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Mobile money comes to Bangladesh

Submitted by Sanket Mohapatra on Tue, 05/12/2009 - 10:21

Bangladesh seems on track to launch a mobile money transfer (MMT) service which could potentially reduce costs to 1 percent of the transfer amount. The project will be implemented by Grameen Phone (a subsidiary of Grameen Bank which has pioneered mobile access to rural areas in Bangladesh) and is being supported by the World Bank, according to India's Economic Times. 

There are two new innovations compared to other developing countries with successful MMT implementation: (1) This service is targeted primarily for cross-border transfers (estimated at $9 billion annually), unlike other countries such as Kenya and Philippines where MMT has been focused on domestic transfers, and (2) It will use a network of ATM machines, where recipients can withdraw the money instead of having to go to a designated agent.

Entering the cross-border market will require developing settlement systems between Grameen Phone and banks and money transfer operators in the major remittance-sources (including in the Gulf) and extensive cooperation between the respective central banks and banking supervisors. The success of this venture will serve as a useful pilot for other countries that are considering such cross-border transfers.

Crisis and Immigration: Is demand for migrant workers falling in the US?

Submitted by Sonia Plaza on Fri, 04/10/2009 - 09:44

This is the first year that the H-1B visa cap has not been reached during the first 5 days of filing applications. The current cap is set at 65,000, with an additional 20,000 for holders of advanced degrees. It seems that the number of petitions for the H-1B visa this year will be far less than last year. The U.S. Citizenship and Immigration Services (USCIS) put out a statement that “it has received approximately 42,000 H-1B petitions counting toward the Congressionally-mandated 65,000 cap.”

Indian information technology companies have been the largest petitioners of H-1B visas in the past, and now these firms are applying for fewer H1-B visas. For example, Infosys Technologies will apply for less than 3,000 visas as opposed to the 4,500 visas that it requested in 2008.
 
Even Microsoft Corp has applied for fewer H-1B Visas. Brad Smith, Microsoft’s General Counsel said, “I think we’re going to see substantially fewer H-1B applications filed this year compared to last year,” He also mentioned that “the majority of applications will be to extend the stays of existing workers rather than for new hires.”

A major use of H-1B visas has been to facilitate offshore outsourcing. Is the financial crisis having an impact on outsourcing activities? Has the U.S. fiscal stimulus package or the Troubled Asset Recovery Program complicated the hiring of foreign workers for companies receiving federal bailout funds? 

China and Taiwan launch a two-way postal remittance service

Submitted by Sanket Mohapatra on Fri, 02/27/2009 - 17:49

China launched a two-way postal remittance service with Taiwan earlier this week. The Chinese daily Xinhua reports that this was the first formal money transfer from the mainland to Taiwan since 1949. 
 
While people in mainland China would be able to receive inward remittances in some 20,000 post offices, outward remittances would be available at over 2,000 post offices. The Taiwan post office has already offered such a service since December.
 
The cost to send money is 8 percent of the transfer amount for sending up to 200 Yuan from mainland China to Taiwan, and for the other way around, a fixed fee of 400 new Taiwan dollars (about $12) for a mail transfer.

Apart from being a historic moment for migrants on both sides of the Straits, this step shows how postal networks—which have perhaps the widest reach among the population, especially in rural areas—can play an important role in facilitating formal cross-border remittance flows.       

Will international money transfers through mobile phones reduce remittance costs?

Submitted by Sanket Mohapatra on Tue, 12/09/2008 - 13:45

Vodafone and Western Union announced a partnership that will allow cross-border remittances between the UK and Kenya through mobile phones, according to the Wall Street Journal (the pilot project is initially for residents of Reading in the UK but will be expanded in future). Safaricom subscribers in Kenya can choose to either withdraw the cash at any of the 4,000 M-Pesa agents, store upto 50,000 Kenyan Shilling (about $640) in their "mobile wallet", or even send it on to another mobile user. The FT adds that the maximum amount that can be transferred internationally is GBP 200 (about $300).

The price Kenyan migrants will have to pay for the convenience of being able to send money to relatives and friends back home through their cellphone is not low. The cost of sending GBP 100 would be GBP 4.90, i.e. about 5 percent of the transfer amount, and GBP 6.90 for sending larger amounts. This is lower  than the average fee of GBP 8.32 (exclusive of foreign exchange commissions) for sending a similar amount through a bank or money transfer firm from the UK to Kenya, but a staggering 40 to 55 times larger than the cost of a transfer through M-Pesa's domestic mobile money transfer service.

Apart from the convenience factor, unless prices come down to comparable levels - or at least somewhat closer to the cost of sending money domestically - there is still a long way to go before the potential of international mobile money transfers can be realized.       

Money transfers conference in London on November 17-18: New innovations in money transfers amidst crisis

Submitted by Sanket Mohapatra on Fri, 11/28/2008 - 11:33

I recently made a presentation on our outlook for remittances at the Money Transfers London conference. The discussions were lively and interesting and the topics included the impact of the EU payment services directive (PSD) and other regulatory changes for the money transfer industry, innovations in smart cards and mobile money transfers, and the impact of the current economic crisis, among others (see full conference agenda).

One development I found interesting was efforts to standardize training for Money Laundering Reporting Officers (MLROs) in the money transfer firms. To remain relevant in times of changing rules and regulations, these officials will need to be tuned to the messages coming from regulators not only through directives and websites, but also from speeches and interviews in the media.  

This conference and others organized by industry bodies such as the IAMTN are very useful because they provide a space for private sector participants to interact with regulators and development agencies, clarify new regulations and laws, and let us hear from practitioners on new developments and emerging technologies.

A new remittance price database brings much-needed transparency

Submitted by Dilip Ratha on Thu, 09/25/2008 - 18:32

I was in Vienna last week to attend an impressive event called the Public-Private Partnership on Remittances, organized by my colleagues Massimo Cirasino and Peer Stein. Amid the technocratic, technical, and tactical treatise on payment systems, a high point for me was the launch of Remittance Prices Worldwide, a new World Bank remittance price database.

For the first time there is one database, painstakingly gathered and meticulously organized with the lay user in mind, dedicated to the cost of sending remittances in over 120 important remittance corridors. Transparency is expected to help educate consumers and generate competition among remittance service providers. Indeed a few stats are eye openers: it costs less than $8 to send $200 from Spain to Brazil (less than 4%). By contrast, sending the same amount from Germany to China can cost nearly $50 (or 25%)!

Leaders have been talking about reducing remittance costs since 2004, if not earlier. Yet, until now, there were no real indicators of how costs are falling. Mexico began putting out remittance cost data from about 13 US cities to several Mexican cities, and we saw a 56% decline in remittance costs between 1999 and 2004. The hope is that the new database will have a similar cost reduction effect. That would reduce the drain on poor migrants' incomes and increase their ability to send more help home.

 

Making mobile banking affordable

Submitted by Sanket Mohapatra on Tue, 08/26/2008 - 09:49

Adding to my earlier post about card based technologies, m-banking services are far cheaper than brick and mortar banks, but these can be costly compared to a poor person's income.  The Consultative Group to Assist the Poor (CGAP) has a head-to-head comparison of how the prices of the top branchless banking service -- GCash, Smart Padala, M-Pesa, Wizzit and MTN -- stack up against the top four banks in South Africa. The Filipino m-banking services and M-Pesa come out on top in terms of cost and affordability for the poor, while the South Africans providers are relatively more expensive.

New: Teething problems for mobile money transfers? See why Kenyan commercial banks are objecting to the MMT firms such as Safaricom’s M-Pesa which have become enormously popular and grown their customer base exponentially.