CEMLA, MIF/IDB and World Bank Launch enviacentroamerica.org To Make Costs and Conditions of Remittances More Transparent
Washington, February 2, 2012 - The Center for Latin American Monetary Studies (CEMLA), the Multilateral Investment Fund (MIF), a member of Inter-American Development Bank (IDB), and the World Bank today launched enviacentroamerica.org, a free online tool to compare and make transparent the costs of remittances from the United States to six Central American countries and the Dominican Republic.
The website provides detailed and updated monthly information on how much it costs to send money from the U.S. to Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Panama. Costs are calculated based on amounts of US$200 and US$500.
"This initiative will help the Hispanic community to better understand the costs and options available before deciding how and with whom to send their money," said Paloma Monroy, remittance specialist with CEMLA, the agency implementing this initiative with joint support from MIF and the World Bank. "This tool will create more transparency in this market, contributing to reduced costs."
Enviacentroamerica.org provides information on the costs that different operators charge in five major remittance-sending hubs in the United States (California, Florida, New York, the District of Columbia and Massachusetts) to Central America and the Dominican Republic as well as on the costs to wire money from Costa Rica to Nicaragua.
"Remittances are a vital source of income for millions of working families in Central America and the Dominican Republic," said Massimo Cirasino, who heads the Financial Infrastructure Division of the World Bank. "In that sense, the sponsors of this site seek to provide useful information that will benefit those most in need."
Only in the last quarter of 2011, an estimated US$200 million or more were spent by immigrants from six Central American countries and the Dominican Republic to cover the costs of remittances to their families from the United States.
"By increasing market transparency, providing more information on remittance prices, migrants can have a better sense of the options within their reach, and they can choose the service that best fits their needs," said Natasha Bajuk, MIF’s remittances specialist.
An analysis of data from the last quarter of 2011 shows that:
- Immigrants from Central America and the Dominican Republic paid on average US$12 for every US$200 remitted.
- A one percentage point reduction in the cost of sending remittances will save migrants and their families an additional US$150 million a year.
- The average price of sending remittances from the U.S. to Central America and the Dominican Republic fell slightly over the last three months of 2011, from 5.9 percent in October to 5.7 percent in December.
- In December, the most expensive services were to the Dominican Republic and Costa Rica, with an average cost of US$14.60 (7.3%) and US$13.60 (6.8%), respectively. The cheapest were to El Salvador, with an average cost of US$9.40 (4.7%), followed by Honduras and Nicaragua, both with average cost of US$9.60 (4.8%).
- In December 2011, the highest cost to wire US$200 was from Miami and New York to the Dominican Republic, with an average cost of US$15.60 (7.8%). The cheapest was from New York to El Salvador and Honduras, and Los Angeles to El Salvador and Nicaragua, with an average cost of US$9.20 (4.6%).
- In general, it is cheaper for the remitter to send money into a recipient’s account (US$9) than as cash (US$11). However, the volume of wires through commercial banks is still small compared to money sent through remittance companies.
- Many remittance service providers offer to send money from the U.S. to Central America through debit and credit cards with payment in cash or by deposit into an account. However, the cost of remittance by credit or debit card, and paid in cash, is significantly higher than for the other methods of sending remittances.