that!migrants!typically!choose!to!make!small!regular!payments!home.!From!the!naïve!
economic!perspective,!small!and!regular!is!stupid.!The!transaction!costs!of!making!remittances!include!a!fixed!
charge!that!heavily!penalizes!small!transfers.!It!would!be!much!cheaper!for!the!migrant!to!accumulate!cash!and!
occasionally!send!a!single!large!payment.!The!only!big!winner!from!the!prevailing!pattern!of!smallYandYfrequent!
appears!to!be!the!wire!agency!Western!Union.!But!one!unexplored!explanation!for!such!behavior!is!that!small!
and!frequent!installments!signal!to!the!family!back!home!that!they!are!not!forgotten.!They!give!the!appearance!
that!the!migrant!is!constantly!struggling!to!put!together!something!to!send!back.!In!contrast,!were!the!family!to!
receive!only!infrequent!large!amounts!(albeit!with!the!same!total),!the!behavior!could!be!misinterpreted!as!
indicating!that!the!migrant!had!done!very!well!but!was!only!fitfully!remembering!his!obligations.”!!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 45!
!
Most! of! the! times! the! money! will! be! collected! by! a! male! person.! One! attribute! that!
distinguishes! the! senderYreceiver! relationship! among! Nigerians! from! that! of! Ghanaians! is!
gender.! Unsurprisingly,! 57%! of! Ghanaian! recipients! are! female.! While! the! majority! of!
senders! within! both! groups! are! male,! over! 70%! of! Nigerian! recipients! are! male.! Education!
levels!of!Nigerian!recipients!are!surprisingly!high,!with!43%!of!all!recipients!indicating!they!
have!a!college!degree!(Orozco,!2013).!The!Ghanaian!focus!group!participants!(Amsterdam,!
November! 2013)! gave! as! one! of! the! purposes! of! the! money! sent! to! be! education,! besides!
basic! necessities! of! life! and! health! care.! They! stated! that! it! is! very! common! for! parents! to!
leave! their! children! in! Ghana,! because! they! noticed! that! the! youth! in! Ghana! has! a! higher!
education!than!the!Ghanaian!youngsters!in!the!Netherlands.!!
!
A! recent! study! commissioned! by! the! Food! and! Agriculture! Organization’s! (FAO’s)! Food!
Security!and!Nutrition!Analysis!Unit!for!Somalia!(FSNAU)!found!that!oneYthird!of!remittance!
recipients!in!Somaliland!and!Puntland!would!be!unable!to!afford!food,!medicine!and!school!
fees!without!their!remittances.!The!same!study!found!that!households!receiving!remittances!
are! more! likely! to! support! poorer! families! (75! percent)! than! households! not! receiving!
remittances!(54!percent).!!
!
It!is!difficult!to!convince!the!beneficiaries!to!make!different!use!of!their!remittances;!such!as!
for!savings,!investments!or!added!value!services.!This!is!mostly!because!of!the!dire!necessity!
of! the! funds! for! immediate! use.! But! also! because! of! a! lack! of! value! added! services,! like!
possibilities!to!save!or!invest,!offered!by!the!service!providers!(HIRDA,!interview!Oct!2013).!
Remittances!are!sent!to!allow!the!receivers!to!meet!their!livelihoods,!pay!hospital!bills!when!
they! are! sick,! and! allow! children! to! attend! school.! “That! money! is! not! money! for!
development”!(Recogin,!interview!October!2013).!!
!
In! Somalia,! remittances! are! an! important! source! of! revenue! for! women.! The! IFAD! survey!
found! that! more! than! half! of! Somali! women! receive! money! and! are! responsible! for!
managing! houseY! hold! spending! (even! when! they! are! not! regarded! as! the! head! of!
household).! On! average,! the! income! of! Somali! women! who! receive! remittances! is! 52!
percent! higher! than! that! of! women! who! do! not! get! funds! from! relatives! living! abroad.! On!
average,!female!remittance!recipients!are!nearly!four!times!more!likely!to!save!than!women!
who!do!not!receive!remittances!(Orozco!for!OxfamYNovib,!2013).!!!
!

46*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

In!the!Ethiopian!context,!a!World!Bank!survey!on!Ethiopian!remittance!recipients!shows!that!
14%! out! of! the! 37! million! Ethiopian! adults! are! dependent! on! remittances;! of! which! each!
adult! receives! 600! USD! each! year! (Addisfortune! 2010! and! Capitalethiopia,! 2010)! which!
means!over!5!million!Ethiopian!adults!are!dependents!on!remittance.!And!of!course,!these!
recipients! also! remit! part! of! the! 600! USD! to! other! extended! family! member! (ibid)! which!
extends!the!dependency!to!other!family!members!too.!To!receive!600!USD!per!year!is!by!far!
larger! than! the! country’s! average! per! capita! income,! which! could! also! lead! to! income!
disparity!among!those!who!do!and!do!not!receive!(Mehari,!Thinking!Back!Home,!2010).!
!

III.4*Preference*for*remittances*channels*
!
The!choice!of!preferred!remittance!channels!depends!on!four!determining!factors!(UNCTAD!
2012:!67):!(i)!cost,!(ii)!reliability,!(iii)!accessibility!for!both!sender!and!receiver,!and!(iv)!trust.!
Cordaid! conducted! an! extensive! survey! under! the! African! migrant! population! in! 2006! and!
discovered!that!the!preferred!channels!for!sending!money!home!differed!across!countries,!
while!the!reasoning!behind!their!choices!were!similar!(see!tables!below).!!
!
How*money*is*sent*to*migrants’*home*countries*
*

Somalia*

Ghana*

Nigeria*

Western*Union*

14,1%!

24,9%!

60,6%!

MoneyGram*

5,2%!

16,8%!

3,6%!

Bank*

8,1%!

5,2%!

0%!

People*traveling*

6,7%!

31,2%!

16,1%!

African*transfer*agencies*

65,9%!

22%!

19,7%!

Source:!adapted!from!Mohogu!2006!

*
Why*money*is*sent*through*Western*Union*and*MoneyGram**
*

Somalia*

Ghana*

Nigeria*

Speed*&*Safety*

100%!

62,4%!

89,9%!

Office*open*all*the*times*

0%!

0%!

3,2%!

Cost**

0%!

12,7%!

6,0%!

Good*Services*

0%!

24,9%!

0,9%!

Source:!adapted!from!Mohogu!2006!

1

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 47!
!
Preference1for1the1informal1
Based!on!evidence!on!West!Africa!presented!by!Orozco,!we!have!to!realize!that!“most!of!the!
mechanisms! used! to! send! money! are! informal.! Results! show! that! 65! percent! of! migrants!
send! money! to! their! relatives! through! another! person! “…”.! Furthermore! a! combined! 20!
percent!send!money!through!a!driver!or!take!the!cash!themselves.!Reasons!provided!for!the!
choice!of!sending!method!are!straightforward:!!convenience!(70!percent),!recommendation!
(32! percent),! safety! (15! percent),! and! reputation! (12! percent),! based! on! multipleYchoice!
response.”! (Orozco! 2013,! 92)! This! demonstrates! that! there! are! other! important!
considerations!than!price!that!play!a!role!in!the!choice!of!a!specific!RSP.!!
!
In! the! Netherlands,! the! research! shows! that! migrants! prefer! to! send! money! through!
informal! channels! to! save! money,! but! most! importantly! because! of! the! speed! and! its!
familiarity,! while! they! are! not! regarded! as! being! less! reliable! than! others.! A! contributing!
factor!reported!by!migrant!communities!for!the!use!of!informal!channels!is!the!mandatory!
requirement!to!identify!oneself!when!sending!money!through!formal!channels,!and!the!time!
it! takes! to! go! through! all! the! procedures! (Ghanaian! Focus! group,! Dec! 2013).! ! This! also!
influences! the! (lack! of)! use! of! innovative! technological! solutions,! such! as! making! online!
transactions,! as! this! would! require! registering! online! and! often! the! need! for! a! credit! card.!
MTOs!confirm!that!even!though!these!online!transactions!are!cheaper,!the!target!audience!
makes! little! use! of! this! possibility.! Thus! costs! do! not! seem! the! most! important! factor! for!
choosing!a!channel.!!
!
The! study! conducted! by! Unger! and! Siegel! (2006)! into! the! remittance! corridor! of! the!
Netherlands! and! Surinam! shows! similar! results.! Respondents! of! household! surveys! argued!
that!they!prefered!informal!services!over!formal!institutions.!On!average!they!ask!lower!fees,!
and!provide!more!favourable!exchange!rates.!In!addition,!the!services!offered!fit!well!with!
the! needs! of! the! recipients,! such! as! home! delivery! of! the! transferred! funds,! and! text!
message!to!both!recipient!and!sender.!Informal!service!providers!were!often!more!trusted!
than! offical! banking! institutions! as! these! latter! were! often! conncected! with! issues! of!
corruption!or!breach!of!privacy.52!
!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
52

!Deeper!insights!into!the!informal!economy!in!the!Netherlands,!though!not!necessarily!connected!with!the!
international!remittance!industry,!can!be!found!in!the!publication!by!Slot!(2010)!“Informele!Economie:!oorsprong,!
oorzaak!en!ontwikkeling”!in!Justitiële!verkenningen,!jrg!36,!nr!7,!Boom!Juridische!Uitgevers.!!

48*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

Especially!the!undocumented!migrants!and!the!ones!who!are!involved!in!the!informal!sector!
(and! sometimes! illegal)! will! send! their! money! through! the! informal! channels! (Vital! Aid!
Foundation,! interview! Oct.! 2013).! In! addition,! those! migrants! in! the! Netherlands! that! are!
dependent! on! social! welfare! are! more! likely! to! use! informal! channels.! As! the! authorities!
check!their!balances!and!expenditures,!there!is!a!fear!that!they!could!lose!social!benefits!and!
allowances!if!their!remittances!were!recorded.!
!
Migrants! are! not! always! aware! of! the! fact! that! an! informal! channel! is! not! automatically!
illegal;! if! no! fees! are! charged,! the! activity! is! not! illegal.! This! makes! it! difficult! to! discuss!
openly!about!informal!channels!and!to!get!detailed!information!about!these!services.!!!!
!
Where! there! is! limited! access! to! financial! institutions,! lower! technology! within! the! market!
and!fluctuating!exchange!rate!differentials,!such!as!in!Ethiopia,!it!will!not!be!surprising!that!
the! total! remittance! sent! through! the! formal! channels! is! lower! than! the! actual! amount.!
Following! this! realization,! the! government! of! Ethiopia! as! a! receiving! country! through! its!
general!directorate!for!Ethiopian!expatriates!started!an!awareness!creation!campaign!to!the!
Ethiopian! diaspora! that! sends! money! through! informal! channels.! It! informed! about! the!
illegal! nature! and! the! potential! negative! effects! on! the! economy.! As! a! result,! the!
government!has!recorded!a!growth!of!formal!remittance!flows.!(Arefaine!Berhe,!2010)!
!
MTO’s!are!the!second!choice!of!the!migrants.!Mostly,!when!the!money!is!urgently!needed,!
they! send! money! via! MTOs,! for! their! high! speed.! These! findings! were! supported! by! the!
argumentation!provided!by!MTOs,!who!state!that!clients!consider!speed!and!accessibility!in!
the!receiving!country!to!be!important.!An!example!was!provided!to!support!this!realization.!
In! 2012Y2013! an! MTO! in! the! Netherlands! had! organized! a! 48Yhour! action! in! which! clients!
were!offered!a!reduced!fee!when!transferring!money!to!Morocco.!The!limitation!to!the!deal!
was!that!the!recipients!could!withdraw!the!money!only!after!48!hours.!The!action!has!been!
discontinued!as!clients!stressed!the!importance!of!speed!over!costs.!
!
Reliability,! positive! experiences! of! other! clients,! targeted! services,! and! having! close!
accessibility! are! other! factors! on! which! clients! base! their! choice! for! an! MTO.! However,! in!
practice,! even! when! offering! specialized! ‘targeted’! services,! like! Unity! for! Ghana! and!
SuriChange! for! Suriname,! the! remitters! give! preference! to! the! informal! channels.! For! the!
Surinamese! and! the! Ghanaians,! this! channel! is! as! reliable! as! the! formal! ones;! the! service!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 49!
!
providers! are! aware! of! the! importance! of! their! reputation! for! future! transactions! (Seva,!
interview!and!Ghanaian!focus!group).!These!informal!remittances!services!are!often!offered!
by! nonYfinancial! businesses! that! need! foreign! currency! to! buy! goods! to! resell! in! the!
countries!of!origin.!This!service!might!even!be!costless!for!the!senders.!!
!
Banks!are!a!less!common!used!remittances!channel.!It!is!argued!that!language,!cultural!an!
institutional!barriers!hinder!the!use!of!bank!services.!Banks!in!most!cases!require!clients!to!
have! a! bank! account,! whereas! MTO’s! only! require! official! identification.! What! is! more,!
recipients!can!find!it!difficult!to!access!banks!due!to!their!limited!coverage,!especially!in!poor,!
remote! or! destroyed! areas.! Banks! do! not! always! have! direct! links! to! every! country! (e.g.!
Somalia)!and!thus!involve!intermediate!banks.!As!a!result,!bank!transfers!may!take!a!couple!
of!days!(Kosse!&!Vermeulen,!DNB!Working!Paper,!2013).!On!the!other!hand,!migrants!that!
are!sending!money!for!business!purposes!will!send!their!money!more!often!through!a!bank!
(e.g.!a!Letter!of!Credit!or!directly!to!a!bank!account)!or!an!MTO.!This!is!because!they!need!a!
receipt!for!tax!purposes!in!the!Netherlands!(interviews!with!migrant!entrepreneurs,!Oct/Nov!
2013).!!
!
In! Somalia! nonYbank! financial! transfers! involving! cash! payments! dominate! the! market.!
Somali! Remittances! Organizations! replace! the! formal! system’s! expensive! bureaucratic!
safeguards,! designed! for! an! open! market,! with! a! closed! network! constructed! out! of! the!
social!capital!and!safeguards!provided!by!clan!and!family!membership.!(Cockayne,!2013)!
!
According!to!the!participants!of!the!Ghana!focus!group,!in!Ghana!most!adults!in!the!urban!
areas!do!have!a!bank!account.!This!is!due!to!the!regulation!concerning!payment!of!salaries!in!
Ghana;! all! payments! have! to! be! done! through! bank! accounts.! Accessibility! in! both! the!
Netherlands! and! Ghana,! and! speed! play! a! role! when! choosing! between! formal! channels.!
About! 70%! of! Ghanaian! migrants! donate! to! religious! or! community! groups.! Networks!
between! churches! in! Ghana! and! the! Netherlands! play! a! crucial! contact! role! between!
Ghanaians!abroad!and!communities!in!Ghana.!Development!activities!are!promoted!trough!
these!church!initiatives!(Orozco,!Migrant!remittances!and!development,!2013).!!
!
In!the!Nigerian!community!the!illegality!of!migrants!plays!a!role!when!sending!remittances.!
In! some! cases! when! legal! Nigerians! send! money! for! the! illegal! ones,! they! are! confronted!
with!being!blocked!with!an!MTO,!after!having!sent!money!several!times.!Because!they!lack!

50*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

information! on! the! regulations! for! remitting,! they! prefer! to! send! money! through! informal!
channels,!to!prevent!future!blockings.!The!highly!educated!Nigerians!though,!prefer!to!send!
money! through! formal! channels! (no! risks! and! convenience! of! internet)! (Goodwill! Homage!
Foundation,!interview,!Nov!2013).!!!
!
Among!Ethiopians!in!the!Netherlands,!the!informal!channels!are!the!most!common!ways!of!
sending!money!home.!The!main!reason!is!that!the!costs!are!less!than!when!sending!money!
through!formal!channels!(Ethiopian!migrant,!interview,!Oct!2013).!
!The! Ghanaian,! Nigerian,! Somali! and! Ethiopian! communities! in! the! Netherlands! have! good!
connections!with!their!fellowYcountrymen!in!England!and!compare!the!remittances!services!
in!both!countries.!They!find!that!the!legislation!for!sending!remittances!in!the!Netherlands!is!
unattractive!compared!to!the!U.K.!(interviews!with!several!Migrant!Organizations).!!
!

III.5*Needs*for*additional*financial*products*
!
Migrants’!and!remittance!recipients!have!different!financial!requirements!and!expectations.!
Five! different! types! of! financial! products! have! been! suggested! by! the! migrant! community!
and!the!migrant!organizations!that!would!meet!these!specific!needs.!These!products!are:!(i)!
products!and!services!using!information!and!communication!technologies!to!transfer!money!
from! residence! to! origin! countries! (such! as! mobile! banking),! (ii)! products! and! services! to!
improve! ‘traditional’! money! services,! (iii)! products! and! services! for! linked! bank! accounts!
(such! as! remote! opening! of! nonYresident! accounts! in! recipient! countries);! (iv)! services! for!
collective! investments! by! migrant! associations,! and! lastly! (v)! products! for! migrants’! longY
term!financial!investments!(such!as!bonds!and!loans).!(Bourenane!2011:!84).!!
!
In!the!Netherlands!it!appears!that!migrants!are!not!very!familiar!with!the!financial!products!
offered!by!the!Dutch!banks.!Products!like!a!pension!are!quite!complex!to!them!(like!for!most!
Dutch! people).! This! can! be! concluded! from! the! interviews! with! several! Migrant!
Organizations.!TailorYmade!information!on!(transnational)!financial!products!like!insurances,!
mortgages!and!(transnational)!pension!schemes!are!not!readily!available.!However,!banks!in!
the! countries! of! origin,! like! Ghana,! Ethiopia! and! Morocco! are! already! offering! special!
services! to! the! Diaspora.! Yet,! these! services! have! been! created! without! solid! market!
research!into!the!needs!and!wants!of!the!Diaspora!(information!collected!of!experiences!of!
startYup!missions!in!Ghana,!Ethiopia!and!Cape!Verde,!former!IntEnt!director).!!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 51!
!
Presently,! some! foreign! banks! have! been! established! in! the! Netherlands! to! serve! their!
diaspora,!such!as!Chaabi!du!Maroc!(Morocco).!Besides!remittances!services!it!offers!special!
financial!products!to!their!customers,!such!as!life!insurance,!and!mortgages!for!real!estate!in!
Morocco.!!
!
In!some!destination!countries!the!marketing!of!remittance!products!is!made!difficult,!such!as!
the!introduction!of!remittanceYbacked!mortgages!and!loans.!In!some!cases,!it!is!even!made!
impossible! by! laws! and! regulations! that! prohibit! the! selling! of! savings! products! and!
properties! abroad.! At! the! same! time,! it! is! argued! that! such! proof! of! savings! is! critical! to!
establish!credit!for!lowYincome!migrants!(Rannveig!Agunias!and!Newland!2012:!127).!!
!
Financial!institutions!might!consider!conducting!market!research!among!this!specific!market!
segment! to! understand! the! needs! of! potential! diaspora! customers! in! order! to! create! new!
products!for!transnational!investment!purposes.!From!the!conducted!study,!it!appears!that!
especially! secondYgeneration! migrants! are! very! interested! in! investing! in! businesses! and!
projects!in!their!country!of!origin.!In!addition,!DMA!has!reported!that!in!the!case!of!Ghana!a!
majority!of!Ghanaian!migrants!want!to!have!more!control!over!how!the!money!they!sent!is!
spent.! DMA! reports! that! direct! channelling! of! funds! into! schemes! through! remittances!
would!help!to!eliminate!common!trust!issues!around!the!misuse!of!funds.!(DMA,!2011)!!
!
!

!

52*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

IV.*Cost*reduction*of*remittances*
!
To! date,! the! prognosis! of! reaching! the! 5x5! objective! across! Europe! is! not! very! positive.!
During!the!latest!Technical!Workshop!at!EU!DEVCO!(November!2013),!it!appeared!that!the!
EU!average!is!lacking!behind!on!the!rest!of!the!world,!with!an!approximate!average!of!10%!
across!the!European!Union.!The!EU!G20!coordinator!argues!that!for!European!countries!to!
meet! the! objective! before! the! set! deadline! of! 2014,! coordinated! actions! should! be! taken!
that! have! a! shortYterm,! middle! term! and! longYterm! focus! in! bringing! down! the! costs! of!
remittances.!
!
Remittances!can!be!expensive!relative!to!the!oftenYlow!incomes!of!migrant!workers!and!to!
the! rather! small! amount! sent! –! typically,! no! more! than! a! few! hundred! dollars! or! the!
equivalent!at!a!time!(IBRD/The!World!Bank,!2011:!81).!In!SubYSaharan!Africa,!the!costs!for!
sending! remittances! and! receiving! remittances! are! reported! to! be! the! highest! among! all!
developing! regions! (Mohapatra! and! Ratha! 2011:! 27).! Africa's! overseas! workers‚! who! sent!
close! to! US$60bn! in! remittances! last! year‚! pay! more! to! send! money! home! than! any! other!
migrant! group.! According! to! the! World! Bank's! Send! Money! Africa! database‚! subYSaharan!
Africa!is!identified!the!most!expensive!region!to!send!money!to.53!!!
!
These! costs! are! constructs! of! fees,! rates! and! running! costs! that! involve! international!
payment! services.! Breaking! down! this! cost! structure! actually! shows! the! potential! for!
reduction! in! the! price! that! remitters! and! their! recipients! need! to! pay.! The! following! pages!
will! offer! an! insight! in! the! different! price! components! related! to! remittances! and! what!
opportunities!are!available!to!reduce!costs.!54!
!
!
!
!
!
!
!
!
!
!
!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
53

!The!World!Bank!has!developed!specific!websites!for!different!continents!such!as!the!price!comparison!website!
for!Asia!corridors:!Send!Money!Asia!and!the!African!corridors:!Send!Money!Africa.!For!more!information!on!the!
African!website,!please!refer!to!http://sendmoneyafrica.worldbank.org!!
54
!Graph!drawn!from!Sanket!Mohapatra!and!Dilip!Ratha!(2011)

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 53!
!
!

Cost*of*sending*remi\ances*
cost*in*US$*per*$200*sent*

25,0#
20,0#

23,1!
17,9!

17,0!

15,0#

15,1!

14,5!

13,1!

10,0#
5,0#
0,0#
SubYSaharan! Middle!East!
Africa!
and!North!
Africa!

Asia!and!
Paciﬁc!

Europe!and! Laun!America! South!Asia!
Central!Asia!
and!the!
Caribbean!

recipient*region*
Source:!Information!obtained!from!the!World!Bank!briefing!on!Remittance!Prices!Worldwide,!September!2013!

!

*
IV.1* Elements*of*the*remittance*transfer*
!
Five! elements! are! involved! in! the! international! money! transfer! process:! capture,!
disbursement,! messaging,! settlement,! and! liquidity.! Each! element! directly! or! indirectly!
influences!how!costs!are!structured,!influences!transparency!over!costs!and!determines!the!
type! of! options! senders! and! receivers! of! remittances! have.! In! the! below! figure! the! five!
elements! are! presented! as! well! as! what! actions! are! involved! in! the! process! that! influence!
remittance!costs,!transparency!and!services.!!
As! becomes! clear! from! the! figure! on! page! 54,! transferring! remittances! is! complex! and!
involves!a!number!of!stages.!This!complexity!influences!the!cost!of!remittances!significantly.!
It! can! for! example! affect! (inY)! efficiency! and! (lack! of)! transparency! of! the! transfer! process.!
The! process! is! furthermore! determined! by! the! means! of! payment! that! are! available,! the!
necessary! identity! requirements,! and! the! type! of! disbursing! agents! allowed! to! serve!
remittance! customers! in! both! sending! and! receiving! country.! In! addition,! the! type! of!
settlement!network!transferring!the!funds!from!A!to!B!contribute!to!the!complexity!of!the!
system!and!influences!the!cost!structure!(see!Annex!2).!55!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
55

!The!World!Bank!offers!an!interesting!overview!of!how!the!settlement!process!of!remittances!is!organized!in!
different!contexts.!As!described!in!the!figure,!the!‘settlement!chain’!is!the!payments!inRbetween!(from!the!agent!
receiving!the!cash!through!to!the!disbursing!agent!paying!out!cash!to!the!recipient).!Such!chains!could!include!
the!more!traditional!settlement!structure!involving!RSPs!(banks!and!nonYbanks),!intermediary!banks!and!their!
local!liaison!offices.!The!information!provided!by!the!World!Bank!explains!how!different!forms!of!networks!

54*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
influence!the!complexity!of!the!transfer!process!and!thus!carry!the!potential!for!improved!efficiency!and!
transparency!over!costs.!!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 55!
!
Before!we!turn!to!approaches!that!touch!upon!the!different!elements!of!the!transfer!process!
in!an!effort!to!facilitate!the!flows!of!remittances,!it!is!important!to!understand!how!costs!are!
calculated!across!the!transfer!process.!The!next!section!provides!a!basic!description!of!costs!
involved!in!sending!and!receiving!international!money!transfers.!!
!

IV.2* Structure*of*costs*of*remittance*transfers*
!
Remittance! costs! can! be! structured! related! to! three! processes:! (i)! the! transfer! and!
processing! of! funds! (costs! related! to! capturing,! messaging! and! settling),! (ii)! exchanging!
currencies! (costs! determined! at! settling! stage)! and! (iii)! receiving! of! funds! (costs! related! to!
disbursing!and!liquidity).!!Firstly,!when!capturing!remittances,!Remittance!Service!Providers!
(RSPs)!charge!a!service!fee.!MTOs!have!stated!that!the!most!important!cost!components!are:!
staff! costs,! ICT,! housing,! compensation!
for! agents,! and! deposit! costs! for! cash!
money!

(to!

cover!

for!

liquidity!

requirements! at! the! disbursing! end).! In!
addition,!

expenditures!

related!

to!

compliance! and! regulations! also! impact!
the!eventual!cost!calculation!of!the!fee.56!
Secondly,! for! the! processing! stage!
(messaging!

and!

settling),!

currency!

conversion! rates! are! added,! as! well! as!
potential! fees! for! the! messaging! or!
processing! of! information! to! and! from!
the!capturing!and!disbursing!agent.!Here,!
especially,! often! signals! of! ‘hidden! costs’!
are! reported! as! not! all! service! providers!
are! transparent! over! the! currency! rate!
that! is! applied,! which! influences! the!
amount!the!recipient!eventually!receives.!
(IFAD!2009]!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
56

!In!interviews!with!MTO!representatives!in!the!Netherlands!it!became!clear!that!MTOs!see!little!opportunity!for!
reducing!the!costs.!In!contrast,!they!have!argued!that!they!expect!costs!to!rise!with!new!regulations!that!are!
underway.!For!the!table,!Information!drawn!from!the!World!Bank!report!‘General!Principles!for!International!
Remittance!services’!(2007)!
!

56*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

Foreign*Exchange*conversion*as*a*hidden*cost:*a*banking*perspective*
When!sending!Hard!Currency!(HC)!EUR!or!USD!to!beneficiaries!in!developing!countries!by!a!bankY
toYbank!transfer!the!currency!can!be!exchanged!from!HC!into!the!Local!Currency!(LC)!of!the!
country!of!the!beneficiary.!When!EUR!are!being!sent!to!an!account!of!the!beneficiary,!which!is!
also!held!in!EUR;!no!FX!conversion!is!involved.!In!that!situation!it!is!up!to!the!local!beneficiary!to!
exchange!the!received!EURs!into!its!own!LC.!!However!when!EURs!are!sent!to!an!account!of!the!
beneficiary!in!its!own!country,!which!is!denominated!in!LC,!an!FX!conversion!is!required.!!The!
Dutch!client!will!be!debited!by!their!Dutch!bank!with!the!agreed!EUR!amount!and!the!bank!of!the!
beneficiary!who!sees!that!the!account!of!the!beneficiary!is!held!in!LC!need!to!exchange!the!EUR!
into!LC.!
!
The!beneficiary!bank!is!in!principle!able!to!use!any!FX!conversion!rate!it!feels!like,!as!there!is!no!
involvement!of!either!the!payee!or!the!beneficiary!on!this!rate.!!So!when!for!instance!EUR!200!is!
being!sent!and!the!payee!is!being!debited!by!this!amount!it!depends!on!the!FX!conversion!rate!
used!by!the!beneficiary!bank!how!many!LCs!this!will!be!paid!out.!!As!it!is!hardly!possible!to!
influence!the!FX!rate!as!a!customer!and!the!FX!quote!taken!is!most!likely!not!even!reported!to!the!
beneficiary!it!is!a!hidden!and!a!nonYtransparent!cost.!In!combination!with!the!fact!that!the!FX!
market!for!emerging!markets!suffers!from!rather!nonYtransparent!FXYquotes!it!is!also!hard!to!
evaluate!whether!the!FX!quote!received!were!competitive!compared!to!the!market!rates!that!day.!!!!!!!!
!

!

Finally,!when!remittances!are!disbursed,!direct!and!indirect!costs!for!collecting!the!funds!are!
sometimes,!but!not!always,!involved.!!
!
In! addition,! contextYrelated! factors! determining! the! transfer! of! remittances! contribute! to!
costs.! For! example,! the! available! means! of! transfer! determine! the! choice! of! services! and!
mode! of! receipt.! This! is! one! of! the! reasons! why! a! lot! of! discussion! has! been! taking! place!
surrounding! the! closing! down! of! Barclays! bank! accounts! for! Remittance! Service! Providers!
serving!the!Somalia!corridor.!The!decision!will!directly!affect!the!choice!of!sending!options!
for! remitters,! and! might! negatively! influence! the! flows! of! money! to! Somalia,! either! by!
forcing!people!to!use!informal!channels,!or!reducing!the!number!of!industry!players!offering!
competitive!services!across!the!market.!*
!
!
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 57!
!

IV.3*International*agreements*on*cost*reduction*
!
A! number! of! international! initiatives! have! been! taken! that! contribute! to! a! more!
comprehensive! understanding! of! remittance! flows! that! have! fuelled! policy! actions! in!
different! sectors! supporting! cost! reduction.! Those! actions! that! are! relevant! to! the! Dutch!
regulatory!and!policy!environment!are!mentioned!here.57!
!
IV.3.1!! Luxembourg!Group!
!
In!2006!the!Luxembourg!Group!was!created!as!an!informal!working!group!of!practitioners!to!
consider! the! difficulties! of! collecting! and! compiling! remittance! data.! The! objective! of! the!
Group!is!to!make!recommendations!for!improvements!that!should!lead!to!the!production!of!
a! compilation! guide! for! remittance! statistics.58!The! initiative! followed! the! realization! that!
there! exists! a! large! discrepancy! in! terminology! and! conceptualization! of! remittances! that!
influences!how!data!are!collected!and!interpreted.!!
!
If!for!example!speaking!of!the!total!amount!of!remittances!flowing!out!of!the!Netherlands,!
the!EU!report!(2012)!shows!two!different!volumes!contributing!to!a!total!of!approximately!
EUR!8!billion!outward!remittances!from!the!Netherlands.!The!total!volume!is!composed!of!
€1,5! billion! in! workers’! remittances! and! the! amount! of! €5,5! billion! in! compensation! of!
employees! (approximate! data).59!The! difference! lies! within! the! definition! of! remittances,!
whether!this!includes!workers’!remittances!and/or1compensation!of!employees.!The!former!
total!refers!to!worker’s!remittances,!which!the!IMF!has!defined!in!the!Balance1of1Payments1
Manual,1 6th! edition! as! current! private! transfers! from! migrant! workers! who! are! considered!
residents!of!the!host!country!to!recipients!in!the!workers’!country!of!origin.!In!the!latter!case!
the! amount! includes! payment! of! salaries! to! foreign! nationals! working! in! the! Netherlands,!
such! as! Belgian! and! German! expats! (compensation! of! employees).! The! difference! in!
definitions!and!thus!the!corresponding!calculations!may!influence!policy!actions!at!country!
level.!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
57

!The!Dutch!Ministry!of!Foreign!Affairs!has!been!engaged!in!several!initiatives!that!directly!or!indirectly!address!
the!issue!of!remittances,!such!as!the!Financial!Inclusion!Support!Framework!(FIRST),!which!supports!the!
development!of!financial!infrastructures!and!the!creation!of!an!enabling!environment;!support!to!CGAP!and!the!
government!participates!in!relevant!networks,!working!groups!and!bilateral!communications!relevant!to!the!
topic!under!study.!
58
!More!information!on!the!Luxembourg!Group!and!its!participants!can!be!found!on!the!website!of!IMF!at!
http://www.imf.org/external/np/sta/bop/2006/luxgrp/060106.htm!!
59
!Eurostat!database!offers!an!overview!of!country!statistics!on!remittances.!The!latest!data!collected!is!for!2011.!
For!a!detailed!comparison!per!country!at!European!level,!please!refer!to!
http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=bop_remit&lang=en.!

58*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

IV.3.2! 5x5!initiative!and!general!principles!
!
The!G8!and!G20!have!called!upon!states!to!make!an!effort!in!achieving!a!price!reduction!of!
global!average!cost!of!remittances!from!10!to!5!percent!of!the!transfer!amount!by!2014!(by!
5!percentage!points!in!5!years)!and!more!broadly,!to!improve!the!remittance!market.!This!
attempt! at! reducing! the! price! to! transfer! money! across! borders! would! generate! a! net!
increase!in!income!for!migrants!and!their!families!in!the!developing!world,!estimated!at!20!
billion! euro! per! year.60!The! potential! such! a! surge! in! transfers! brings,! inevitably! has! an!
impact!on!economies!both!in!sending!and!in!receiving!states.!!
!
In! support! of! achieving! the! 5x5! initiative! within! its! set! time! frame,! the! World! Bank! has!
developed!five!general!principles!for!remittances!(see!box).!These!principles!are!one!of!the!
key! tools! that! are! being! used! by! many! countries! to! help! deliver! on! the! objectives! of!
achieving! a! price! reduction! in! the! global! average! cost! of! remittance! services.! The! G20! is!
especially! relevant! in! realizing! these! ambitions! as! half! of! global! remittances! flows! is! sent!
from!or!received!by!G20!members.!In!addition!to!the!general!principles,!the!World!Bank!has!
drafted! twelve! tools! as! guidance! for! states! in! reaching! their! objectives! and! applying! the!
general!principles!to!practice.61!(see!Annex!3!for!overview!of!tools)!!
!
Complementary!to!the!World!Bank!monitoring!reports,!the!European!Commission!offered!in!
2012! a! report! on! the! barriers,! challenges! and! recommendations! for! enhancing! the!
development!impact!of!remittances!(Isaacs!2012)!–!including!the!necessity!of!cost!reduction!
of! remittances! in! order! to! achieve! this! goal.! The! report! argued! that! certain! fields! require!
continued! attention! from! policyYmakers! in! the! EU! in! order! to! realize! the! 5x5! objective.!
Especially!in!the!field!of!“market!structure!and!competition”!(GP4)!EU!countries!lack!behind!
on! fulfilling! their! 5x5! promises.! Overall,! the! EU! countries! were! reported! to! be! reasonably!
compliant!with!the!GPs.!
!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
60

!These!estimates!come!forth!out!of!calculations!provided!by!the!Financial!Inclusion!and!Infrastructure!Global!
Practice!team!of!the!World!Bank,!which!were!presented!at!the!EU!DEVCO!Technical!Workshop!on!reducing!the!
cost!of!remittances!at!EU!level!in!Brussels!on!15!November!2013.!!
61
!The!Toolbox!offers!guidance!to!countries!that!wish!to!follow!the!five!general!principles!of!the!World!Bank.!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 59!
!
From!the!lessons!learned!since!the!adoption!of!the!5x5!initiative!by!the!G20,!the!following!
steps! have! been! highlighted! that! have! proven! beneficial! to! cost! reduction:! (i)! improved!
efficiency,! (ii)! increased! competition,! (iii)! innovation,! (iv)! compliance! requirements,! and! (v)!
measures!taken!in!receiving!countries.!Below,!we!will!go!through!each!of!the!recommended!
steps.!!

60*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

IV.4* Opportunities*for*cost*reduction*
!
At!the!EU!Technical!Workshop!on!‘Meeting!the!G20!5x5!objective”!in!November!2013,!the!
World!Bank!argued!that!global!average!remittance!costs!remains!high!due!to!the!following!
factors62:!
!
-

underdeveloped!financial!infrastructure!in!some!countries!

-

limited!competition!

-

scarce!transparency!

-

regulatory!obstacles!

-

lack!of!access!to!the!banking!sector!by!remittance!senders!and/or!receivers!

-

difficulties! for! migrants! to! obtain! the! necessary! identification! documentation! to!
enter!the!financial!mainstream!

!
While!these!factors!seem!to!influence!the!cost!structure!negatively,!it!also!means!that!these!
factors!offer!opportunities!for!improvements.!It!is!also!important!to!note!that!not!all!factors!
are!equally!important!for!each!corridor,!such!as!in!the!case!of!the!Netherlands,!where!every!
registered! migrant! is! allowed! access! to! a! ‘basic! bank! account’.63!However,! as! remittances!
constitute! financial! interactions! across! borders! and! with! industry! players! operating! in!
multiple! countries,! these! factors! will! automatically! affect! parts! of! the! corridors! that! the!
Dutch!market!serves.!!
!
This!part!provides!an!overview!of!global!practices!that!could!prove!relevant!in!the!corridors!
under! study.! Firstly! we! will! turn! to! how! improved! efficiency! of! the! transfer! process! of!
remittances! can! reduce! costs.! Arguably,! market! inefficiencies! can! mean! that! the! price! of!
remittance! services! is! higher! than! would! otherwise! be! the! case! and/or! that! the! services!
offered!are!of!lower!quality!(CPSS/World!Bank,!2007).!Secondly,!the!issue!of!a!competitive!
market! environment! is! discussed! and! how! exclusivity! agreements! in! sending! and! receiving!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
62

!Full!presentation!of!Ceu!Pereira,!Senior!Payment!Systems!Expert!for!the!World!Bank!at!the!Technical!Workshop!
on!reducing!the!cost!of!remittances!at!EU!level!can!be!requested!with!the!authors.!!
63
!The!Dutch!banks!established,!in!collaboration!with!the!Salvation!Army,!the!selfYregulatory!‘Covenant!on!a!
Package!of!Primary!Payment!Services’!for!the!provision!of!primary!banking!services!in!2001.!All!large!retail!banks!
are!involved,!giving!a!total!coverage!of!98!%!of!the!Dutch!market!and!availability!throughout!the!country.!This!
Covenant!guarantees!access!to!an!individual!bank!account!for!Dutch!residents!older!than!18!years,!who!do!not!
yet!have!a!bank!account!(such!as!homeless!and!socially!disadvantaged!people)!and!whose!identity!can!be!
affirmed!as!indicated!by!national!and!European!rules!and!regulations!concerning!antiYmoney!laundering,!
combating!of!financing!of!terrorism!and!other!customer!due!diligence!measures.!The!basic!bank!account!is!
offered!to!all!consumers,!even!to!those!with!a!bad!credit!history!or!a!history!of!fraud.!The!applicant!needs!a!valid!
ID!(or!temporary!residence!permit)!and!a!Dutch!social!security!number!to!open!a!basic!bank!account.!The!
participants!of!the!Covenant!have!launched!the!website!www.basisbankrekening.nl!in!2010.

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 61!
!
countries! determine! fee! rates! and! networks! that! sender! and! receiver! can! turn! to.! Thirdly,!
the!role!of!innovative!market!players!is!exemplified!and!the!possibilities!to!not!only!reduce!
costs!of!remittances!but!also!to!create!addedYvalue!products.!!
!
*
Efficiency*

Possible*Actions*
Sending1country1

-

Receiving1country1

Competition*

Innovation*

-

increase!financial!inclusion!levels!
support!national!identification!
encourage!interoperability!with!service!
providers!in!sending!countries!

-

Outlaw!exclusivity!agreements!!
Lowering!barriers!for!innovative!players!and!
small!RSPs!to!enter!market!
support!price!comparison!website!

Receiving1country1

-

outlaw!exclusivity!agreements!

Sending1country1

-

lowering!barriers!for!innovative!players!to!
enter!market!
provide!incentives!for!technological!
innovation!and!business!development!

Sending1country1

Receiving1country1

-

Compliance*

research!on!and!learn!from!informal!service!
providers!
encourage!interoperability!with!service!
providers!in!receiving!countries!

Sending1country1
Receiving1country1

allow!nonYbanks!to!enter!the!remittance!
market!(and!deal!with!foreign!exchange)!
conduct!market!research!into!recipients!of!
remittances!(not!copyYpaste!models!such!as!
mPesa)!

-

provide!support!to!receiving!country!to!
meet!AML/CFT!supervision!requirements!

-

support!national!identification!
strengthen!supervisory!requirements!to!
counter!irregular!activities!

!
Then,! the! chapter! turns! to! the! issues! of! compliance,! referring! to! the! changing! regulatory!
environment! that! is! perceived! by! some! as! countering! efforts! to! reduce! fees.! Lastly,! the!
possibilities!that!receiving!countries!have!to!contribute!to!a!more!favourable!environment!to!
receive!remittances!at!lower!costs!is!discussed.!

62*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

IV.4.1!! Improved!Efficiency!
!
Some!explanation!has!already!been!provided!in!part!IV.1!on!the!complexity!of!the!transfer!
process!of!remittances.!Especially!the!settlement!processes!seem!intricate,!where!multiple!
payments! are! made! to! autonomous! institutions! using! particular! technologies! in! order! to!
reach! the! disbursing! agent.! The! more! players! and! technologies! are! involved! in! the! ‘inY
between’! network,! the! more! commission,! operational! costs! and! perhaps! other! fees! are!
included.!However,!this!goes!specifically!for!the!settlement!of!payments.!In!the!case!of!payY
out!possibilities!and!sending!facilities,!the!more!players!are!allowed!to!offer!their!services,!
the!more!efficient!the!sector!potentially!could!become.!!
1
Interoperability1
Improving! efficiency! of! the! payment! infrastructure! could! therefore! influence! costs! for!
senders!and!receivers.!We!see!this!happening!at!the!European!level!already!where!countries!
are! preparing! for! the! shift! to! a! Single! Euro! Payments! Area,! an! initiative! that! is! aimed! at!
simplifying!bank!transfer!denominated!in!euro.!According!to!the!DNB,!SEPA!will!strengthen!
international!competition!for!payment!institutions.64!More!competition!will!in!principle!lead!
to!improved!products,!more!efficiency!and!lower!costs!of!payments.!While!this!assumption!
refers! to! the! European! context,! the! principle! could! be! applicable! to! contexts! outside! of!
Europe!as!well!(Takashi!Mobile,!interview!Nov!2013).!
!
One!approach!to!increasing!efficiency!is!to!support!interoperability!of!payment!services!and!
technological! innovations.! One! such! service! that! is! doing! just! that! for! the! remittance!
industry!is!HomeSend!(www.homesend.com)!by!BICS.!The!company!has!introduced!a!way!to!
facilitate! interoperability! of! telecom! operators! across! borders! to! serve! the! remittance!
market! by! improving! its! efficiency.! HomeSend! is! a! global! ‘hubbing! service’! that! enables!
personYtoYperson! transfers,! and! makes! it! possible! to! integrate! mobile! wallets! or! money!
transfer!systems!of!two!different!providers.!It!also!provides!access!to!other!service!providers,!
such!as!money!transfer!organizations!and!banks.!!
!
In!the!Netherlands,!a!working!group!with!a!similar!domestic!purpose!was!formed!under!the!
name! of! Six* Pack.! The! objective! of! the! initiative! was! to! develop! a! sound! ecoYsystem! for!
mobile! payments! in! the! Netherlands,! and! joined! together! three! banks! and! three! mobile!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
64

!More!information!on!SEPA!can!be!found!at!the!DNB!website!
http://www.dnb.nl/betalingsverkeer/sepa/waaromYsepa/!.!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 63!
!
operators.!Different!reasons!are!mentioned!for!the!end!of!the!Sixpack!project:!according!to!
Dan!Armstrong,!who!was!one!of!the!initiators!of!the!initiative,!the!initiative!eventually!was!
not! successful! due! to! the! fact! that! the! interests! of! the! different! market! players! (banks! vs!
operators)! were! not! aligned:! the! operators! were! interested! in! making! profit! by! increasing!
mobile!usage;!the!banks!were!interested!in!developing!more!payment!methods!to!broaden!
access! to! banking! facilities.! (Takashi! Mobile,! interview! Nov! 2013)! Another! reasons! given! is!
that! Sixpack! announced! that! given! the! now! mature! availability! of! trusted! service!
management! (TSM)! products! and! services,! there! is! no! need! to! continue! with! its! original!
complex! plans! for! setting! up! one! national! TSM! to! support! (Dutch)! mobile! contactless!
payments!and!related!nearYfieldYcommunication!(NFC)!services.!
!
The! Consultative! Group! to! Assist! the! Poor! (CGAP)! reports! that! elsewhere! in! the! world,!
developments! are! underway! to! understand! how! interoperating! of! especially! branchless!
banking!can!strengthen!efficiency!and!reduce!costs.65!
!
RemitOne! (www.remitone.com)! is! an! example! of! a! software! solution! that! offers! a! single!
system! for! money! transfers.! It! argues! that! unifying! software! across! RSPs! will! reduce! costs!
and!extend!the!range!of!services!for!customers.!They!see!the!current!infrastructure!as!not!
adapting!to!technological!changes!that!are!required!to!meet!the!needs!of!customers,!as!well!
as!not!meeting!the!diversity!of!needs!of!customers;Y!who!want!to!send!money!from!a!laptop,!
a!tablet,!a!smartphone!and!an!ATM!machine!as!well!as!visiting!their!agent!on!the!corner.66!!
!
Companies! such! as! WorldRemit! (www.worldremit.com)! offer! other! approaches! to!
improving!efficiency!of!payment!services.!The!company!argues!that!the!agentYbased!model!
that!is!used!by!many!traditional!remittance!players!is!no!longer!viable!in!the!current!Internet!
era.! It! argues! that! moving! to! a! cashless1 business1 model! would! address! some! of! the!
‘traditional‘!problems!that!are!associated!with!remittances.!It!would!for!example!eliminate!
the! use! of! intermediary! players,! thus! making! one! business! responsible! for! customer! due!
diligence!procedures.!And,!cashless!transactions!ensure!an!audit!trail!of!funds.67!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
65

!More!background!information!on!interoperability,!especially!in!branchless!banking,!can!be!found!in!the!blog!
series!of!CGAP!on!“Interoperability!in!Branchless!Banking!and!Mobile!Money”!at!the!following!weblink!
http://www.cgap.org/blog/interoperabilityYbranchlessYbankingYandYmobileYmoneyY0!.!It!reports!that!in!Ghana,!
the!government!is!trying!to!understand!its!role!in!promoting!interoperable!branchless!banking.!In!India,!
interoperability!at!the!agent!level!is!part!of!the!financial!inclusion!vision!painted!by!the!Unique!Identification!
Authority!of!India.!
66
!Presentation!of!RemitOne!at!GMTS!2013!available!upon!request.!!
67
!Information!obtained!from!presentation!of!WorldRemit!at!the!Global!Money!Transfer!Summit!2013!in!October!
in!London.!

64*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

Such!technological!advances!could!impact!the!remittance!industry!in!countries!such!as!the!
Netherlands,!where!most!migrants!have!access!to!bank!accounts.!This!increases!their!ability!
to!send!money!home!using!their!payment!account,!whether!this!would!be!online!or!through!
an!agency!using!the!WorldRemit!service.!!
!
Reaching1the1lastRmile!
Another!way!to!improving!efficiency!in!the!market!is!building!the!financial!infrastructure!and!
increasing! access! to! the! market! for! alternative! market! players,! such! as! Micro! Finance!
Institutes.!About!40%!of!remittances!are!received!in!rural!areas!(IFAD!2013),!yet!these!areas!
are!the!least!penetrated!by!financial!institutions.!Making!use!of!alternative!payout!locations!
that! could! as! well! offer! complementary! services! could! provide! a! solution! to! lowering! the!
indirect! costs! of! remittances! (travel! time/costs,! safety,! etc).! In! Ethiopia! for! example,! new!
types! of! partnership! agreements! are! emerging! in! the! RSPs! market.! These! include!
partnerships! involving! microfinance! institutions! (MFIs)! and! the! national! post! office,! which!
are! deemed! to! better! serve! the! unbanked,! particularly! in! rural! areas! of! the! country!
(Mohapatra! and! Ratha! 2011:! 128).! However,! thus! far! MFIs! have! not! seem! to! shown! much!
success! when! serving! as! RSPs.! But! neither! have! they! proven! to! fail! in! their! endeavours.!
(CGAP!interview)!
!
IV.4.2!! More!competition!
!
Corridors!with!a!large!number!of!migrants!and!with!high!level!of!competition!among!service!
providers! are! found! to! exhibit! lower! prices! for! remittances! (Beck! 2009).! ! Enhanced!
competition! is! a! product! of! the! regulatory! environment,! the! available! capacity! and! the!
resources!at!the!disposal!of!Money!Transfer!Operators!and!other!players!in!the!market.!In!its!
latest! monitoring! report,! the! World! Bank! stated! that! competition! in! the! market! for!
remittances! seems! to! be! an! important! driver! of! the! cost! of! sending! remittances;! corridors!
served!by!a!higher!number!of!RSPs!should!have!lower!prices!(The!World!Bank!2013:!4).!Two!
core! issues! influence! the! level! of! competition! at! the! sending! and! receiving! side! of! the!
remittance! transfer! process:! (i)! exclusivity! conditions! and! (ii)! access! to! the! financial!
infrastructure.!
!
The!former!refers!to!exclusivity!contracts!that!have!been!signed!between!RSPs!and!agents,!
in!which!agents!are!not!allowed!to!offer!any!other!remittance!service.!It!has!been!reported!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 65!
!
that! two! major! MTOs! dominate! the! African! remittance! market! with! about! 65%! of! the!
market! share! in! some! countries! (IFAD! 2009,! 5).! Exclusivity! conditions! can! be! particularly!
undesirable!in!receiving!countries,!where!for!example!a!community!has!only!a!single!retail!or!
financial!outlet!offering!one!available!remittance!service!(CPSS/World!Bank!2007:!18).!!
!
The*Role*of*Micro_Finance*Institutions*

For! many! years! MFIs! have! been! trying! to! get! involved! as! payout! locations! for! remittance!
recipients! in! order! to!offer! additional! addedYvalue! products! (loans,!savings).! According! to! the!
African! Development! Bank! “Microfinance! institutions! (MFIs),! credit! unions,! and! small! banks!
have!demonstrated!a!key!role!in!banking!the!traditionally!unbanked!Y!especially!the!poor!Y!and!
in! transforming! remittance! clients! into! clients! of! other! financial! services! by! being! closer! to!
remittance! recipients.! Indeed,! MFIs! can! contribute! to! the! reduction! of! remittance! costs,! but!
only!if!the!institutions!are!well!regulated.!Appropriate!regulation!provides!a!level!playing!field!
and! transparency! of! information! so! that! there! is! adequate! competition! and! cost! reduction.”!
(Dia!Kamgnia!and!Murinde!2012,!1)!!!
!
The!present!role!of!MFIs!in!this!field,!however,!is!still!small.!“Even!in!countries!where!MFIs!are!
allowed! to! act! as! agents! or! subagents,! many! of! these! institutions! have! not! yet! entered! as!
players! in! the! market.! This! suggests! an! opportunity! (…)! for! increasing! competition! and!
expanding! remittance! services! to! people! in! rural! areas! where! MFIs! have! a! relatively! larger!
presence! compared! to! commercial! banks.”! (Orozco! 2013,! 97)! According! to! CGAP,! this!
expectation! is! too! optimistic.! MFIs! have! never! really! been! able! to! attract! a! ‘sticky’! customerY
base.!The!perception!was!that!remittances!could!function!as!collateral,!and!therefore!additional!
financial!products! could! be!more!easily! offered! to!recipients.!Yet! to! date,!according! to!CGAP,!
little! empirical!evidence! showing!that!MFI!initiatives!have!been!successful! in! these! endeavors!
has! appeared.! It! seems! that! the! principle! has! not! yet! achieved! scale.! One! of! the! reasons!
provided! relate! to! the! intended! use! of! receiving! funds.! Most! remittances! pay! for! ongoing!
expenses! on! a! dayYtoYday! basis.! Money! is! thus! withdrawn! for! direct! use.! Recipients! of!
remittance!then!do!not!naturally!become!savers!or!good!customers!for!the!financial!sector,!just!
because!they!receive!remittances;!Y!which!often!seems!to!be!the!underlying!assumption!of!such!
initiatives.!!!
!

!

!
However,! exclusivity! agreements! do! not! only! exist! in! the! receiving! countries.! In! sending!
countries,!postal!networks!too!are!involved!in!agreements!with!RSPs.!This!could!have!a!big!

66*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

influence! on! transfer! costs! and! options,! as! postal! networks! have! a! vast! network! in! the!
sending! country.!It! has! also! been! argued! that! greater! freedom! of! money! transfer! agencies!
and!post!offices!to!operate!independently!of!banks!can!increase!the!degree!of!competition!
in!the!remittance!market!and!thereby!put!downward!pressure!on!costs”!(Irving,!Jacqueline,!
Sanket!Mohapatra,!and!Dilip!Ratha.!2010:!16).!In!the!Netherlands,!Post!NL!recently!made!a!
deal!with!MoneyGram,!allowing!for!remittances!to!be!sent!at!the!offices!of!the!Dutch!postal!
network.!Thus!far,!PostNL!only!offers!services!by!MoneyGram.!Yet!it!should!be!noted!that!it!
is!unclear!whether!this!entails!an!exclusive!relationship.!(DNB!interview!7!October!2013)!!
!
CGAP! argues! that! actually! one! of! the! main! driving! forces! behind! the! lack! of! progress! in!
bringing! costs! down! is! the! competitive! role! of! traditional! money! transfer! operators.!
According! to! CGAP,! the! exclusive! partnerships! and! networks! that! they! have! been! able! to!
establish!in!a!staggering!number!of!corridors!influences!their!dominance!in!the!remittance!
market.! The! strength! of! their! network! of! agents! in! the! receiving! country! influences! their!
competitive!position!at!the!sending!end.!The!added!value!for!such!operators!to!participate!in!
scaling!up!for!example!branchless!banking!opportunities!was!until!recently!missing,!as!their!
competitive! position! would! be! negatively! influenced! as! new! players! would! be! allowed! to!
benefit!from!their!wellYestablished!networks.!(CGAP!interview).!!
!
The!second!issue,!access!to!financial!infrastructure,!refers!to!the!fact!that!not!all!countries!
allow!nonYbanks!(such!as!MTOs!or!MFIs)!to!have!access!to!official!payment!services,!such!as!
dealing! with! foreign! currencies.! This! would! result! in! only! banks! being! able! to! offer!
international! remittance! services! for! example,! and! therefore! limiting! competition! in! the!
market!place,!as!is!the!case!in!Nigeria.!Orozco!has!argued!that!low!cost!remittance!transfers!
depend! significantly! on! the! nature! of! the! agreement! established! between! financial!
institutions! and! the! money! transfer! companies,! and! the! money! transfer! company! itself!
(Orozco!2006:!13).!“Greater!freedom!of!money!transfer!agencies!and!post!offices!to!operate!
independently! of! banks! can! increase! the! degree! of! competition! in! the! remittance! market!
and! thereby! put! downward! pressure! on! costs”! (Irving,! Jacqueline,! Sanket! Mohapatra,! and!
Dilip! Ratha.! 2010:16).! This! argument! is! supported! by! IFAD! (2009)! arguing! “effectively,! 80!
percent!of!African!countries!restrict!the!type!of!institutions!able!to!offer!remittance!services!
to!banks”.!
!
A!EU!commissioned!study!showed!in!2012!that!EU!countries!need!to!improve!their!policies!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 67!
!
especially!in!the!fields!of!fostering!market!competition!–!as!currently!the!market!structure!in!
many!European!countries!hampers!competition!and!effective!business!operations!(Isaacs!et!
al!2012:!27).!Since!2009,!the!passporting!arrangement!in!the!Payment!Services!Directive!has!
allowed!for!greater!competitive!advantages!for!industry!players.!It!allows!RSPs!to!apply!for!
one!license!in!a!member!state,!and!they!can!then!use!this!license!across!other!EU!countries.!
Therefore!they!only!need!to!meet!the!requirements!for!AML/CFT!for!example!in!one!country,!
to!be!able!to!offer!their!services!in!other!member!states.!However,!due!to!countryYspecific!
interpretation! of! the! PSD! requirements,! it! is! reported! that! the! European! market! is! not!
harmonized,!as!compliance!requirements!might!be!stricter!in!one!country!than!in!the!other,!
making! the! passport! perhaps! less! efficient! in! certain! contexts.! (Interview! with! Ministry! of!
Finance,!1!November!2013)!The!European!Commission’s!proposal,!dated!24th!July!2013,!for!a!
revised! Directive! 2007/64/EC! on! Payment! Services! (“the! PSD2”)! incorporates! an! increased!
degree! of! harmonisation! by! the! reduction! of! Member! State! options! that! is! inherent! in! the!
proposal.!
!
The!example!provided!in!the!previous!section!of!BICS’!HomeSend!might!offer!an!opportunity!
for!alternative!industry!players!to!circumvent!exclusivity!deals,!according!to!CGAP.!Such!nonY
cash!based!models!could!offer!a!competitive!advantage!over!the!wellYestablished!networks!
of! traditional! industry! players! as! they! could! compete! outside! of! the! existing! agency!
networks.!!
!
Yet,!more!competition!in!the!market!place!does!not!immediately!lead!to!a!reduction!in!costs.!
During! the! EU! DEVCO! workshop! [15! November! 2013],! DEVCOMPETITION! raised! the! issue!
that!having!more!players!does!not!lead!quickly!to!better!markets!for!consumers.!It!requires!a!
period!of!transition!for!both!consumers!as!well!as!traditional!market!players!to!respond!to!
new!trends!in!the!market.!In!addition,!from!interviews!with!MTOs,!arguments!were!drawn!
that! diminishing! costs! does! not! necessarily! lead! to! reduced! fee! rates.! It! is! the! competitive!
nature!of!the!business!and!strategic!decisions!of!the!sector!that!will!determine!the!fee!rates!
in!the!end.!(Dan!Armstrong,!interview,!Nov!2013)!
!
IV.4.3! Innovative!forms!of!remittances!
!
New!technologies!and!solutions!to!(international)!remittances!are!introduced!worldwide!in!
order! to! facilitate! sending! and! receiving! remittances,! often! accompanied! with! a! cost!
reduction! of! services.! These! services! range! from! more! efficient! traditional! services,! newly!

68*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

developed! and! innovative! technologies! to! facilitate! transfers,! and! the! introduction! of!
specific!remittance!products.!!
Three! major! technological! innovations! in! the! remittance! sector! are:! (i)! the! introduction! of!
mobile!services,!(ii)!the!introduction!of!online!payment!services!and!(iii)!the!introduction!of!
debit!cards!or!preYpaid!cards!(see!overview!in!the!figure!below).!Each!of!these!innovations!
could! be! categorized! as! ‘branchless! banking! options’,! which! according! to! CGAP! refers! to!
“receiving! mechanisms! that! use! technology! to! expand! access! to! remittances! to!
beneficiaries”.!
!
Often,! these! types! of! services! are! identified! as! ‘disruptive! innovations’! as! they! offer!
competitive! products! in! relation! to! traditional! service! providers.! The! technologies! used! to!
facilitate!the!transfer!have!been!presented!in!figure!below.!

!
!
Traditional! market! players! have! actually! started! to! reach! out! to! their! customer! base! using!
new!technologies!such!as!mobile!payments!or!offering!online!transfers.!Ria!Money!Transfer!
for! example! has! recently! (September! 2013)! launched! RiaMoneyTransfer.com,! the!
customer’s! first! consumerYfacing! digital! product! offering.! It! now! offers! remitters! the!
possibility! to! transfer! their! funds! through! their! online! platform,! rather! than! having! to! visit!
the!physical!location.!Western*Union!in!its!turn!is!serving!customers!that!request!payYout!in!
mYwallets!in!countries!such!as!Bangladesh,!Kenya,!Philippines!and!Tanzania.!!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 69!
!
Mobile1services!
“(A)n! area! of! growing! interest! consists! in! mobile! telephoneYbased! remittances,! where! the!
telephone!either!functions!as!a!storedYvalue!instrument,!much!like!a!prepaid!card,!or!where!
the!phone!functions!as!a!communication!instrument!to!authorize!debits!and!credits!from!a!
separate!account.”!(Orozco!2013,!67)!!
!
The! bestYknown! example! is! mYPesa,! launched! by! Safaricom,! the! Kenyan! daughter! of!
Vodafone! in! 2007.! It! has! become! a! tremendous! success,! with! now! (in! early! 2013)! 17.3!
million!active!users!in!Kenya,!i.e.!users!who!have!made!a!transaction!during!the!last!90!days.!!
MYPesa! works! like! a! debit! card:! a! client! buys! eYmoney! at! one! of! the! 96.000! agents! in! the!
country,!sends!the!money!by!phone!to!another!phone,!whose!owner!can!then!use!it!again!as!
money!on!a!debit!card!or!turn!it!into!cash!again!at!another!agent.!In!Kenya!alone,!payments!
of! about! 1.2! billion! dollars! are! transferred! every! month,! normally! of! small! amounts! (of! an!
average!of!$!30)!through!many!millions!of!transactions!every!day.!Users!do!not!need!a!bank!
account! for! these! transactions.! A! mobile! payment! system! like! that! is! therefore! especially!
attractive!in!countries!with!a!low!banking!penetration,!but!widespread!ownership!of!mobile!
phones.!!
!
Vodafone! has! introduced! such! systems! in! 10! other! countries,! beside! Kenya! also! in!
Afghanistan,! the! DRC,! Egypt,! Fiji,! India,! Lesotho,! Mozambique,! Qatar,! South! Africa! and!
Tanzania.!Similar!successful!systems!have!been!developed!by!MTN!in!Uganda,!by!Orange!in!
WestYAfrica,!and!by!two!telephone!providers!in!the!Philippines.!Users!in!Kenya!and!Tanzania!
can!also!receive!international!payments!on!their!mYPesa!account.!This!services!is!offered!in!
cooperation!with!Western!Union!and!BICS!(a!Belgacom!company!–!see!www.bics.com).!!
!
Vodafone!expects!a!fast!expansion!of!international!payments:!“International!money!transfer!
will!become!very,!very!big!I!believe!over!the!next!few!years”,!according!to!Michael!Joseph,!
Managing! Director! MYPesa. 68 !He! expects! that! enabling! migrant! workers! to! send! money!
home! will! be! a! big! opportunity! for! Vodafone,! for! example! from! Qatar! to! India.! The!
challenges!are!no!longer!of!a!technological!nature,!but!getting!permission!from!the!various!
regulators.!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
68

!Mobile!Money!Webinar,!5!March!2013,!Transcript,!p.!3,!see!
http://www.vodafone.com/content/dam/vodafone/investors/company_presentations/2013/Mobile_Money_W
ebinar_transcript.pdf!

70*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

Precondition!for!a!widespread!use!for!international!payments!is!that!clients!are!accustomed!
to!use!their!mobile!phone!for!domestic!payments.!Vodaphone!Spain!was!the!first!country!in!
the!world!that!introduced!Vodafone’s!mobile!payments!system!SmarPass!in!November!2013,!
Y!an!app!which!will!include!a!prepaid!Visa!account.!At!launch,!it!is!accepted!at!250,000!stores!
across!Spain!where!the!Visa!payWave!technology!is!already!in!place,!and!at!more!than!one!
million!locations!across!Europe.69!
1
“We1are1living1in1an1era1of1unprecedented1change.1One1of1the1most1transformational1of1these1changes1has1been1the1
influence1of1the1mobile1phone1–1which1has1become1one1of1the1most1commonly1used1technologies1on1our1planet.”1
!
Tomasz!Smilowicz,!Global!Head!of!Mobile!Solutions,!Citi,!Global!Transaction!Services!
In:!Foreword!to!Davidson!(2011)!
!
The!use!of!mobile!phones!to!transfer!money!can!make!a!decisive!contribution!to!reduce!the!costs!of!remittances.!At!
the!end!of!2010,!there!were!already!84!live!mobile!money!deployments!in!lowY!and!middleYincome!countries!that!
targeted! the! unbanked! (Davidson! 2011,! 4).! These! did! not! include! the! mobile! services! that! banks! offer! to! their!
existing! customers! to! interact! with! their! bank! and! to! handle! their! bank! accounts! from! mobile! devices.! This! is!
regarded!as!a!mere!“channel!extension”,!which!does!not!serve!additional!customers.!The!Dutch!Six!Pack!Project!was!
such!a!“channel!extension”.!!“(T)he!key!feature!that!distinguishes!an!unbankedYfocused!mobile!money!service!from!
a!‘channel!extension’![is]!a!network!of!independent!agents!at!which!customers!can!cash!in!and!cash!out.”(Davidson!
1

2011,! 5) !A! 2009! study! estimated! that! there! would! be! 1.7! billion! unbanked! potential! customers! who! do! possess!
1

mobile!phones!by!2012. !
!
To!offer!“mobile!money”!to!the!unbanked,!banks!and!mobile!operators!have!to!work!together:!“a!bank!must!hold!
the!deposits!which!back!the!electronic!value!stored!in!customers’!and!agents’!wallets!…!an!operator!must!provide!
the!data!channel!which!allows!customers!and!agents!to!initiate!transactions!using!their!handsets.”!(Davidson!2011,!
4)!Both!types!of!actors!bring!specific!assets!to!the!field:!

!
!!!!!!!!!!!!!!!!!!!!!!!!!!!Comparative*strength*of*banks*and*operators*in*mobile*money*operations*
*

Banks*

Interest*in*mobile*money*

Access!to!lowYincome!customers!who!
cannot!be!profitably!served!through!
traditional!branches!

Specific*strengths*

DepositYtaking!license,!
ATM/cash!machines,!well!situated!to!
support!agent!liquidity!

Competencies*

Risk!management,!regulatory!compliance,!
financial!product!development,!liquidity!
management,!relationship!with!financial!
regulator!

Mobile*Network*Operators*
New!services!to!customers!to!
strengthen!their!position!in!the!
increasing!competition!among!
operators!
Large!and!growing!customer!base,!
wellYknown!brand;!
Pervasive!agent!network!for!airtime!
distribution!
Mass!marketing,!service!development,!
relationship!with!telecom!regulator!

Source:!!Based!on!Davidson!2011.!!
!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
69

!http://www.zdnet.com/vodafoneYtoYlaunchYmobileYwalletYinYspainYaheadYofYglobalYrolloutY7000020278/!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 71!
!
Vodafone! is! cooperating! with! other! operators! with! mobile! money! operations,! connecting!
them! to! the! BICS! hub! in! Belgium,! and! then! tying! up! the! remittance! agencies! to! the! hub.70!
This!is!expected!to!take!place!in!the!next!12Y18!months.!
!
In! the! Netherlands,! Vodafone! operates! with! WorldRemit! (see! www.wordremit.com).!
Senders!can!use!its!online!portal!to!send!money!to!Ghana!or!Nigeria!and!pay!with!a!credit!
card!or!with!iDeal71,!and!the!receiver!will!get!the!money!as!mobile!money!on!their!phone!or!
on!their!bank!account.72!
1
1Online1services1
Money!transfers!online!(online!to!bank!account!or!online!to!mobile)!have!shown!to!be!more!
feasible!in!the!short!run!than!transfers!from!mobile!to!mobile.!There!are!innovative!online!
senders!such!as!Remitly!(www.remitly.com)!and!Xoom!(www.xoom.com)!offering!a!variety!
of! options! for! delivery! channels! on! both! the! sending! and! receiving! side.! There! is! the!
opportunity! to! ‘remit! to! a! cash! substitute’,! where! senders! purchase! a! retail! gift! card.! Or,!
another!example!of!a!new!model!is!remitting!a!direct!payment,!where!remitters!can!transfer!
funds!to!pay!utility!bills!or!school!fees!directly!for!the!recipient.!
*
Figure*x:*Screen*shot*of*Regalii*website**

!
!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
70

!Mobile!Money!Webinar,!5!March!2013,!Transcript,!p.!9!
!To!ease!payments!for!online!products!and!services,!the!iDEAL!online!payment!method!was!introduced.!iDEAL!
allows!online!payments!to!be!made!using!online!banking.!
72
!Receivers!in!Ghana!can!get!the!money!in!cash,!on!a!bank!account,!as!MTN!Ghana!Mobile!Money,!or!as!Airtime!
Topup!on!their!mobile!(see!https://www.worldremit.com/en/ghana?gclid=COei0rSg5LoCFUrJtAodOwcA8Q).!
Receivers!in!Nigeria1can!receive!their!money!as!an!instant!bank!deposit!in!their!bank!accounts!of!19!leading!
Nigerian!banks!or!as!Mobile!Topup!(see!!
https://www.worldremit.com/en/nigeria?gclid=CPbnlcSj5LoCFQjKtAodEGcA3w).!
71

72*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

One!of!the!benefits!of!these!innovations!is!that!it!brings!along!new!opportunities!in!decisionY
maker!power!over!the!mode!of!transfer!and!the!use!of!remittances!for!senders!and!receivers.!
Some! new! models! offer! senders! control! over! where! and! how! funds! are! spent,! such! as!
Regalii! in! the! Dominican! Republic! (www.regalii.com).! The! company! has! devised! a! way! for!
people,!via!their!mobile!devices,!to!send!remittances!to!their!families!back!home,!which!are!
received!in!the!form!of!credits!to!buy!groceries.73!
!
Send! for! example! offers! opportunities! for! wireless! topYup! of! mobile! phones,! international!
bill!payments!or!paying!for!gift!cards!that!could!be!for!example!used!in!grocery!shops.!And,!
Willstream* in! its! turn! serves! the! Senegalese! community! by! offering! gift! cards! for! bill!
payments! or! groceries.! Their! marketing! message! emphasizes! the! need! for! controlling! the!
use!of!productive!use!of!remittances:!“it’s!important!to!make!sure!the!funds!you!send!are!
used! as! you! intended! them! to! be.”! Another! example! is! the! “Ensure! Your! Family”! service!
developed! by! the! Rotterdam! company! Enviu,! which! “aims! to! help! diasporas! buy! financial!
products,! like! health! insurance! and! house! construction! savings,! for! family! in! their! home!
country.”74!
!
These!innovative!solutions!might!not!directly!lower!the!costs!of!traditional!remittances,!but!
they! do! offer! senders! and! receivers! alternatives! with! reliability! and! valueYadded! benefits!
that!might!outweigh!fee!savings,!according!to!CGAP.!Through!the!use!of!these!innovations,!
receivers! therefore! increasingly! have! influence! over! remittance! channels! and! usage.!
Through!close!communication!with!the!sender,!receivers!can!influence!how!funds!are!sent!
or! the! channel! by! which! they! cashYout.! Remitly! for! example! includes! direct! chat! services!
between!senders!and!receivers!via!their!mobile!app.!(interview!Remitly!11!November!2013)!
According! to! online! sender! WorldRemit,! 30%! of! their! sending! decisions! are! made! with!
receiver! input,! and! FacebookYenabled! sender! Azimo! advertises! the! benefit! of! senderY
receiver!communication!and!through!their!service,!the!recipient!actually!decides!where!they!
want!the!money!sent.!(CGAP!Dalberg!Research)!!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
73

!Interview!CGAP!19!November!2013.!There!have!also!been!other!cases!of!‘directed’!remittances,!such!as!
senboutique.com!in!Senegal.!See!Melissa!Blanchard!(2011),!presented!at!the!University!of!Trento!!
Senboutique.com1or1how1Senegalese1migrants’1use1of1eRcommerce1reshapes1family1relations1and1consumption1
practices.!!
74
!http://enviu.org/nl/ourYwork/ensureYyourYfamilyY2/:!“We!want!...!to!offer!diaspora!the!possibility!to!choose!
and!buy!financial!products!for!their!family!in!the!home!country!directly!online.!We!work!with!local!insurers!and!
banks!to!ensure!that!we!provide!the!people!with!adequate!financial!products!such!as!life!insurance,!health!
insurance!and!pension!products.”!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 73!
!
Beside! Facebook,! the! other! big! power! on! the! Internet,! Google,! is! also! active! in! mobile!
payments.!Google!introduced!the!mobile!payment!system!Google!Wallet!in!the!US!in!2011.75!
It!allows!users!to!store!debit!cards,!credit!cards,!loyalty!cards!and!gift!cards!on!their!phone,!
to! make! payments! by! simply! tapping! the! phone! on! any! PayPassYenabled! terminal! at!
checkout.76!Google!Wallet!is!a!combination!of!a!credit!or!debit!card!and!a!mobile!payment!
service.!The!service!can!easily!be!used!to!send!remittances!within!the!United!States.!Google!
advertises:! “Send! money! to! friends! and! family! and! they! can! spend! it! instantly! with! the!
Google!Wallet!Card.!…!Send!money!to!any!friend!in!the!US!with!an!email!address.!It’s!easy,!
fast! and! free! to! send! from! your! bank! account! or! Google! Wallet! Balance.! …! Send! friends!
money! with! Gmail,! as! easily! as! you’d! send! them! a! picture.”77!Google! combines! a! debit! or!
credit!card!with!a!mobile!payment!service.!Given!the!global!coverage!of!Google,!it!would!be!
a!relatively!small!step!to!extend!the!service!to!international!payments.!!!
!
The! introduction! of! virtual! currency! like! “Bitcoins”! would! strengthen! the! role! of! online!
money!transfers.!Simultaneously!buying,!transfer!and!selling!of!Bitcoins!is!mentioned!as!an!
innovative!solution!for!reducing!the!costs!of!remittances.!The!valuta!specialist!David!Woo!of!
the!Bank!of!America!Merrill!Lynch!expects!that!Bitcoins!can!become!a!serious!competitor!of!
Money! Transfer! Organizations! like! Western! Union! (Het! Financieele! Dagblad,! 6! December!
2013).!However,!this!may!still!be!a!farYfetched!alternative!and!will!not!be!elaborated!in!this!
study.!!
!
However,! another! innovative! online! scheme! that! allows! remittances! at! almost! no! cost!
between! senders! and! receivers! connected! to! the! system! would! be! Auxfin,! which! also!
contributes!to!positive!development!by!creating!incentives!for!community!mobilization!and!
allowing!to!trace!not!only!monetary!payments,!but!also!the!flows!of!commodities!(see!box!
on!following!page).!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
75

!Google!had!already!offered!“Google!Checkout”!in!the!United!States!since!2006!(and!in!the!UK!in!2007).!Google!
Checkout!was!an!online!payment!processing!service!aimed!at!simplifying!the!payment!for!online!purchases.!
Users!stored!their!credit!or!debit!card!and!shipping!information!in!their!Google!Account,!so!that!they!could!
purchase!at!participating!stores!by!clicking!an!onYscreen!button.!The!service!was!discontinued!in!November!2013.!
http://en.wikipedia.org/wiki/Google_Checkout!
76
!http://en.wikipedia.org/wiki/Google_Wallet!
77
!http://www.google.com/wallet/:!!“It’s!free!to!send!money!from!your!Google!Wallet!Balance!or!directly!from!a!
linked!bank!account.!When!you!use!your!credit!or!debit!card!to!send!money,!a!2.9!%!fee!per!transaction!
(minimum!$!0.30)!will!apply!…!Receive!instant!notification!on!your!phone!immediately!after!you!send!and!receive!
money!and!after!every!Google!Wallet!Card!transaction.!You’ll!also!be!able!to!track!all!of!your!Google!Wallet!
transactions!in!the!app!or!at!wallet.coogle.com.!…!Once!you!receive!money!into!your!Wallet!Balance,!you!can!
access!it!instantly!with!the!Google!Wallet!card.!You!can!purchase!in!stores!by!swiping!the!card!at!millions!of!
MasterCard!locations!or!you!can!withdraw!cash!from!ATMs.!You!can!also!transfer!the!money!to!your!bank!
account,!use!it!to!buy!on!Google!Play!or!send!money!to!friends.”!!

74*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

* 1
Auxfin’s*UMVA*value*registration*system*
A! recent! creation! is! Auxfin,! a! highly! innovative! formula! for! “banking! the! unbanked”.! It! allows! the! transfer! of!
remittances!at!almost!no!cost!via!the!UMVA!online!value!registration!and!management!system.!At!the!same!time,!it!
contributes!to!
Y

financial!inclusion!of!migrants!on!the!one!side!and!of!remittances!recipients!on!the!other,!

Y

increased!cooperation!and!social!cohesion!within!migrant!organizations!as!well!as!!local!institutions,!!

Y

spreading!ICT!and!financial!literacy,!

Y

assuring!a!high!level!of!information!on!senders!and!recipients,!!

Y

allowing!better!insight!into!the!use!of!remittances,!!

Y

fighting!corruption!at!the!sending!and!the!receiving!end,!!

Y

and!increasing!transparency!of!all!transactions!and!thus!the!trust!among!the!different!actors!involved.!!

The!system!has!been! tested! with!remittances!from! Senegalese!migrants! in! Spain! to! their! home! country,! and! largeY
scale!applications!are!presently!on!their!way!in!Burundi!and!in!the!DRC!Congo.!!In!Burundi,!about!1.2!million!farmers!
will!be!connected!to!the!system,!which!is!also!used!to!administrate!the!distribution!of!fertilizer!to!the!farmers.!
At!the!core!of!the!system!is!the!UMVA!platform,!which!allows!private!persons!and!organizations!to!open!an!account!In!
any!kind!of!organization!that!works!at!the!rural!level.! The!account!can!be!used!to!send!money!to!all!other!account!
holders!within!the!system.!The!account!holder!thus!obtains!ownership!rights!to!part!of!a!corresponding!account!in!a!
commercial!bank,!which!is!owned!either!by!an!association!or!foundation!in!the!sending!or!the!receiving!country.!
Money! is! sent! within! the! system! by! transferring! amounts! from! one! UMVA! account! (e.g.! in!the! sending!country)! to!
another!UMVA!account!(e.g.!in!the!receiving!country).!The!system!accumulates!these!transactions!and!translates!them!
into!bulk!bank!transfers!from!its!bank!account!in!the!sending!country!to!the!bank!account!of!the!organization!that!uses!
UMVA!in!the!country!of!destination.!While!the!real!transfer!may!take!some!time,!the!money!can!almost!instantly!be!
available!at!the!receiving!end,!because!the!receiver!is!notified!that!money!has!been!sent!to!his/her!UMVA!account,!
and! it! can! either! be! withdrawn! (e.g.! at! post! offices! or! cooperating! microfinance! organizations)! or! used! to! make!
payments! to! other! UMVA! account! holders.! UMVA! accounts! can! not! only! be! created! for! money,! they! can! also! be!
created!for!commodities!(sacks!of!cement,!fertilizer,!coffee,!school!fees,!etc.)!allowing!to!trace!the!use!of!money!for!
important!categories!of!expenditures.!
Users!of!UMVA!accounts!receive!a!basic!computer!training!to!handle!their!account!–!and!to!use!the!internet!for!access!
to! all! kind! of! relevant! information! as! well! as! for! communication! with! family! members! abroad.! The! better! the!
communication!and!the!links!maintained,!the!larger!probably!the!flow!of!remittances!will!be.!
Since!large!groups!of!recipients!and!local!organizations!get!connected!to!the!system!and!open!an!UMVA!account,!the!
system!can!also!be!used!to!make!local!payments,!Y!reducing!the!risky!use!of!cash,!facilitating!the!administration!of!the!
institutions!involved,!increasing!transparency!and!cutting!down!opportunities!for!corruption.!A!central!role!is!played!
by!schools,!where!every!student!can!hold!an!UMVA!account,!where!financial!literacy!can!be!taught,!and!which!also!
reach!out!to!the!parents!to!involve!them!in!the!system.!!
!
For!information!on!AUXFIN,!see!www.auxfin.com.!!!!
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 75!
!
Prepaid1cards!
A! very! easy! way! to! handle! remittances! and! to! reduce! the! price! of! remittances! drastically,!
using!existing!infrastructure,!is!to!issue!prepaid!cards!(debit!cards),!which!could!be!topped!
up! online! or! via! mobile! banking.! These! cards! could! then! be! used! by! receivers! to! withdraw!
cash!at!any!ATM!machine!(probably!only!in!an!urban!environment)!or!to!use!them!directly!to!
make!payments!at!stores!where!the!cards!are!accepted.78!!
!
MasterCard! advertises! prepaid! cards! in! the! Netherlands,! which! cost! only! €10! and! do! not!
require! a! credit! check.79!Prepaid! MasterCards! are! sold! as! “Lucamoney! Cards”! in! Britain! for!
£!4.9980!to!anybody!who!can!show!a!passport!or!UK!driving!license!and!a!proof!of!address.81!
The!Silver!Lycamoney!Card!allows!additional!cards,!linked!to!the!same!account,!which!makes!
it! easy! to! withdraw! money! by! a! different! person! in! a! different! country.! They! are! popular!
among!Ghanaian!migrants!in!Britain.82!
!
Dutch!banks!have!been!very!cautious!with!prepaid!cards!or!second!bank!cards.!The!Dialogue!
Incubator!of!ABN!AMRO!already!in!2010!came!with!the!suggestion!to!use!a!PreYPaid!Family!
Card!for!remittances83,!but!this!proposal!was!not!picked!up!by!the!bank.!A!large!credit!card!
company! that! actually! experiments! with! prepaid! cards! is! even! anxious! to! be! named! in! the!
context! of! remittances.! The! use! by! a! prepaid! card! by! anybody! else! than! the! person! for!
whom!the!card!is!issued!would!for!the!company!be!a!breach!of!contract.!
!
In! the! near! future,! however,! this! problem! can! easily! be! avoided,! when! the! functions! of! a!
prepaid! card! are! incorporated! into! a! mobile! phone,! because! remitters! may! be! inclined! to!
give!a!debit!card!to!a!family!member!in!the!country!of!origin,!but!would!not!easily!cede!their!
mobile!phone!to!anybody!else.!Regulators!are!not!charmed!by!the!use!of!prepaid!cards!by!
third!persons,!because!this!would!not!allow!tracing!the!receiver!of!the!money!withdrawn.!!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
78

!With!the!“Square!Register!app”,!introduced!by!Twitter’s!Chairman!Jack!Dorsey,!prepaid!cards!can!be!processed!
from!a!mobile!phone,!which!may!extend!the!use!of!credit!and!debit!cards!considerably,!especially!in!areas!with!
few!ATM!tellers.!Square!processes!some!USY$!15!billion!annually.!(Time,!13!January!2014,!22)!
79
!https://www.skrill.com/nl/skrillYprepaidY
mastercard/overview/?rid=16730621&gclid=CIjCi4y_srsCFY5b3godsV0A_g!
80
!Even!that!small!amount!is!returned!to!the!card!owner!as!a!credit!once!the!owner!has!activated!and!loaded!the!
card!for!the!first!time.!!
81
!www.lucamoney.co.uk/!!
82
!Molenaar!(2013,!28),!too,!mentions!lending!a!card!to!a!family!member!in!Ghana,!who!can!then!withdraw!
money!from!an!Amsterdam!account!of!a!migrant!at!a!local!ATM!in!Accra,!as!one!of!the!informal!ways!of!
transferring!money.!
83
!Business!Case:!Remittances.!Presentation!by!Timo!Mulder,!Divya!S.!Chadha!and!Jaspar!Roos,!Dialogues!
Incubator,!ABNYAMRO,!1!June!2010.!!

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REMITTANCES*MARKET*IN*THE*NETHERLANDS!

IV.4.4!! Reduction!of!compliance!requirements!
!
Part!of!the!costs!for!remittance!service!providers!arises!because!of!the!required!compliance!
with! relevant! laws! and! regulations,! Y! in! the! sending! and! in! the! receiving! country.! If! these!
requirements!were!somehow!more!lenient,!remittance!transfer!could!be!cheaper!(but!at!a!
risk).! According! to! the! DNB,! it! is! expected! that! the! coming! Fourth! EU! Directive! on! Money!
Laundering!will!contain!rather!stricter!than!more!lenient!requirements.84!EMA!confirms!that!
it! expects! harsher! regulations,! which! will! potentially! influence! all! low! value! payment!
transactions!in!Europe.85!!!
!
After! “9/11”! in! 2001,! international! pressure! has! increased! to! sharpen! regulations! and! to!
improve!the!surveillance!of!international!money!transfers!to!prevent!payments!to!terrorist!
organizations!and!money!laundering.!“Since!September!11,!2001,!regulations!have!required!
MTOs!and!financial!institutions!apply!stricter!requirements!to!remittance!transactions,!such!
as!tightened!Know!Your!Customer!guidelines,!the!Bank!Secrecy!Act,!and!the!Patriot!Act.!
These!requirements!have!made!the!internal!costs!of!regulatory!compliance!soar.!According!
to!one!major!business,!MTOs!and!financial!institutions!often!have!to!devote!as!much!as!65!
percent!of!their!time!and!personnel!to!compliance!issues.”!(Orozco!2013,!83Y84)!
!
Recent!analysis!by!Mara!Wesseling!has!shown!that!the!existing!regulations!would!not!have!
prevented! “9/11”! and! probably! did! not! have! an! impact! on! the! availability! of! money! to!
terrorist!organisations.86!And,!if!CGAP’s!prognosis!is!right,!this!could!mean!that!the!stricter!
(identification)!compliance!requirements!expected!will!most!likely!lead!to!an!increase!in!the!
use!of!informal!channels!for!remittance!transfers.!!
!
During! the! EU! DEVCO! Workshop,! it! was! argued! that! the! focus! placed! on! regulatory! issues!
and!compliance!requirements!as!a!contributing!factor!to!lowering!remittance!costs!might!be!
too!singleYfocused.!While!reduced!requirements!are!often!cited!as!a!way!to!lower!costs!of!
remittances,! these! changes! require! stamina! for! the! longYterm! as! regulations! are! not!
changed! over! night.! In! the! long! run! they! could! increase! competition! and! expand! room! for!
innovation,!but!remittances!will!remain!a!commodity!that!is!served!by!industry!players!with!
commercial!interests.!(from!Takashi!Mobile,!interview!7!November!2013)!!!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
84

!Interview!at!the!DNB!on!7!October!2013.!A!detailed!overview!of!all!EU!policy!documents!on!financial!crimes!
can!be!found!on!http://ec.europa.eu/internal_market/company/financialYcrime/index_en.htm#laundering!
85
!Phone!interview!with!EMA!on!18!November!2012.!
86
!Mara!Wessling!Y!The1European1fight1against1terrorism1financing:1professional1fields1and1new1governing1
practices.1PhD!dissertation,!University!of!Amsterdam,!defended!on!3!September!2013.!!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 77!
!
Compliance1requirements1in1the1EU1
According! to! the! Global! Payment! Systems! Survey! 2010! of! the! World! Bank,! euroYarea!
countries! show! the! highest! percentages! of! countries! with! relatively! strict! requirements!
regarding! transparency! of! remittance! services87:! “The! high! level! of! transparency! in! this!
region! is! explained! to! a! large! extent! by! the! disclosure! and! consumer! protection!
requirements! under! the! EU! Payment! Services! Directive! 2007/64/EC.”! The! national!
implementation! of! EU! directives! varies! from! country! to! country! (e.g.! with! different!
thresholds! for! identification! requirements),! with! more! elaborated! requirements! in! Great!
Britain,!Germany!and!the!Netherlands,!and!other!countries!“catching!up”.!
!
Compliance1requirements1in1African1countries!
Many!African!countries!do!not!have!fully!convertible!currencies,!and!they!show!considerable!
balance!of!payments!deficits.!They!therefore!try!to!apply!strict!controls!on!foreign!currency!
flows.! ! “Most! African! countries! permit! only! banks! to! pay! remittances.! In! most! countries,!
banks!constitute!over!50!percent!of!the!businesses!undertaking!money!transfers.!About!41!
percent! of! payments! and! 65! percent! of! all! payout! outlets! are! serviced! by! banks! in!
partnerships! with! Western! Union! and! MoneyGram! –! the! two! dominant! MTOs! on! the!
continent.!Indeed,!such!partnership!agreements!are!major!obstacles!to!the!development!of!
[other]!mechanisms!for!remittance!transfers.”!(Dia!Kamgnia!&!Murinde!2012,!4)!
!
In!many!countries,!MTOs!have!concluded!exclusive!arrangements!with!banks!for!remittances!
payments.! The! lack! of! competition! in! many! African! markets! for! remittances! services! has!
kept! prices! relatively! high,–and! has! thus! contributed! to! a! largeYscale! use! of! informal!
channels!for!remittances.!In!fact,!in!a!recent!survey,!almost!70! percent!of!central!banks!in!
SubYSaharan!Africa!cited!high!costs!as!the!most!important!factor!inhibiting!the!use!of!formal!
remittance! channels.! (Irving,! Mohapatra,! and! Ratha! 2010)! In! countries,! where! the! official!
exchange! of! the! currency! is! below! the! rate! that! is! paid! on! the! black! market! for! foreign!
currency,! this! forms! an! additional! incentive! to! prefer! informal! channels! and! to! bypass! the!
official!banking!system.88!
!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
87

!World!Bank,!Payment!Systems!Worldwide,!2011,!90Y92!
!Writing!not!about!Africa,!but!about!Latin!America,!Orozco!(2013,!85)!states!that!“informal!businesses!typically!
operate!in!countries!where!flows!are!not!particularly!attractive!to!companies!because!of!their!small!volume,!
foreign!currency!transfers!are!highly!regulated,!technology!is!still!inaccessible!to!individuals!and!businesses,!or!
customers!prefer!personYtoYperson!delivery.”!

88

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REMITTANCES*MARKET*IN*THE*NETHERLANDS!

In! many! international! forums,! recommendations! are! made! that! have! the! objective! to!
influence!regulations!in!remittances!receiving!countries!and!to!make!local!payments!systems!
more! competitive! and! more! effective.89!! The! government! of! the! Netherlands! can! support!
such!efforts,!but!changes!of!national!regulations!in!developing!countries!are!largely!beyond!
reach!of!Dutch!policies.!This!report!therefore!limits!itself!to!some!short!remarks!on!the!four!
countries!chosen.!!
!
(a) Nigeria*
In! Nigeria,! “the! presence! of! exclusive! agreements! has! been! a! primary! cause! for! lack! of!
competition”:! “As! of! 2007,! twentyYone! out! of! twentyYfive! banks! operating! in! Nigeria! have!
agreements!with!MTOs.!Fifteen!banks!work!with!Western!Union,!five!with!MoneyGram,!and!
one! with! Coinstar! and! Vigo! Corporation! (Vigo! is! owned! by! Western! Union).! Thus,! Western!
Union!controls!approximately!80!percent!of!money!transfer!through!banks.”!(Orozco!2013,!
93).!“In!November!2008,!however,!the!Central!Bank!of!Nigeria!warned!banks!against!signing!
exclusive!deals!with!MTOs!to!hinder!competition!in!a!deregulated!environment.!All!deposit!
money! banks! were! notified! that! the! Central! Bank! of! Nigeria! would! no! longer! approve! any!
money! transfer! agreements! between! International! Money! Transfer! Operators! and! agent!
banks!that!contain!exclusivity!clauses.”!(Orozco!2013,!100,!note!22)!
!
While! competition! as! a! result! may! increase,! another! important! bottleneck! is! the! limited!
extension!of!the!banking!network!in!the!country:!“The!geographic!diffusion!of!bank!branches,!
while!very!important,!is!not!sufficient!to!ensure!effective!delivery!across!the!country.!Nearly!
35!percent!of!all!bank!branches!are!based!in!Lagos!(29!percent)!and!Abuja!(6!percent)!alone.!
Therefore! people! may! be! finding! alternative! ways! for! transferring! remittances! in! order! to!
address! the! lack! of! choice.”! (Orozco! 2013,! 93)! ! A! possible! remedy! could! be! to! allow! more!
financial!institutions!to!participate!in!the!market,!e.g.!microfinance!organizations!that!reach!
far!into!rural!areas.90!(See!Dia!Kamgnia!&!Murinde!2012)!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
89

!GMTS!(London,!2013),!EU!DEVCO!(November!2013),!IFAD!(Bangkok,!2013),!Wereldbank!
!See!Dia!Kamgnia!&!Murinde!2012:!Microfinance!Institutions!actually!do!not!account!for!more!than!five!procent!
of!all!remittances!payouts!in!Africa!(according!to!UNCTAD!2012).!!
“In!many!countries!Y!including!Kenya,!the!Philippines,!Bangladesh,!Jamaica!and!India–!it!is!possible!to!send!
remittances!without!having!to!use!banks.!Providing!regulation!that!is!accommodating!to!new!business!models!
will!be!increasingly!important!moving!forward.!New!technological!advancements!in!mobile!phones!and!Internet,!
and!as!such!new!operating!models,!highlight!the!need!to!amend!regulation,!or!the!implementation!and!
interpretation!of!regulation,!to!accommodate!and!reflect!changes!in!the!market.”!Developing!Markets!Associates,!
2011,!4.!

90

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 79!
!
The!opportunities!for!cheap!remittances!may!dramatically!increase!in!the!future,!if!the!plans!
are! realized! to! equip! large! numbers! of! Nigerian! citizens! with! an! ID! card,! which! combines!
identity! functions! with! other! applications! including! the! MasterCard! prepaid! payment!
functionality.91!This! would! ease! remittances! payments! through! formal! channels.! This! does!
not!imply!automatically,!however,!that!most!remittances!senders!will!really!make!use!of!the!
cards,!since!there!are!many!reasons!to!keep!these!flows!out!of!the!official!system.!!
!
(b) Somalia*
There! still! is! an! almost! total! absence! of! oversight! or! regulation! of! financial! transactions! in!
Somalia.!With!the!recent!closure!of!the!last!international!Bank!in!Somalia92,!´the!remittance!
companies!are!the!sole!international!financial!institutions!operating!in!Somalia.!Omer!wrote!
about! ten! years! ago! “Regardless! of! the! formation! of! a! strong! central! government! and/or!
banking!system!in!Somalia,!the!remittance/Hawala!system!will!remain!an!integral!part!of!the!
Somali! economy! and! monetary! system! for! the! foreseeable! future.! The! reasons! were! as!
follows:!!
!
Y

Remittance!companies!have!the!trust!and!confidence!of!their!customers;!

Y

Remittance!companies!have!an!extensive!network!of!agents!that!service!almost!all!
the! towns! and! villages! in! Somalia;! as! well! as! all! major! cities! and! towns! in! other!
countries!populated!by!Somali!Diaspora;!

Y

Remittance!operations!are!far!more!efficient!than!other!financial!services;!

Y

There!are!social!and!historical!factors!that!reinforce!a!relationship!of!trust!between!
individuals! who! are! doing! business,! these! are! tied! to! the! extended! family,!
geographic!and!clan!factors;!

Y

The!cost!of!remittance!is!far!cheaper!than!other!financial!institutions,!such!as!banks.!

!
Currently,! the! context! in! Somalia! seems! to! be! more! favourable! to! new! financial! players!
entering! the! market.! Since! 2009,! a! growing! number! of! mobile! providers! are! offering! their!
services! in! Somalia,! allowing! for! the! growth! of! mobile! banking! technology! and! services! to!
take!a!hold!in!the!country.!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
91

!MasterCard!Inc.,!the!secondYbiggest!United!States!payment!network,!is!working!with!the!Federal!Government!
of!Nigeria!to!issue!13!million!debit!cards!in!Nigeria,!which!will!also!act!as!identity!cards.!See!
http://www.punchng.com/business/money/mastercardYplansY13YmillionYdebitidYcardsYforYnigeria/!!Under!this!
plan,!the!Nigerian!National!Identity!Management!Commission!plans!to!introduce!more!than!100!million!cards!to!
Nigeria’s!167!million!citizens.!http://www.technologytimes.ng/mastercardYparleysYjonathanYcashlessYnigeria/!
92
!See!e.g.!http://www.somsa.co.uk/newsYpress/!

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REMITTANCES*MARKET*IN*THE*NETHERLANDS!
(c) Ghana*

A! recent! study! by! Developing! Markets! Associates! (2011,! 4)! concludes! “the! Bank! of! Ghana!
also!has!a!role!to!play!in!reducing!the!dependency!on!banks!in!the!money!transfer!process.!
At!present!regulation!in!Ghana!means!that!remittance!payout!outlets!are!confined!to!banks!
and!the!Post!Office!or!agents!that!have!to!be!visited!by!the!Bank!of!Ghana.!All!international!
remittances! into! Ghana! must! be! channelled! through! these! institutions.! This! regulation!
restricts! competition! in! the! market! (and! thus! prices)! and! affects! the! convenience! for! rural!
recipients! where! long! travel! distances! can! be! expensive! in! terms! of! both! time! and! cost.!
These! factors! contribute! to! making! the! informal! market! more! attractive.! A! change! in! the!
regulation,! to! open! up! the! international! remittance! market! to! other! outlets,! such! as! retail!
outlets!and!mobile!phone!kiosks,!would!therefore!help!to!tackle!some!of!these!issues.!It!is!
acknowledged!that!the!Bank!of!Ghana!has!issued!guidance!notes!on!Branchless!Banking!for!a!
bankYled! model.! This! is! a! good! step! in! the! right! direction! but! implementation! of! nonYbank!
agents!is!extremely!slow!due!to!the!requirement!for!the!bank!of!Ghana!to!visit!every!single!
agent!location.”!
!
(d) Ethiopia*
The! website! of! the! National! Bank! of! Ethiopia! provides! a! good! overview! of! the! current!
regulation! of! remittances.93!! Recognized! Remittance! Service! Providers! are! only! “licensed!
transfer! houses! that! provide! remittance! service! to! customers! either! directly! by! banks! via!
SWIFT!or!through!money!transferring!agents!working!in!association!with!banks.”!
However,!Ethiopia!seems!to!be!a!good!example!of!how!stringent!regulations!together!with!
official!exchange!rates!below!the!street!market!value!of!foreign!currencies!push!remittances!
payments!into!unofficial!channels,!as!our!interviews!seem!to!suggest.!As!long!as!the!disparity!
of!exchange!rates!remains!in!existence,!cheaper!transfer!costs!via!the!official!channels!could!
not!compensate!for!the!unattractive!exchange!rates!in!the!informal!markets.!Changes!in!the!
regulations! alone! would! therefore! have! not! a! big! effect! on! the! amount! of! money! that! the!
receivers!obtain.!!!
!
IV.4.5!! Influence!on!costs!in!receiving!countries!
!
Lastly,! we! turn! to! the! influence! that! receiving! countries! can! have! on! the! cost! structure! of!
remittances.!As!the!report!so!far!has!shown,!the!African!remittance!market!has!a!low!level!of!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
93

!http://www.nbe.gov.et/remittanceservice/index.html!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 81!
!
competition!in!comparison!to!other!regions,!especially!when!compared!to!the!Asian!market.!
Two!Money!Transfer!Operators!dominate!about!65%!of!the!African!remittance!market.!Due!
to! exclusivity! agreements! that! were! once! made,! these! two! operators! now! control! most!
remittance! payout! locations,! and! thus! have! the! power! to! determine! prices,! locations! and!
type! of! services! that! recipients! of! remittances! depend! on.! Such! regulatory! arrangements!
have! severely! undermined! the! level! of! competition! on! the! continent! and! have! created!
barriers! to! entry! for! new! players,! such! as! MFIs! or! post! offices.! These! factors! embedded! in!
the!recipient!country!have!direct!influence!on!the!cost!of!remittances.!!
!
It! should! be! noted! that! introducing! innovations! at! the! receiving! end! does! not! necessarily!
bring! down! costs! considerably.! CGAP! argues! that! the! cost! structure! of! remittances! is! built!
across! an! endYtoYend! remittance! corridor.! (from! interview! CGAP! 19! November! 2013)! ! This!
implies! that! reducing! costs! only! at! one! end! will! most! likely! not! have! the! expected! impact.!
Rather,! it! is! argued! that! measures! should! be! taking! to! reduce! costs! at! both! sending! and!
receiving!sides!congruently.!Therefore,!changes!in!the!infrastructure!at!the!receiving!end!for!
example,! would! have! little! potential! to! reduce! the! overall! cost! structure! of! remittance! if!
measures!would!not!be!taken!to!improve!the!level!of!efficiency!across!the!whole!value!chain.!!
!
Having! said! that,! there! are! opportunities! that! combine! two! seemingly! separate! worlds:!
lowering! the! costs! of! remittances,! while! supporting! financial! inclusion! for! remittance!
recipients.!There!are!case!examples!where!commercial!payment!services!have!collaborated!
with!governments!in!order!to!not!only!include!citizens!in!the!traditional!financial!sector,!but!
also! to! incorporate! them! into! national! databases.! For! example,! the! MasterCard’s!
collaboration! with! the! Federal! Government! of! Nigeria! to! issue! 13! million! ID! cards,! which!
combine! identify! functions! with! other! applications! including! the! MasterCard! prepaid!
payment!functionality.!Or,!for!example,!Micro!Finance!Institutions!(MFIs)!could!prove!to!be!
effective!remittance!disbursers!when!provided!the!right!capacity,!as!20%!of!people!receiving!
remittances! live! within! the! reach! of! MFIs.! Yet,! in! 2009! they! represented! only! less! than! 3!
percent!of!remittance!payers.!!
!
We! have! also! seen! in! Kenya! what! innovative! technologies! could! mean! for! countries! with!
limited! financial! infrastructures.! The! introduction! of! MYPesa,! the! mobile! money! transfer!
service,!is!now!offering!financial!payment!services!to!millions!of!Kenyans!and!is!exploring!the!
market!for!international!mYpayments.!Still,!some!issues!inhibit!initiatives!such!as!MYPesa!to!

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successfully! expand! their! services! across! remittances! corridors.! Factors! pertaining! crossY
border!mYpayments!are!for!example!the!required!authorization!to!act!as!a!paying!institution,!
limits!on!and!requirements!of!the!amount!of!money!transferred,!the!possibility!of!owning!a!
foreign!currency!account!and!issues!related!to!AML!regulations.!!
!
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 83!
!

V.*Recommendations*
!
!
These! recommendations! follow! an! intensive! period! of! research! in! which! 55! people! have!
been! interviewed,! primary! data! has! been! gathered! and! secondary! literature! has! been!
studied.!These!recommendations!consider!those!issues!relevant!for!the!three!sectors!under!
study:! the! financial! sector,! the! public! sector,! and! migrant! organizations.! For! additional!
recommendations! regarding! data! gathering,! the! further! development! of! the! EU! Payment!
Services!Directive,!the!General!Principles!for!international!remittance!services!of!the!World!
Bank,!Policy!Cohesion!and!the!development!of!a!European!Remittances!Portal,!we!suggest!to!
study!the!recommendations!in!the!EU!Report!by!Isaacs!et!al!(2012).!!
!
While!reading!through!the!recommendations,!it!remains!essential!realizing!the!remittances!
market! is! a! fastYchanging! industry! that! requires! a! forwardYlooking! approach! when! policies!
are!developed!and!actions!are!taken.!
!

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V.1**Recommendations*for*the*Dutch*government*
!
V.1.1.!Support!to!financial!literacy!programmes!“2.0”!of!migrant!organizations!
!
This!report!has!shown!that!there!are!many!new!opportunities!for!migrants!to!send!money!
home!at!considerably!lower!costs!than!they!run!now,!and!these!opportunities!will!certainly!
increase!in!the!future!(see!IV!Cost!reduction!for!remittances).!Migrants!are!often!not!aware!
of!these!new!channels,!and!a!new!generation!of!financial!literacy!programmes!“2.0”!could!
assist! them! in! this! respect! (see! recommendations! for! migrant! organizations,! V.3.! Financial!
literacy! programmes! “2.0”).! There! is! now! considerable! experience! how! such! awareness!
raising!programmes!should!be!organized!(FReDI!Handbook!by!GiZ).!Combining!efforts!in!this!
field! could! proof! beneficial! in! terms! of! outreach! and! impact:! linking! financial! education!
programmes! to! priceYcomparison! websites! (see! recommendation! V.1.6)! could! prove!
efficient!and!meeting!the!expectations!of!the!target!audience.!!
!
V.1.2!Support!to!“Financial!Services!Deepening”!in!receiving!countries!
!
One! of! the! reasons! why! migrants! do! not! make! more! use! of! the! new! channels! is! a! lack! of!
financial! infrastructure! in! their! countries! of! origin.! This! includes! the! low! percentage! of!
citizens! with! a! bank! account,! a! limited! number! of! ATMYmachines,! limited! facilities! to! send!
and/or! receive! “eYmoney”! on! mobile! phones,! exclusive! agreements! between! MTO’s! and!
banks,!unconvertible!currencies!or!artificial!exchange!rates,!cumbersome!banking!regulation,!
restrictions!for!Microfinance!Institutions!(MFIs),!bureaucratic!bank!procedures,!etc.!This!has!
not!been!a!priority!area!of!development!cooperation!in!the!past,!but!more!attention!to!this!
field!could!take!away!many!of!the!bottlenecks!for!a!broader!use!of!formal!transfer!channels!
and!a!reduction!of!the!costs!of!remittances.!!
!
V.1.3!!!Support!to!innovative!transfer!schemes!
!
While! the! financial! services! sector! will! introduce! many! innovations! in! the! field! of!
international! money! transfer,! development! cooperation! could! support! new! forms! of!
integrating!innovative!money!transfer!schemes!into!broader!development!programmes.!The!
Auxfin!initiative!(see!page!74)!is!a!good!example!for!that,!since!it!goes!much!further!than!the!
mere! transfer! of! remittances.! It! creates! incentives! for! a! better! organization! among! the!
migrant! population,! it! links! the! transfers! to! community! organizations! in! the! receiving!
country,! it! supports! the! shift! from! cash! transactions! to! less! risky! and! more! transparent!

!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 85!

electronic! transfers,! and! it! helps! to! fight! corruption! by! accounting! not! only! for! monetary!
flows,! but! also! for! material! transactions.! Such! initiatives! could! make! an! important!
contribution! to! reach! several! development! goals! simultaneously,! and! to! use! the! flow! of!
private!money!as!a!leverage!to!achieve!public!objectives.!!
!
V.1.!4!!!Support!for!microYfinance!institutions!as!remittance!payment!agents!
!
The! further! expansion! of! microfinance! institutions! (MFIs)! and! their! integration! into! such!
innovative! schemes! could! help! to! bridge! the! “last! mile”! in! rural! areas! in! many! countries.!
That! would! often! entail! a! change! in! regulations,! allowing! for! a! greater! role! of! MFIs! in!
receiving! remittances.! Building! the! capacity! of! MFIs! to! cope! with! the! required! procedures!
and! regulations,! and! to! deal! with! questions! of! liquidity! and! foreign! exchange! would! be!
essential.!In!addition,!capacityYbuilding!support!to!such!institutions!need!to!be!accompanied!
by! financial! education! programmes! for! the! people! they! wish! to! serve,! the! recipients! of!
remittances!(in!line!with!the!FReDI!recommendations!offered!by!GiZ!and!the!work!of!CGAP).!!!
!
V.1.5!!Encouraging!mobile!money!transfer!
!
It!is!a!remarkable!that!mobile!money!transfer!has!become!possible!in!some!of!the!poorest!
and!most!conflict!prone!countries!(Afghanistan,!DRC),!but!not!in!other!developing!countries,!
where!the!situation!is!more!stable!and!the!infrastructure!more!developed!(and!thus!already!
offering!a!more!efficient!and!safe!payment!system).!Similar!facilities!in!other!countries!with!
a!low!bank!penetration,!but!a!high!number!of!people!with!mobile!phones,!could!make!a!very!
important! contribution! to! reduce! the! costs! of! remittances! and! to! streamline! payment!
services.!A!support!to!such!initiatives,!as!DFID!gave!in!the!early!phase!of!the!discussions!that!
lead!to!the!creation!of!MYPESA,!would!fit!well!into!a!policy!to!achieve!the!“5!x!5”!objectives.!
!
V.1.!6!!!Support!to!priceYcomparison!websites!
Though!comparative!information!on!the!costs!of!different!channels!is!not!always!effectively!
used!by!migrants!(Orozco!2013,!61),!it!has!an!important!function.!The!now!defunct!website!
“geldnaarhuis”! should! be! revived! –! with! a! greater! emphasis! on! the! different! new! and!
alternative!channels!that!have!come!into!existence,!as!was!emphasized!during!the!EU!level!
discussion! on! meeting! the! G20! 5x5! objective.! It! could! be! expanded! to! serve! a! broader!
purpose! focused! on! meeting! the! needs! of! its! target! group.! This! could! involve! including! an!
online! financial! education! programme! and/or! linking! the! site! to! opportunities! for!

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development! or! investment! in! home! countries.! The! EU! report! (Isaacs,! 2012)! offers!
recommendations! for! the! configuration! and! support! structure! of! such! price! comparison!
website.! Different! structures! could! be! thought! of! where! the! programme! is! fully! or! partly!
funded!by!the!government,!and/or!coYfinanced!by!the!private!sector.!However,!in!practice!
most!‘surviving’!models!required!some!form!of!government!funding.!!
!
V1.7!Continued!crossYsectoral!discussions!
!
The!steering!committee!that!was!established!for!the!purpose!of!supporting!the!research!that!
lead! to! this! report! was! a! first! step! towards! structural! discussions! between! different!
representatives! in! the! industry.! It! represents! a! mix! of! interest! groups! (representing! banks!
and!MTOs),!public!institutions,!regulatory!bodies,!and!academics.!It!is!advisable!to!continue!
discussions! after! the! report! has! been! approved! to! discuss! shortYterm,! midYterm! and! longY
term!plans!for!addressing!structural!issues!that!the!remittance!market!is!dealing!with.!Such!
sessions! should! be! fed! by! consultative! sessions! with! migrant! representatives! and! results!
could!feed!back!into!these!groups.!!
!
V.1.8!!Cooperation!in!international!organizations!
!
Many! initiatives! at! the! global! and! regional! level! have! been! taken,! which! the! Dutch!
government!can!(continue!to)!support!in!order!to!!
Y

improve!financial!services!in!countries!of!origin!and!make!them!more!inclusive,!

Y

reduce!the!obstacles!for!international!mobile!money!transfers,!

Y

adapt! international! regulations! regarding! antiYmoney! laundering! and! crime!
prevention!to!the!actual!risks,!

Y

support! institutions! like! the! African! Institute! for! Remittances! to! gather! relevant!
statistics! and! to! spread! information! on! innovative! ways! to! transfer! and! use!
remittances.!

*

*

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REMITTANCES*MARKET*IN*THE*NETHERLANDS* 87!

V.2**Recommendations*for*regulators**
!
V.2.1!!Constructive!international!discussion!on!regulatory!changes!
!
The!unintended!consequence!of!increasing!regulatory!oversight!because!of!perceived!risks!in!
the! sector! is! a! growing! use! of! the! informal! sector.! From! discussions! with! migrant!
representatives,!as!with!industry!players,!it!follows!that!increasing!identity!requirements!for!
low!value!transactions!and!having!the!sector!adhere!to!more!reporting!requirements!carries!
the! potential! of! increased! costs,! and! a! push! of! customers! towards! the! informal! sector.!
Regulators! are! urged! to! support! international! discussions! on! transnational! approaches!
towards! a! balanced! regulatory! framework! that! weighs! perceived! risks! with! the! burden! of!
compliance.!The!followYup!discussion!organized!by!the!EU!G20!coordinator!at!EU!DEVCO!in!
the!coming!months!could!be!relevant.!!
!
V.2.2!!Interaction!with!peers!in!developing!countries!
!
An! efficient! and! transparent! remittance! industry! will! require! action! at! both! ends! of! the!
transfer! process.! Inviting! interaction! with! peers! in! developing! countries,! and! specifically! in!
the! corridors! served! by! the! Dutch! market,! would! stimulate! the! development! of! regulatory!
frameworks!that!respond!to!transnational!trends.!!
!
V.2.3!ProYactive!approach!towards!innovators!
!
If!the!proposed!changes!in!the!4th!AML!Directive!(“the!MLD4”)!are!adopted,!this!will!have!a!
serious! impact! on! the! remittancesYrelated! services! offered! by! electronic! money! providers!
(including! telco’s,! cardYbased! services! and! online! services).! Rather! than! waiting! for! the!
regulations!to!take!hold,!it!is!advisable!for!Dutch!regulators!to!take!on!a!proYactive!approach!
towards! the! industry! and! continue! discussions! with! industry! players! to! develop! adequate!
responses!for!the!Dutch!market!to!the!changes!at!the!European!level.!!

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V.2.4!Include!migrant!representatives!in!Maatschappelijk!Overleg!Betalingsverkeer94!!
!
Migrant! communities! are! currently! not! approached! as! a! separate! market! segment! in! the!
financial! sector,! nor! by! regulatory! bodies! and! are! therefore! more! or! less! a! ‘blind! spot’! for!
authorities.!However,!this!report!has!shown!that!the!type!of!industry,!as!well!as!the!specific!
needs!and!requirements!of!migrants!would!request!a!targeted!approach.!It!is!suggested!to!
include! migrant! representation! in! the! biannual! discussion! of! the! MOB! (Maatschappelijk!
Overleg!Betalingsverkeer),!which!allows!civil!society!to!participate!in!discussions!on!relevant!
paymentsYrelated! issues! in! the! Netherlands.! This! could! take! shape! in! the! form! of!
consultative!feedback!sessions!with!migrant!communities,!as!the!diversity!of!the!population!
might!not!offer!the!opportunity!for!‘a!single!voice’!at!a!biannual!meeting.!
!
V.2.5!Renewed!investigation!of!market!dynamics!
Based! on! the! reports! from! other! countries! on! potential! malYpractice! of! remittance! service!
providers,! especially! in! the! field! of! transparency! and! informationYprovision! on! foreign!
exchange! rates,! it! would! be! advisable! for! the! Authority! Financial! Markets! (AFM)! to!
reinvestigate!the!sector,!based!on!two!notions!that!follow!from!this!report!in!chapter!II!and!
IV:!(1)!migrants!might!be!a!‘blind!spot’!to!authorities!(and!are!less!inclined!to!file!complaints),!
and!(2)!remittances!prices!might!include!hidden!costs!in!foreign!exchange!rates.!!

*

*

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
94

!The!National!Forum!on!the!Payment!System!(known!by!its!Dutch!acronym!MOB)!promotes!the!efficiency!of!the!
Dutch!payments!system.!Broadly!based,!the!Forum!represents!both!the!providers!and!the!users!of!payment!
systems,!including!retailers’!and!banks’!umbrella!organizations,!the!consumer!interest!association!
Consumentenbond,!and!disabled!people’s!organizations.!The!Forum!holds!regular!consultations!on!the!social!
implications!of!developments!in!payment!systems.!Its!key!focus!is!to!establish!how!the!payments!system!can!be!
run!more!efficiently!for!consumers,!businesses!and!banks!alike!–!which!is!why!the!Forum!brings!together!players!
from!different!ends!of!the!payments!spectrum.!The!MOB!does!not!merely!collect!and!analyses!data,!it!also!makes!
baseline!agreements.!The!Dutch!Central!bank!chairs!the!Forum.!In!addition!to!the!core!group,!the!Forum!has!
working!groups!focusing!on!particular!issues!and!a!special!consultative!platform.”!(source:!NVB)!

!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 89!

V.3**Recommendations*for*financial*institutions*
V.3.1**Recommendations*for*Dutch*banks*
!
V.3.1.1!!!Reduction!of!perceived!thresholds!for!migrants!
!
The! large! Dutch! banks! do! not! explicitly! target! the! migrant! population! in! the! Netherlands,!
though!it!is!a!considerable!percentage!of!the!Dutch!population.!More!explicit!efforts!could!
be! made! to! address! a! migrant! audience! and! to! reduce! the! (perceived)! thresholds! for!
financial!services!offered!by!banks.!Banks!could!encourage!their!staff!to!participate!actively!
in!financial!literacy!programmes!of!migrant!communities,!which!would!also!help!to!reduce!
the!social!distance!between!the!banks!and!many!migrants.!!
!
V.3.1.2!!Negotiate!reduction!of!“OUR”!costs!with!partner!banks!
!
While! the! transfer! provisions! of! banks! for! money! transfers! to! the! countries! of! origin! are!
relatively!low,!the!“OUR”!costs!charged!for!the!services!of!the!correspondent!(intermediary)!
banks!in!the!receiving!country!can!be!quite!high.!Negotiations!with!partner!banks!could!take!
increases! in! efficiency! and! competition! into! account! and! lead! to! lower! charges! for! this!
component!of!the!total!remittance!costs.!!
!
V.3.1.3!!Support!to!partner!banks!in!introducing!mobile!money!accounts!
!
The! banking! sector! is! –! for! good! reasons! –! a! quite! conservative! sector.! Banks! could!
distinguish!themselves!from!competitors!if!they!encourage!their!partner!banks!in!receiving!
countries!to!offer!services!like!MYShwari95,!introduced!in!cooperation!with!the!Commercial!
Bank! of! Africa.! Such! forms! of! cooperation! could! trigger! a! more! intensive! use! of! bank!
accounts!for!remittance!transfers.!!
!
V.3.1.4!!Develop!innovative!financial!services!for!“circular”!migrants!
!
Banks!could!increase!their!share!in!the!remittance!market,!if!they!came!up!with!innovative!
products,! which! address! the! increasingly! “transnational”! needs! of! circular! migrants,! who!
simultaneously!build!up!an!existence!“there!and!here”.!These!could!be!saving!and!pension!
accounts,!insurance!products,!(crossYborder)!mortgages,!investment!credits!etc.!adapted!to!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
95

!MYShwari!is!a!new!banking!product!for!MYPESA!customers!that!allows!saving!and!borrowing!money!through!
your!phone!while!earning!interest!on!money!saved.!MYShwari!also!offers!emergency!loans!to!its!customers.!

90*
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REMITTANCES*MARKET*IN*THE*NETHERLANDS!

the! ambitions! of! an! increasingly! mobile! migrant! population! that! creates! bridges! between!
the!sending!and!the!receiving!countries.!
!
V.3.2.**Recommendations*for*MTOs*
!
V.3.2.1!!Know!your!customer!for!product!development!
!
Most!MTOs!and!industry!players!that!were!asked!during!international!events!when!they!had!
last! done! market! research! among! their! customers! into! their! needs! and! requirements,!
answered! negatively.! Especially! traditional! MTOs! working! with! cashYbased! models! and!
agentYnetworks!appeared!to!have!spent!only!limited!attention!to!‘knowing!their!customer’!
for!their!own!marketing.!Innovative!players!on!the!other!hand!use!social!media!and!contextY
related! information! of! their! online! users! to! learn! more! about! customer! behavior.! By!
conducting!market!research,!new!products!could!be!developed!that!could!improve!efficiency!
of!services!and!better!meet!the!needs!of!remitters!and!receivers!of!remittances.!!
!
V.3.2.2!!Engage!more!with!recipients!of!remittances!
!
CGAP!and!others!(such!as!Remitly)!foresee!a!shift!of!focus!from!senders!deciding!on!modes!
of!transfer!and!services,!towards!receivers!having!a!greater!say!in!the!services!that!are!used!
and! the! way! they! receive! the! funds.! It! is! expected! that! app’s! and! digital! solutions! will! be!
offered!to!receivers!that!offer!geoYlocation!services!for!receivers!to!find!out!the!nearest!payY
out!location!on!their!phone,!or!services!such!as!Yelp!that!allow!customerYrating!of!offices!so!
that!potential!clients!can!diversify!their!options.!!
!
V.3.2.3!!1%!Development!fund!
!
A!number!of!migrant!representatives!have!mentioned!that!migrants!would!be!attracted!as!
(new)! customers! if! a! social! purpose! was! added! to! the! service.! Their! suggestion! is! to! work!
together!with!RSPs!in!creating!‘development!funds’!that!could!for!example!be!formed!by!a!
percentage!of!each!transfer!that!is!to!be!deposited!in!the!fund,!and!the!fund!to!be!spent!for!
development! purposes! in! the! corridors! the! RSPs! serve.! This! is! in! line! with! the! wellYknown!
Mexican! ‘Tres! por! Uno’! initiative.! Even! when! costs! might! be! relatively! higher! than! the!
competition,! it! is! expected! that! such! added! services! could! attract! a! larger! customer! base!
(and!thus!perhaps!pulling!in!clients!that!formerly!gave!preference!to!informal!channels).!!

!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 91!

V.4.**Recommendations*for*migrant*organizations*
!
V.4.1!!Financial!literacy!programmes!“2.0”!
!
The!remittance!market!is!in!a!process!of!fast!change.!Even!professionals!active!in!the!market!
often!lack!an!overview!of!recent!developments!and!new!competitors.!It!would!therefore!be!
strange! if! all! migrants! were! aware! of! up! to! date! information! about! the! available! channels!
and! the! costs! of! different! channels! within! the! corridors! most! interesting! for! them.! ! Many!
migrants! regard! themselves! as! fully! financial! literate,! while! they! are! not! aware! of! recently!
created!opportunities.!They!may!not!feel!the!urgency!of!getting!more!information,!because!
many!of!them!have!found!a!way!to!transfer!money!which!is!satisfactory!for!them,!though!it!
may!not!be!the!least!costly,!the!most!secure,!the!fastest,!or!the!most!advantageous!for!the!
receivers.! There! is! certainly! a! need! for! a! new! generation! of! financial! literacy! programmes,!
though! this! need! might! not! be! felt! within! migrant! organizations.! The! recent! Handbook1 on1
financial1 literacy1 for1 remittances1 and1 diaspora1 investments1 (FReDI)! provides! detailed!
suggestions!on!such!programmes.!It!recommends,!for!example,!combining!financial!literacy!
with! other! project! activities,! e.g.! developing! remittanceYlinked! financial! products! in!
cooperation! with! financial! institutions! and! linking! the! trainees! to! the! financial! institutions!
(FReDI,!p.!13).!!
!
V.4.2!!Influence!on!the!financial!system!in!the!receiving!countries!
!
Migrant!organizations!could!stimulate!that!the!receivers!of!remittances!open!bank!accounts,!
which!would!allow!the!use!of!cheaper!channels.!In!countries!where!banks!demand!relatively!
high!initial!deposits,!but!where!owners!of!a!mobile!phone!can!hold!a!mobile!money!account,!
such!accounts!could!fulfill!the!same!function.!!The!same!holds!true!for!the!participation!in!
microfinance! networks.! Migrants! can! inform! family! members! about! the! advantages! of!
channels! for! “accountYtoYaccount”! transactions! and! can! stimulate! them! to! create! such!
accounts.! Beyond! their! influence! on! receiving! family! members,! they! could! sometimes! also!
exercise!some!influence!on!the!regulatory!framework!in!the!receiving!country,!by!proposing!
adaptations!that!would!ease!the!flow!of!remittances.!!
!
!

92*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

V.4.3!!!Aggregation!of!remittances!to!assure!lower!transfer!cost!
!
The! pooling! of! remittances! to! allow! lower! transfer! costs! is! often! done! in! an! informal! way.!
Regulatory! authorities! find! this! worrisome,! since! it! is! against! the! “Know! Your! Customer”!
principle.!However,!innovative!schemes!like!Auxfin!allow!at!the!same!time!the!aggregation!
of!remittance!flows!and!a!detailed!administration!of!the!origin!of!such!flows.!Such!schemes!
should! therefore! meet! less! regulatory! objection.! At! the! same! time,! they! could! give! an!
additional! purpose! to! migrant! organizations,! make! membership! more! attractive,! and!
strengthen! the! links! between! these! organizations! and! local! communities! in! receiving!
countries.!
!
V.4.4!Market!migrant!communities!as!specific!market!segment!
!
As! has! been! mentioned! in! several! of! the! above! recommendations,! migrants! are! in! many!
cases! not! perceived! as! a! specific! market! segment! in! the! Netherlands.! Still,! members! of!
migrant! communities! appear! to! have! very! specific! needs! and! requirements! that! are!
currently! not! met! by! the! financial! sector.! This! conclusion! can! be! drawn! from! the! fact! that!
many!still!prefer!the!informal!services,!above!the!formal.!Migrant!associations!could!play!a!
role! as! intermediaries! in! discussions! with! the! financial! sector! and! proYactively! engage! with!
their!members!as!well!as!with!industry!players!to!address!the!needs!of!their!communities.!
!

!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 93!

References*
!
Beck,!Thorsten!and!María!Soledad!Martínez!Pería,!2009:!What!Explains!the!Price!of!Remittances?!An!
Examination!Across!119!Country!Corridors,!The!World!Bank!Economic!Review,!25(1):!105Y131!
!
Bourenane,!N.,!S.!Bourjij,!L.!Lhériau,!2011:!!Final!Report:!Reducing!the!costs!of!migrants’!remittances!
and!optimizing!their!impact!on!development.!Financial!Products!and!Tools!for!the!Maghreb!Region!
and!the!Franc!Zone,!African!Development!Bank!and!French!Development!Agency!(AFD)!
!
Cockayne,!James,!Shetret,!Liat,!2012:Capitalizing!on!Trust.!Harnessing!Somali!Remittances!for!
Counterterrorism,!Huma!Rights!and!State!Building!
#
st
Collier,!Paul,!2013:!Exodus.!Immigration!and!Multiculturalism!in!the!21 !Century,!London!(Allen!Lane)!
!
CPSS,!The!Wolrd!Bank,!2007:!General!principles!for!international!remittance!services!
!
Davidson,!Neil!and!Claire!Pénicaud,!2012:!Results!from!the!2011!Global!Mobile!Money!Adoption!
Survey,!Groupe!Spéciale!Mobile!Association!(GSMA)!
!
Developing!Markets!Associates,!2011:!Constraints!in!the!UK!to!Ghana!Remittances!Market.!Survey!
Analysis!and!Policy!Recommendations,!UKAID!and!DMA!
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/67581/ConstraintsY
UKYGhana.pdf!
!
Dia!Kamgnia,!Bernadette!and!Victor!Murinde,!2012:!High!Remittance!Costs!in!Africa:!Is!Building!
Regulatory!Capacity!for!Microfinance!Institutions!the!Answer?!!African!Development!Bank,!AfDB!Brief,!
Chief!economist!Complex,!Vol.!3,!Issue!1!
!
Evtimova,!Aneliya!and!Ruben!Koekoek,!2013:!Mobile!Money!as!an!Option!for!Facilitating!Remittance.!
Case!Study:!!Research!within!the!Afghan!community!in!the!Netherlands,!Amsterdam!
!
FSNAU,!Family!Ties:!Remittances!and!Livelihoods!Support!in!Puntland!and!Somaliland.,!June!7,!2013!
!
G20,!2011:!Report!of!the!Development!Working!Group.!Accessed!October!2013!
http://www.g20.utoronto.ca/2011/2011YcannesYdwgY111028Yen.pdf!!
!
GIZ,!2011:!FReDI!(Financial!Literacy!for!Remittances!and!Diaspora!Investments)!
!
IBRD/!The!World!Bank,!2011:!Payment!Systems!Worldwide,!A!Snapshot,!Outcomes!of!the!Global!
Payment!Systems!Survey!2010,!Financial!Infrastructure!Series,!Payment!Systems!Policy!and!Research!
!
IFAD,!2009:!Sending!Money!Home!to!Africa,!Remittances!markets,!enabling!environments!and!
prospects!
!
IFAD,!2013:!The!FFR!Brief,!Five!years!of!the!Financing!Facility!for!Remittances,!Promoting!innovative!
remittance!markets!and!empowering!migrant!workers!and!their!families,!Rome,!May!2013!
!
Isaacs,!Leon,!Carlos!VargasYSilva!and!Sarah!Hugo,!2012:!EU!remittances!for!Developing!Countries,!
Remaining!Barriers,!Challenges,!and!Recommendations.!Final!Report.!July!2012!
!
Irving,!Jacqueline,!Sanket!Mohapatra,!and!Dilip!Ratha.!2010:!Migrant!Remittance!Flows:!Findings!from!
a!Global!Survey!of!Central!Banks.!Working!Paper!194,!World!Bank,!Washington,!DC.!
Kitroeff,!Natalie,!2013:!Immigrants!Pay!Lower!Fees!to!Send!Money!Home,!Helping!to!Ease!Poverty,!in:!
New!York!Times,!30!April!2013!
!

94*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

Kosse,!Anneke!and!Robert!Vermeulen,!2013:!Migrants’!Choices!of!Remittance!Channel:!Do!General!
Payment!Habits!Play!a!Role?,!De!Nederlandsche!Bank,!DNB!Working!Paper,!No.!375!
!
Mehari!Arefaine!Berhe!,!2010:!Thinking!Back!Home.!Determinants!of!remittance!flow!among!
Ethiopian!immigrants!in!Sweden.!A!qualitative!insight!
!
Mohapatra,!Sanket!and!Dilip!Ratha,!2011:!Remittance!Market!in!Africa.!The!World!Bank,!Washington,!
DC!
!
Mohogu,!Mindanda!2006:!African!Remittance!Markets!in!The!Netherlands,!study!commissioned!by!
Cordaid,!April!!
!
Molenaar,!Klaas,!2013:!Je!kunt!een!rivier!niet!twee!keer!oversteken,!Intreerede,!Lector!Financial!
Inculsion!and!New!Entrepreneurship!(De!Haagse!Hogeschool)!
!
Nijkamp,!Peter,!Jacques!Poot!and!Mediha!Sahin!(eds.)!2012:!!Migration!Impact!Assessment.!New!
Horizons,!Cheltenham,!UK!(Edward!Elgar)!
!
Omer,!Abdusalam,!no!date:!!Supporting!Systems!and!Procedures!for!the!Effective!Regulation!and!
Monitoring!of!Somali!Remittance!Companies!(Hawala),!Report!prepared!for!UNDP!Somalia!
http://mirror.undp.org/somalia/Remittance/sspYhawala.pdf!
!
Orozco,!Manual!en!Rachel!Fedewa,!2006:!Leveraging!Efforts!on!Remittances!and!Financial!
Intermediation.!InterYAmerican!Development!Bank.!Working!Paper!24.!December!2006!
!
Orozco,!Manuel,!2013:!Migrant!Remittances!and!Development!in!the!Global!Economy,!Boulder!(Lynne!
Rienner!Publishers)!
!
Orozco!and!Yansura,!2013:!Keeping!the!lifeline!open,!Remittances!and!market!in!Somalia,!for!Oxfam!
Novib!
!
Passas,!Nikos,!2003:!Informal!Value!Transfer!Systems,!Terrorism!and!Money!Laundering,!A!report!to!
the!National!Institute!of!Justice.!Northeastern!University.!November!2003!
!
Rannveig!Agunias,!Dovelyn!and!Kathleen!Newland,!2012:!Developing!a!Road!Map!for!Engaging!
Diasporas!in!Development.!A!Handbook!for!Policymakers!and!Practitioners!in!Home!and!Host!
countries.!IOM!and!MPI!publication!
!!
Shah,!Anand!Ajay,!2007:!The!International!regulation!of!Informal!Value!Transfer!Systems,!Utrecht!Law!
Review!3(2),!December!2007!
!
The!World!Bank,!2007:!General!Principles!for!International!Remittance!Services”,!Washington.!
January!2007!
!
The!World!Bank,!2013:!Remittance!prices!worldwide.!An!analysis!of!trends!in!the!average!total!cost!of!
migrant!remittance!services.!Issue!No!6YJuly!2013!
!
The!World!Bank,!Isaacs,!2012:!Remittances!Prices!worldwide,!Index!2012!
!
The!World!Bank,!2013:!World!Development!Report!2014!
http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTWDRS/EXTNWDR2013/0,,c
ontentMDK:23330018~pagePK:8258258~piPK:8258412~theSitePK:8258025,00.html!!
!
Unger!and!Siegel,!2006:!NetherlandsYSuriname!Remittances!Corridor,!Prospects!for!Remittances!
When!Migration!Ties!Loosen,!Bilateral!Remittance!Corridor!Analysis,!prepared!for!the!World!Bank!and!
the!Dutch!Ministry!of!Finance!
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 95!

!

UNCTAD,!2012:!The!Least!Developed!Countries!Report!2012.!Harnessing!Remittances!and!Diaspora!
Knowledge!to!Build!Productive!Capacities!

!

*

96*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

Annex*–*Table*of*Contents*
!

Annex!1:!List!of!interviewees!
Annex!2:!Settlement!of!Remittance!Transfer!
Annex!3:!Toolbox!for!General!Principles!
!!
!

!

!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 97!

Annex*1:*List*of*interviewees*
!

Organization*

Name*Interviewee*

Date*

ABN*AMRO*
ADPC*
AFM*
AfroEuro*(Ghanaian*community)*
Auxfin*
Bakaal*General*Trading*(MTO*Somalia)*
CGAP**
Chaabi*Bank*
De*Nederlandsche*Bank*
De*Nederlandsche*Bank*

Axel!Beune!
Albert!Che!Suhnjwi!
Martijn!van!Andel!
Vincent!Gambrah!
Cornelis!Heesbeen!
Amid!A.!Ibrahim!
Xavier!Faz!
G.!Anakhrouch!
Ayse!ZoodsmaYSungur!
F.W.!de!Rooij,!!
Saliha!Emjadi,!!
Ayse!ZoodsmaYSungur!
Pinar!Ture!
A.!Sag!
Jaspar!Roos,!
Aneliya!Evtimova!
Marc!van!der!Maarel!
Y!
Y!
vrouwelijk!
Siicid!Ducaale!
Simon!Lelieveldt!
vrouwelijk!
focusgroep!
Joshua!Ebule!
Fatumo!Farah!
Kawita!Doerga!
Asmae!Idrissy!
Cornelie!van!Holthe!
André!Nkeshimana!
Peter!Mulder!
Lucia!Dias!
Jaap!Smit,!!
Richard!Dons!
Rene!Spitz,!!
Lidy!Navis,!!
Nelleke!van!der!Walle!
Iris!Vissers!
Meike!Kramer!
Diana!Boncheva!
Fernandez!Rosa!
Janine!de!Pee!
Chris!Buijink!
Marc!van!der!Maarel!
P.!Mulders!
Gera!Voorrips!
Milco!Lust!

25YnovY13!
28YnovY13!
19YnovY13!
06YnovY13!
08YnovY13!
07YdecY13!
19YnovY13!
15YnovY13!
07YoktY13!
07YoktY13!

DHB*Bank*
Dialogues*House*
Dutch*Banking*Association*(NVB)*
Dutch*Embassy*in*Ghana*
Dutch*Embassy*for*Somalia*(Nairobi)*
Ethiopian*community*
Ethiopian*entrepreneur*
EMA*
Ghanaian*community*
Ghanaian*community*
Goodwill*Homage*Foundation*
Hirda*
ING*Bank*
IntEnt*Maroc*
International*Card*Service*
Izere*(Burendese*Migrant*Organization)*
Kaah*Express*
Cape*Verdian*entrepreneur*
Ministry*of*Foreign*Affairs*
Ministry*of*Foreign*Affairs*

Ministry*of*Finance*
Mondato*
Money*Trans*
MoneyGram*
Nederlandse*Vereniging*van*Banken*
NVGTK*
PHB*Development*
Rabobank*

14YdecY13!
09YdecY13!
15YnovY13!
22YnovY13!
19YnovY13!
16YoktY13!
19YnovY13!
08YnovY13!
11YnovY13!
06YdecY13!
27YnovY13!
22YoktY13!
12YnovY13!
30YoktY13!
03YdecY13!
31YoktY13!
!
26YnovY13!
01YnovY13!
06YnovY13!

01YnovY13!
10YoktY13!
07YnovY12!
27YnovY13!
17YdecY13!
06YnovY13!
18YdecY13!
05YnovY13!

98*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

Rabobank*
Rabobank*Development*
Recogin*(Ghanaian*community)*
Remitly*
SEVA*
Sierra*Leone*Migrant*Organization*
Small*World*
SPARK*
Suri_Change*
Takashi*Mobile*
Text*to*Change*
Unity*Money*
Vital*Aid*Foundation**
(Nigerian*Migrant*Organization)*
Vodafone*
Vodafone*Group,*London*
Wellsfargo*
Western*Union*
*
!
!

!

Gijs!van!Tuyl!
F.!Nagel!
Charles!van!der!Puye!
Matt!Oppenheimer!
Radj!Bondhoe!
Ababukar!Bangura!
A.!Kuyper!
Marc!de!Klerk!
V.!Misier!
Dan!Armstrong!
Hajo!van!Beijma!
Linda!Boers!
M.!Douglas!
Marylin!Marthins!

29YoktY13!
04YdecY13!
10YoktY13!
11YnovY13!
11YnovY13!
14YnovY13!
20YnovY13!
26YnovY13!
30YoktY13!
07YnovY13!
06YdecY13!
02YdecY13!

Klaas!van!der!Molen!
Claire!Alexandre!
Daniel!Ayala!
Ted!Jansen!
Klaas!Molenaar!

10YdecY13!
14YnovY13!
18YdecY13!
30YoktY13!
12YdecY13!

30YoktY13!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 99!

!

Annex*2:*Settlement*of*Remittance*Transfer*
!
This! annex96!uses! stylized! examples! of! remittance! transfers! from! Italy! to! the! Philippines! to!
illustrate!how!remittance!services!settle.!The!initial!example!is!designed!to!show!that!even!a!
remittance!service!that!appears!to!be!simple!to!endYusers!may!involve!complex!settlement!
arrangements.!Three!variations!on!the!example!with!less!complex!settlement!arrangements!
are!then!considered.!
!
Description*of*initial*example*
Figure!1!illustrates!a!sender!(S)!in!Italy!transferring!euros!(say,!€200)!to!a!receiver!(R)!in!the!
Philippines,!who!will!be!paid!in!pesos.!It!is!assumed!that!the!capturing!agent!and!capturing!
RSP! in! Italy! are! different! entities,! and! that! they,! and! the! sender,! have! euro! accounts! at!
different!banks.!Similarly,!the!disbursing!RSP!and!the!disbursing!agent!in!the!Philippines!are!
different! entities,! and! they,! and! the! receiver,! have! peso! accounts! at! different! banks.! Both!
countries!have!two!domestic!payment!systems,!which!settle!at!the!central!bank.!
!
The!capturing!and!disbursing!RSPs!are!assumed!to!be!part!of!a!negotiated!network!
in! which! the! information! about! the! remittance! is! sent! separately! from! the! funds! (eg! by!
encrypted!eYmail),!as!shown!by!the!dotted!line,!and!passes!more!or!less!immediately!from!
one!end!of!the!chain!to!the!other.!
!

!
*
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
96

!The!Annex!is!copied!from!the!World!Bank!(2007)!

100*
!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

Step*1:*sender*to*capturing*agent*
In!the!first!step,!S!uses!a!debit!card!to!pay!euros!to!the!capturing!agent!(Agent!E).!How!many!
pesos! this! translates! to,! depends! on! the! exchange! rate! used! by! the! agent.! The! debit! card!
transaction!results!in!S’s!euro!account!at!Bank!E1!being!debited!and!Agent!E’s!euro!account!
at!Bank!E2!being!credited,!and!at!some!point,!depending!on!how!payment!system!E(a)!works,!
Bank!E1!settles!with!Bank!E2!across!the!accounts!they!hold!at!the!central!bank.!This!step!is!a!
normal!domestic!payment.!
!
Step*2:*capturing*agent*to*capturing*RSP*
The!second!step!is!for!Agent!E!to!pay!the!capturing!RSP!(RSP!E).!The!agent!is!assumed!to!do!
this!only!once!a!day,!when!it!transfers!all!the!euro!amounts!it!has!collected!on!behalf!of!RSP!
E! that! day! (not! just! the! euros! from! S).! The! agent! makes! a! credit! transfer! (eg.! a! bank! giro!
credit)!through!payment!system!E(b),!which!results!in!its!account!at!Bank!E2!being!debited!
and!RSP!E’s!account!at!Bank!E3!being!credited.!Again,!at!some!point!that!depends!on!how!
system!E(b)!works,!Banks!E2!and!E3!settle!across!their!accounts!at!the!central!bank.!This!is!
also!a!normal!domestic!payment.!
!
Step*3:*capturing*RSP*to*disbursing*RSP*
The!third!step!is!for!RSP!E!to!transfer!the!funds!to!the!disbursing!RSP!in!the!Philippines!(RSP!
P).! Again,! it! is! assumed! that! it! does! this! once! each! day! for! all! ItalyYPhilippines! transfers! it!
handles!that!day,!which!may!include!funds!from!other!capturing!agents!in!addition!to!Agent!
E.!(It!is!also!possible!that!the!RSP!has!a!relationship!with!more!than!one!disbursing!RSP!in!the!
Philippines,!but!here!it!is!assumed!that!there!is!only!one.)!This!step,!which!involves!a!number!
of!subYsteps,!uses!international!correspondent!banking.!!
!
Sub$step)3a:)between)banks)in)Italy)
To! transfer! the! funds! to! RSP! P,! RSP! E! asks! its! bank,! Bank! E3,! to! make! an! international!
transfer!of!pesos!to!RSP!P’s!account!at!Bank!P2.!It!is!assumed!that,!perhaps!because!it!does!
not!have!much!international!business,!Bank!E3!does!not!provide!an!international!payments!
service!directly!but!instead!uses!global!Bank!E4,!where!Bank!E3!holds!a!euro!account!for!this!
purpose.!Bank!E3!gives!the!information!about!the!transfer!to!Bank!E4,!which!in!return!tells!
Bank!E3!the!euro!value!of!the!transfer,!which!depends!on!the!exchange!rate!Bank!E4!uses!
(this!need!not!be!the!same!rate!used!by!RSP!E!and!its!agent!Agent!E!to!charge!S).!
!

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REMITTANCES*MARKET*IN*THE*NETHERLANDS* 101!

To!pay!for!the!transfer,!Bank!E4!debits!Bank!E3’s!account.!This!assumes!that!Bank!E3!has!a!
sufficient!balance!on!the!account!or!that!Bank!E4!will!give!Bank!E3!credit.!If!not,!Bank!E3!will!
have!to!first!transfer!euros!to!its!account.!Bank!E3!may!have!a!range!of!business!going!across!
the! account,! both! outflows! and! inflows.! Bank! E3! will! therefore! monitor! the! account! and!
transfer!euros!to!or!from!it!as!the!amount!on!the!account!becomes!too!small!or!large.!Any!
amount!transferred!on!that!day!may!thus!bear!no!relation!to!the!business!of!RSP!E,!let!alone!
the!specific!transfer!of!S.!
!
Sub$step)3b:)cross$border)transfer)between)banks)
It!is!assumed!that,!to!make!and!receive!payments!to!and!from!the!Philippines,!Bank!E4!holds!
a! peso! account! with! Bank! P1! (a! soYcalled! international! correspondent! bank! relationship).!
Bank!E4!therefore!gives!an!instruction!to!Bank!P1!to!credit!pesos!to!RSP!P’s!account!at!Bank!
P2.!Again,!Bank!E4!must!have!sufficient!pesos!on!its!account!at!Bank!P1!or!sufficient!credit!to!
do!this.!From!time!to!time,!Bank!E4!may!need!to!go!to!the!foreign!exchange!market!to!buy!
or!sell!pesos!to!keep!the!balance!at!a!reasonable!level.!!
!
Sub$step)3c:)between)banks)in)the)Philippines)
Bank! P1! then! transfers! the! money,! by! credit! transfer,! through! the! Philippines! payment!
system!P(a)!to!Bank!P2,!and!Bank!P2!credits!the!funds!to!the!account!that!RSP!P!holds!there.!
Depending! on! how! payment! system! P(a)! works,! Bank! P1! settles! with! Bank! P2! across! their!
accounts!at!the!central!bank.!This!is!a!normal!domestic!payment.!
!
Step*4:*disbursing*RSP*to*disbursing*agent*
The!fourth!step!is!for!RSP!P!to!pay!the!disbursing!agent!in!the!Philippines!(Agent!P).!RSP!P!
may!deal!with!several!agents,!so!of!the!pesos!received!from!RSP!E!that!day,!only!some!will!
be!destined!for!Agent!P.!(Likewise,!RSP!P!may!have!received!funds!not!just!from!RSP!E!but!
also!from!other!capturing!RSPs!around!the!world!that!are!for!Agent!P.)!RSP!P!thus!tells!its!
bank,!Bank!P2,!to!transfer!the!relevant!amount!of!pesos!to!the!account!that!Agent!P!has!at!
Bank!P3.!This!is!a!normal!domestic!payment,!using!payment!system!P(b).!!
!
Step*5:*disbursing*agent*to*receiver*
Finally,! the! fifth! step! is! for! Agent! P! to! give! the! money! to! the! receiver,! R,! in! cash.! Agent! P!
knows!from!the!information!provided!by!the!capturing!agent!how!many!pesos!to!give!R.!
!

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!

REMITTANCES*MARKET*IN*THE*NETHERLANDS!

Analysis*of*the*example*
The!example!illustrates!a!number!of!points!about!how!remittance!transfers!are!made.!
!
!

Multiple* payments.!The!transfer!consisted!of!a!set!of!individual!payments!Y!in!this!
case!five!payments!(S!to!Agent!E,!Agent!E!to!RSP!E,!RSP!E!to!RSP!P,!RSP!P!to!Agent!P!
and!Agent!P!to!R),!each!of!which!was!made!in!a!different!way!(eg!using!a!different!
payment! system).! Moreover,! one! of! the! payments! (from! RSP! E! to! RSP! P)! itself!
involved!three!transactions!(from!Bank!E3!to!Bank!E4,!from!Bank!E4!to!Bank!P1,!and!
from!Bank!P1!to!Bank!P2).!

!

Speed.! The! whole! process! may! take! a! significant! time.! That! depends! in! part! on!
certain! fixed! schedules! (eg! the! speed! of! the! different! payment! systems! involved)!
and!on!the!speed!of!each!of!the!parties!to!the!transactions!(eg!when!it!receives!the!
payment!instruction!from!Bank!E3,!how!quickly!Bank!E4!passes!it!on!to!Bank!P1).!!

!

Liquidity.!The!process!has!been!described!as!if!the!steps!occurred!in!sequence!but!
this! does! not! have! to! be! the! case.! The! steps! could! be! out! of! order,! provided! the!
payer! concerned! (a)! has! the! necessary! information! to! do! so,! (b)! has! the! necessary!
funds!(liquidity)!to!do!so!and!(c)!is!willing!to!do!so!(given!that!if!it!pays!before!being!
paid! it! may! face! the! risk! of! losing! the! money).! For! example,! some! RSPs! offer! an!
almost! immediate! service! Y! within! a! few! moments! of! the! sender! initiating! the!
remittance,!the!receiver!can!collect!the!funds.!That!could!be!possible!in!this!example!
(where,! as! part! ! of! the! negotiated! network,! information! flows! immediately! from!
Agent!E!to!Agent!P),!provided!that!Agent!P!is!willing!to!pay!out!the!funds!to!R!before!
it!receives!them!from!RSP!P.!In!practice,!if!it!wants!to!provide!a!fast!service,!RSP!P!
may!provide!liquidity!to!Agent!P!Y!it!might!provide!Agent!P!with!a!float.!Or!Agent!P!
may! have! to! claim! ex! post! for! the! money! it! has! paid! out! that! day,! but! be!
compensated!for!this!by!receiving!a!higher!fee!from!RSP!P.!RSP!P!may!then!use!its!
own!liquidity!to!cover!the!time!until!the!funds!actually!arrive!from!RSP!E!(the!cost!of!
this! being! built! into! the! fees! charged! to! R! and/or! S),! or! RSP! E! may! be! required! to!
maintain!a!balance!in!an!account!on!which!RSP!P!can!draw.!

!

Batching* and* netting.! Because! they! are! only! small! amounts,! the! funds! associated!
with!individual!remittances!are!unlikely!to!be!transferred!individually!or!in!real!time!
throughout!the!process.!Rather,!the!funds!from!multiple!remittances!are!likely!to!be!
batched!and!transferred!as!a!single!payment!Y!in!this!example,!it!has!been!assumed!
that!this!happens!once!each!day.!Batching!is!possible!because!(as!noted!above)!it!is!

REMITTANCES*MARKET*IN*THE*NETHERLANDS* 103!

!

assumed! that! the! information! about! the! individual! transfers! is! transferred!
separately!and!so!does!not!need!to!accompany!the!funds.!Sometimes,!the!payments!
may! also! be! netted! (eg! if! there! is! also! a! flow! from! the! Philippines! to! Italy)! so! that!
only!the!smaller!net!amount!needs!to!be!transferred.!!
!

Exchange* rates.! Because! S! pays! in! euros! but! R! receives! pesos,! RSP! E! (through! its!
agent,! Agent! E)! needs! to! use! an! exchange! rate! to! decide! how! many! pesos! R! will!
receive.!To!do!this,!it!would!be!useful!for!RSP!E!to!know!what!exchange!rate!its!bank,!
Bank!E3,!will!use,!while,!in!turn,!it!would!be!useful!for!Bank!E3!to!know!what!rate!
Bank!E4!will!use.!As!mentioned,!Bank!E4!does!not!necessarily!have!to!buy!pesos!in!
this!example!(it!may!already!have!enough!on!its!account!at!Bank!P1).!Nevertheless,!
it!will!typically!charge!Bank!E3!a!rate!close!to!the!current!open!market!rate,!and!the!
rates!charged!by!Bank!E3!and!RSP!E!will!be!related!to!that!rate.!But!because!there!
may!be!a!significant!time!gap!between!S!initiating!the!remittance!with!Agent!E!and!
Bank! E4! converting! the! euros! to! pesos,! not! all! exchange! rates! may! be! known! in!
advance!and!thus!a!margin!is!likely!to!be!built!into!the!rates!actually!charged!in!case!
rates!move!adversely!in!the!meantime.!

!
!

!

104*
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REMITTANCES*MARKET*IN*THE*NETHERLANDS!

Annex*3:*Toolbox*for*General*Principles*
!
!
The!International!Conference!on!Remittances!in!Rome!has!identified!a!set!of!possible!
initiatives!according!to!a!“tool!box”!approach,!embracing!various!means!to!lower!the!costs!
of!remittances!and!to!improve!their!development!impact97:!!
!
1Y improvement!of!data!accuracy,!for!example!through!the!use!of!migration!and!
remittances!modules!in!household!surveys!
2Y promotion!of!transparency!and!consumer!protection!in!the!market!
3Y creation!of!national!databases!to!inform!customers!and!other!interested!parties!on!
the!costs!of!sending!remittances!
4Y activities!of!moral!suasion,!advocacy!and!monitoring!by!relevant!authorities!
5Y participation!to!international!initiatives!and!working!groups,!such!as!the!Global!
Remittances!Working!Group!
6Y establishment!of!codes!of!conduct!for!remittance!operators!
7Y creation!of!sound,!predictable,!nonYdiscriminatory!and!proportionate!legal!
frameworks!on!remittances!
8Y implementation!of!best!practices!to!increase!the!access!to!finance!through!
remittances!
9Y elaboration!and!financing!of!projects!in!the!field!of!remittances,!including!those!that!
encourage!innovative!instruments!of!payments!to!facilitate!the!transfer!of!
remittances!
10Y efforts!to!continue!monitoring!the!impact!of!financial!crisis!on!migration!and!
remittances!
11Y global!survey!of!Central!Banks!on!various!areas!to!be!updated,!at!least!every!two!
years!
12Y analysis!of!impact!of!remittances!on!development!including!thei!role!postYnatural!
disasters,!labour!market!participation,!poverty!reduction,!education!and!health!
outcomes,!and!role!in!providing!financing!for!small!business!investments!!
!

!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
97

!The!informaion!is!drawn!from!the!Rome!Road!Map!for!Remittances!(published!9th!November!2009)!!
http://www.esteri.it/mae/approfondimenti/20091230_Rome_Road_Map_for_Remittances_fin.pdf!!

!
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REMITTANCES*MARKET*IN*THE*NETHERLANDS* 105!

!

The*Network*University*
January*2014!