TransferGo is a money transfer company that offers inexpensive money transfers. While TransferGo works with a significant number of business clients, the bulk of TransferGo’s clients are migrant workers and students studying in another country who are sending money back home. Companies such as TransferGo are referred to as MTOs (Money Transfer Operators). TransferGo is among the new companies in the sector that are changing the traditional MTO structure and providing a great deal of value for their customers.
An Overview of the Industry
Private money transfers are referred to as remittances. Most remittances consist of money being sent home by foreign workers to their families back home.
Most people are unaware of just how large these remittances are. According to the World Bank, remittances are more than £261 billion per year, which is three times larger than the total yearly global aid budget. The value of remittances often is larger than the value of large economic sectors in the country where they are being sent.
Additionally as the world becomes more global in nature, the transfer market forecast is for continued growth.
The Key Players and Fees
Banks are the primary source for money transfers. Using traditional banking transfer methods are somewhat unwieldy in today’s global and connected world. Transfers are overly complicated. They are also expensive. Banks foreign exchange rates are frequently unfavourable at expenses average about 8% and are often higher. This is despite an agreement in principle among the G8 countries to lower fees to a 5% average.
The other two prime MTOs are MoneyGram and Western Union. This duopoly has more than a million offices and agents worldwide. The fees charged by the two companies have been described as “unethically expensive” and can range as high has 29%.
Western Union and MoneyGram dismiss the duopoly claim and state the fees are necessary to support their infrastructure, to comply with all regulations, and to offset other logistical costs.
An industry insider disagreed saying the high fees are “not simply [not due to] varying logistical costs – there is exploitation going on.”
The Impact on Fees
The impact of high remittance fees is greater than the price paid by the customer.
Most remittances are sent by workers who have left their home country with the express purpose of working to improve the lives of their families. India, which receives 12% of all remittances, is one of the largest recipient countries, followed by countries in Africa.
The World Bank sums up how transfer fees affect both the recipient and the sender.
“Forcing migrant workers to pay as much as $50 to send $200 is wrong, especially when they are sending salaries they have earned in the hope of supporting their families back home. Two-hundred dollars often is a very significant sum for migrants’ family income. These funds would simply remain available to migrants and their families and could contribute significantly to improving the living conditions of the migrants themselves as well as reducing poverty in their countries of origin.”
Remittances often pave the way for a family to improve its socio-economic status from near poverty levels to one approaching middle class.
TransferGo is at the forefront of the new generation of MTOs.
The hallmark of the company is that remittances should be quick, safe and secure, easy for customers to use, and, perhaps most importantly, inexpensive.
TransferGo understands the global nature of today’s world and how it impacts workers in foreign countries. They also embrace and fully utilise the digital tools available in a connected society. Through partnerships with banks in over 30 foreign countries, TransferGo has built a “local in, local out” structure which makes transfers extremely fast, with same day availability often possible. They have proven that “logistical costs” need not be exploitative and offer a service which saves users as much as 90% over the other transfer methods available.
The benefits of lower fees are two-fold as the standard of living for both the sender and the recipient are improved.