Tap into growth of electronic transfers
▶ Online remittances have surged since stay-at-home measures were introduced this year, writes Deepthi Nair
The global remittance sector has undergone a transformation since stay-at-home measures were introduced earlier this year, with millions of people now reliant on digital channels to send their money home.
According to leading money transfer companies in the UAE, this trend is expected to continue in the Mena region as residents opt for the convenience, speed and safety of digital channels amid social-distancing measures and health concerns about handling cash.
Thanks to its large expatriate population, the UAE has one of the world’s highest remittance outflows. The Institute of International Finance said in June that remittances to emerging markets could fall by as much as 30 per cent this year due to the coronavirus-induced recession.
According to the World Bank, remittance flows are expected to decline by about $100 billion (Dh367.3bn) this year. The Asian Development Bank also issued a warning on Monday that remittances could fall by $108.6bn this year if it takes up to a year to contain the pandemic.
However, US consultancy Grand View Research said the global digital remittance market was valued at $15bn last year and is expected to grow by 12.2 per cent between this year and 2027.
Here, we guide you through the various options to remit money digitally from the UAE.
Orient Exchange
Online channels: Online transfers have been possible through a dedicated portal (www.orientexchange.com) for the past two years. There is no app for money transfers.
Increase in digital remittances: Orient Exchange has reported a month-on-month growth of 20 to 30 per cent over the past three months, with digital transfers accounting for less than 15 per cent of overall transactions.
Customer registration: The customer needs to be present at the branch to register. Before signing up a customer, the compliance team needs to screen them using internal systems.
Fees: Charges vary from corridor to corridor. Remittances to India, Sri Lanka and Bangladesh that are below Dh1,000 attract a Dh16 fee while those above Dh1,000 have a Dh22 charge. The fee is Dh20 for transfers to the Philippines and Dh50 for euro and US dollar-denominated remittances.
Time taken to remit funds:
It takes a few minutes for funds to be credited if they have been transferred through the website. If the transaction is done after 3pm, the money is credited the next day. If funds are sent from a physical branch, they are credited to the account before a customer leaves the location.
Beneficiary benefits: You can transfer to a bank account or a digital wallet, depending on the country of transfer. The receiver does not have to pay a fee for receiving the funds digitally.
Lulu Exchange
Online channels: The LuLu Money app was launched in 2017 and is available on the Android and iOS platforms. A website is under construction.
Increase in digital remittances: There has been a monthon-month growth of 40 per
cent in digital transactions over the past three months. Digital remittances account for about 15 per cent of transactions at the exchange.
Customer registration: New customers in the UAE first have to register at one of the group’s 74 branches across the country.
Fees: The charge for sending up to Dh1,000 is Dh17, inclusive of tax, and Dh23 for amounts above Dh1,000. A special programme has been launched to waive these fees for medical professionals in the UAE.
Time taken to remit funds:
LuLu Money performs instant transfers. Generally, it takes only 15 minutes to transfer the money to banks that the exchange has direct arrangements with. Other banks might take longer, depending on processing times.
Cap on remittances: There is a limit of Dh75,000 for regular transactions and Dh5,000 a day for transactions conducted using a salary card.
Beneficiary benefits: No fee is imposed on the receiver. Transfers to bank accounts and cash pick-up centres around the world are allowed, while a wallet facility will be unveiled exclusively for Filipino users soon.
Western Union
Online channels: Western Union launched its mobile app and updated website in the UAE last year. Customers can use debit and credit cards or bank transfers to pay for transactions through the website or the app. They can also choose to begin a transaction online and pay cash in person at Western Union agent locations in the UAE. The app is available in more than 40 countries.
Increase in digital remittances: Western Union registered a growth of 99 per cent in global digital transactions in May, its highest in a decade.
Fees: Cash transaction fees differ from those associated with accounts such as wallets, bank accounts or cards. The average cost of transferring money through Western Union (including fees and foreign exchange rates) is about 5 per cent of the amount sent. Currently, customers in the UAE can send money through digital channels, with fees starting from Dh15 per transaction.
Time taken to remit funds:
Money can be picked up a few minutes after a transfer through digital channels and within one to three business days for a bank transfer.
Cap on remittances: Customers in the UAE can now send up to Dh34,890 through Western Union’s app or website.
Beneficiary benefits: The receiver does not pay anything except if they choose to receive the funds in a different currency or have it transferred to a device or a bank account.
Mashreq Bank
Online channels: Mashreq’s mobile apps and all digital channels feature a money transfer feature. Customers can use a variety of methods to transfer money locally.
Increase in digital remittances: More than 95 per cent of all retail payments are sent electronically.
Fees: They vary for different corridors and cost up to Dh25. These are flat fees. Additionally, fees are lower for digital transfers.
Time taken to remit funds:
Mashreq’s Quick Remit service allows for instant remittances to 34 countries and
same-day transfers to another three countries. Instructions received at branches are processed using the Swift money transfer network, which can take up to 72 hours.
Beneficiary benefits: Transferring money to a bank account is the preferred choice for Mashreq customers. However, the bank is also exploring digital wallet options for small payments. Recipients do not pay additional fees for transactions remitted through Quick Remit.
Cap on remittances: There are transaction limits for online channels, depending on the country and the method the customer chooses to send the money.
Al Fardan Exchange
Online channels: Al Fardan Exchange and Western Union have had a two-year strategic partnership through which funds can be sent via the Wu.com website and app. This arrangement covers more than 200 countries and 550,000 agents.
Increase in digital remittances: There has been a 300 per cent increase in digital remittances since movement restrictions came into effect in the UAE this year.
Customer registration: Customers need to visit a branch to sign up. The company has developed an electronic Know Your Customer registration feature, but is waiting for the regulator’s approval.
Fees: Online transfers below Dh1,000 attract a Dh15 charge while branches charge Dh16 for amounts below Dh1,000.
Time taken to remit funds: It ranges from a few minutes up to a full day. Transfers to bank accounts are credited the next day, depending on which country the money is being remitted to. The time frame is similar at branches.
Beneficiary benefits: The money will be deposited into a digital wallet or bank account if a transfer is made through the app. The receiver does not have to pay a fee.
Cap on remittances: As per UAE Central Bank rules, there is a limit of Dh34,890 on transactions done through the app. There are no caps on transfers done through branches but this depends on KYC rules, customer profiles and receiving countries.