Reasons Why Migrant Workers Choose Newer Ways of Transferring Money

Top Five Reasons Why Migrant Workers Are Choosing Newer Ways of Transferring Money

Consider the story of Anna, an Overseas Filipino Worker (OFW) who was born from and lived in the Philippines. She now resides temporarily in Kuwait as a helper for a family of four. She earns around 120 KD, equivalent to 398 USD, per month. If converted in PHP, it can amount to 20,384 pesos, more or less. She sends almost all of her salary to her family in the Philippines but the bank she uses takes so much from her hard-earned money.

Anna’s story is not unusual, more and more Filipinos are working abroad in search of greener pastures. They do this to support their families in the Philippines. They can work in their home country, but the truth is, normal blue-collar jobs won’t even have salaries matching what Anna is earning in Kuwait. The only catch is that they have to live below their preferred standards, save as much money as they can to send back home and then there’s that issue of finding ways to send their money without losing much of it.

Somewhere in the past…

If you think about it, we have come a long way when it comes to remittance. From bankto-bank transfers, to remittance agents and then money transfer websites, we have so many options right now. Working abroad won't be as scary, with the amount of technology we have right now. Migrant workers can easily send money to their loved ones, there’s no more need to wait for days for the money to arrive at its designated recipient.

But what made migrant workers opt for the newer methods of sending money? Bank-tobank transactions are supposed to be secure and they have been in existence for so long. Remittance agents provide for simple, straightforward ways of sending money too.

Yet there’s this change and it’s very easy to see that most migrant workers would rather choose newer ways of sending money despite their associated risks.

Five Reasons Why Reason No. 1: Moving forward but why are they so backward?

This is perhaps the most common reasoning for the millennials. You see, the world we live in is fast evolving and moving at such a quick pace. Unfortunately, banks and even some remittance agents are stuck in an old-world era. Evidently, this doesn't ring true for all of them, some have been able to create their own websites, have made transactions available online or even have support through phone.

You can still find banks and remittance agents holding on to the older style of money transferring. The client needs to go to the bank or remittance location, present identification documents, then fill in some forms before the money can be sent on its way.

There’s nothing wrong with this older style of sending money. But most clients nowadays are go getters who want things done quickly and well, they won’t opt for your method if you can’t keep up with them.

Reason No. 2: High transaction fees coupled with hidden conversion fees and no transparency Most people work abroad to earn money and then save money to send to their loved ones back home. If they can find ways to save their hard-earned money, as much as possible send it as it is to their loved ones back home, they would be happy to do so.

And with banks or even some remittance agents, the transaction fees and conversion fees are just too high to be reasonable.

Most online money transfer companies such as Ria, Xoom and TransferWise have competitive transaction fees not exceeding 10 USD for transactions under 1,000 USD. Don’t frown on the rates, because coupled with their reasonable conversion fees, you get the most value for your money with them. In contrast to banks or remittance agents, where you might lose anywhere from 2% to 4% of your money with conversion fees.

The best part is that most online money transfer companies or even peer-to-peer money transfer companies are very transparent with their fees. You can actually calculate what you’re getting minus the conversion fee. Unfortunately, most banks and remittance agents have hidden conversion fees, meaning you would still be shown the amount you’re getting but you don't know just how much they took from it.

Reason No. 3: Slow transfer speed Wire transfers or bank-to-bank transfers can be nerve-wracking as they take some days to be fully processed. While the transaction between the sender and the bank agent can take no longer than a few minutes, the process of sending the money from one bank account to the other can take a few day or a week at the most. Remember what I said about go getters? Well, they won't put up with such long transfers as well.

Remittance agents are faster in that aspect but you do have to pay prime fees for them to move your money quicker. With online money transfer companies, the money can be sent within a few hours or days to the recipient’s account. In this aspect, Xoom is known as one of the fastest online money transfer companies globally. Filipinos living in the US who want to send money to their relatives in the Philippines rely on Xoom mainly because of its fast money transferring service.

Reason No. 4: Not so hack-proof, as they claim So there’s this notion that online transactions are not truly safe or risk free which most companies do not deny. But remember that banks aren’t spared from this issue as well, having been targeted by hackers for the past years. The most recent one being the Bangladesh Bank Robbery, wherein hackers initiated a money transfer from Bangladesh Central Bank’s account with the Federal Reserve Bank of New York amounting to 951 million USD.

If you’re wondering, the transfer was both successful and unsuccessful for the hackers.

They were able to transfer about 21 million USD to another bank in Sri Lanka, which was later recovered. And the unfortunate part is that they were also able to transfer about 81 million USD to a bank in the Philippines, which was lost to a Filipino businessman’s account.

So as you can see, bank transfers are not completely secure. Hackers can still find their way into a bank’s system. So if you don't have a reliable bank who is very careful in managing your transactions, your money could be at risk of being lost. In some cases, to ensure security, banks resort to derisking or debanking, removing a client’s account if he or she seems to be vulnerable to such money laundering cases.

Reason No. 5: Restrictive versus flexible, the choice is obvious.

Banks, and to some extent even remittance agents, can be very restrictive. Banks are restrictive in the sense that not everyone can use their transfer services. You need to provide for many proofs before acquiring a client account with them. Remittance agents are restrictive when it comes to the transactions you make, you are given a limit per day and per month. When you exceed that, you must find other ways of sending your money abroad.

Most online money transfer companies are very flexible. Aside from the flexibility when it comes to their accessibility, you can transfer money while in your pajamas at home, they are also not as restrictive to clients. You can even send money from apps themselves, PayPal has it, Xoom recently launched it. When it comes to transaction limits, some online money transfer companies are not restrictive, case in point, PayPal, which allows for unlimited transactions.

Migrant workers around the world agree that…

It is always better to weigh all your options when it comes to sending money. You might be satisfied with the way your bank or remittance agents work. But there are always hidden fees that you might not know of. And when it comes to money, that’s a tough issue to just accept, especially when you spend hours of energy each day for every cent that you have.

The reliability and security offered by banks are really outstanding. But as times are changing, they need to adapt to the needs of their clients. When everyone’s using a

cellphone, do you stay with your dependable beeper still? If you do, then you’d be left behind, unable to go with the flow of the society. The same goes for banks and old-fashioned remittance agents, they need to use technology to their advantage.

The number of online money transfer companies continue to rise everyday. Even Facebook Messenger now has the ability for sending payments and it’s free! So why hold on to your high transaction fees and hidden conversion fees when the competitors are offering free services even?

Perhaps to become the prime choice of migrant workers again, banks and remittance agents need to re-evaluate their end goals. Would they rather go with the old but lose many clients along the way? Won’t a better approach would be to go with the flow and gain some new clients along the way, in addition to their loyal old clients? What do you think, guys?