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SANKET MOHAPATRA, DILIP RATHA, AND ANI SILWAL
TABLE 9.2 Cost of Sending $200 to Nepal, June 2009 $, billions
Qatar
United Arab Emirates
Saudi Arabia
Malaysia
Korea, Rep.
United States
4.1
6.8
4.8
4.0
22.0
10.0
8.2
..
5.5
5.3
5.0
15.0
10.0
16.5
UAE Exchange
5.0
5.5
..
..
..
..
8.2
Prabhu Money Transfer
..
..
..
2.8
..
..
..
Muncha Money Transfer
..
..
..
..
..
7.0
9.9
Thamel Money Transfera
10.0
10.0
10.0
10.0
10.0
10.0
10.0
Transfer service Western Union MoneyGram
United Kingdom
Sources: “Mystery shopping” by World Bank staff; www.money.muncha.com; www.thamelremit.com. Note: Fees do not include exchange rate commission. Remittance fees were converted to dollars using the respective exchange rates on June 24, 2009. .. = negligible. a. Requires international Visa or MasterCard.
Union, MoneyGram, UAE Exchange, Prabhu, and several online remittance providers. These were obtained from the MTO websites and from “mystery shopping” by calling the agents of these MTOs located in the destination countries. These suggest that remittance fees, especially for sending remittances from the Middle East and Malaysia, are in the range of 2–5 percent of the amount, which is significantly lower than the global average of about 9–10 percent.16 The cost for sending money from Korea is substantially higher. Online remittance providers such as Muncha.com and Thamel.com provide dedicated money transfer service for Nepalese and are operated by Nepalese diaspora entrepreneurs. These allow direct deposit into recipients’ bank accounts and physical delivery of a bank draft to recipients. Thamel even allows migrants to send goods and offers mortgages and vehicle and education loans for nonresident Nepalese residing in the United States in partnership with Kumari Bank. Another provider, International Money Express, offers direct deposits to bank accounts in Nepal, with the money transferred immediately to the partner IME Financial Institution Limited, although it takes longer to reach other banks. Nepal’s remittance market appears relatively efficient in the delivery of remittances, but several issues are found. No legal requirement exists for money transfer companies to operate in partnership with commercial banks to receive inward remittances. However, many Nepalese banks work in de facto or de jure partnerships with major international money transfer companies. Banks typically act as distributors of remittances for MTOs. Very few Nepalese banks actively promote financial products such as savings and deposit accounts, home loans, and health and life insurance to remittance senders or recipients. This may reflect relatively low banking penetration, prevailing high levels