The U.S.-Honduras Remittance Corridor
21
Table 2.4. Cost of Sending US$200 Remittance from the United States to Honduras and Other LAC Countries (percent)
2001
2002
2004 Nov
2005 Dec
2008 Jan
2009 Jan/ Feb
2001–09 (%)
Jamaica
9.8
12.7
10.2
8.8
8.2
7.2
6.7
–31.6
Haiti
9
8.1
10.4
8.9
7.9
6.7
6.2
7.2
–20.0
Mexico
8.8
9.3
7.5
7.5
6.2
6
5.8
6.8
–22.7
6.9
6.9
7.2
6.2
5.8
4.7
6.0
–13.0
7.1
6.3
5.6
6.6
5.8
–21.6
Honduras
10
2003
2004 Jan
Guatemala
7.4
7.3
7.8
Nicaragua
7.5
7.5
7
6.9
6.7
5.2
n.a
n.a.
–30.7 *
El Salvador
6.7
6.2
5.8
5.7
5
5.2
4.6
4.1
–38.8
Source: Orozco (2006), World Bank (2008/2009). * % shows the decline from 2001 to 2005.
Cost of Remittance Transfers
Costs of sending remittances to Honduras are low but not the lowest in the corridors from the United States to Latin America. By January 2009, the transaction cost to send US$200 to various countries in Latin America had dropped significantly in the past decade (Table 2.4). 13 According to the World Bank’s Remittance Prices Database, remittances from the United States to Ecuador dropped to below 4 percent in January 2009. In general, there are several factors that appear to contribute to these cost reductions in remittances in this corridor. Total volume of remittance flows to Latin America has been increasing until recently, and the size of the remittance market has grown. With the growing market size, more remittance service providers entered the market, which resulted in increased competition. Interestingly, however, some corridors from the United States to Latin America have seen increased costs in the past year, including the U.S. Honduras corridor. Total costs of sending and claiming a remittance in the U.S. Honduras remittance corridor result primarily from commission paid by sender at origination. Commission costs are distributed among the capturing agent, the intermediaries/network, and disbursing agent. Other costs include differentials between the official and unofficial foreign exchange for remittances sent is U.S. dollars and disbursed in Honduran lempira and any other indirect costs associated with claiming remittances in Honduras. Cases of commission paid by recipient at destination have not been observed. Despite being consistent with the regional median, costs in the U.S. Honduras corridor show high variability in terms of commission paid by sender at origination. In order to send US$200 from the United States to Honduras, migrants pay between 1.5 to 32.5 percent of the amount depending on the remittance service provider. Commercial banks usually follow a flat fee structure charging US$30 60 for cash to bank account, or bank account to check transfers, while MTOs charge less for electronic fund transfers. Table 2.5 illustrates types of services, fees, and delivery speed of a US$200 transfer, while Figure 2.2 presents a breakdown of fees by various transfer amounts.
WP_177_web_11-03-09.pdf 37
11/2/2009 8:17:45 PM