Immigrants remittances are big business
June Samaras
As Greece as in the US, transferring of immigrants' money is a booming
business as banks and other compenies compete to bank on the unbanked.
Immigrants in Greece sent home 513 million euros last year.
Thursday, November 29, 2007
By Kathy Tzilivakis
http://www.speroforum.com/site/article.asp?idarticle=12616&t=Immigrants+remittances+are+big+business
Saving every penny he can from his job as a floor-tiler, Ali, an
immigrant from Pakistan, visits his neighbourhood money-wiring outlet
every few months to send 200 euros to his parents halfway around the
world. The money helps his family buy food, clothes and other
necessities.
It's not just Ali's wad of bills that is adding up. Globally, the
money-transfer business has grown into a 200 billion euro market,
according to the World Bank.
Migrant workers in the European Union sent home 27 billion euros last
year, 17 percent more than in 2005, according to the EU's statistical
office, Eurostat.
The Bank of Greece says total transfer of remittances - the cash that
the country's estimated 800,000 immigrants sent home - was 513 million
euros last year, a 65 percent increase since 2000.
Immigrants from Albania, one of Europe's poorest countries, are
sending most of this money. A whopping 270 million euros was sent to
Albania alone in 2006, according to the Bank of Greece.
In Greece, this multibillion-euro remittance business has attracted
two global money-transfer companies, while a growing number of Greek
banks are scrambling to get in on the action.
And business is booming. Money-transfer outlets are mushrooming across
the country.
Dozens of new money-transfer outlets are opened each month in Greece
by MoneyGram, a company founded 67 years ago in Minnesota, USA.
MoneyGram's Athens regional office for Southern Europe and Cyprus,
which was established in 2004, has rapidly increased its presence in
the Greek market. There are currently more than 1,100 MoneyGram
locations in Greece.
"Since opening the new Athens-based regional office in 2004, our
growth in terms of market share and revenue has been the highest in
the money transfer industry," Alfonso Grassopoulos, Regional Director
for Southern Europe and Balkans, told the Athens News. "We hope to
triple [the number of outlets in Greece] over the next two years."
MoneyGram has also partnered with companies like ACS courier and Greek
banks to facilitate money transfers. It is competing with Western
Union, another US-based company, which has more than 245,000 agent
locations in over 200 countries. In Greece, Western Union has
established 700 outlets and has teamed up with supermarkets, banks,
courier companies and telecommunication service providers, as well as
ethnic, immigrant-owned groceries, video clubs and bookstores. Western
Union is planning to expand next year.
"This [immigration] inflow is definitely a positive factor for
business growth, but the employment opportunities and the migration
policy are also crucial in determining the duration and the size of
the business growth," Western Union said in a statement to the Athens
News. "Special reference should be made to the Albanian community,
which represents the highest percentage of migration population in
Greece and whose share in the remittance market is very high.
Immigrants who come here to work, leaving their families behind, tend
to send money home more frequently than others. Characteristic
examples of this are immigrants from Bulgaria and the former Soviet
Union countries."
Both MoneyGram and Western Union dominate the market of electronic
money transfers. Each boasts nearly 10 times more outlets than all the
McDonald's restaurants worldwide.
Making money by sending money
Analysts at Aite Group, a Boston-based independent research firm
focused on business, predict that global money transfer industry
revenues will grow about six percent between now and 2010, generating
some 8.8 billion euros in revenues.
Transaction fees account for about 82 percent of revenues. These
charges depend on the amount of the transaction and where the money
will be transferred. For example, Western Union's transfer fee for
sending 100 euros from Greece to the Philippines is 9 euros. Sending
100 euros to Romania costs 11 euros.
MoneyGram charges 8 euros to send 100 euros to the Philippines. It
costs 7 euros to send 100 euros to Romania.
Banks retool to meet migrants' needs
The booming business in immigrants' money transfers is intensifying
competition between established companies and Greek banks, which are
hoping to get a piece of the pie.
The banks' efforts mark the clearest sign yet of a revolution in the
way financial institutions view immigrants, who were once largely
ignored.
By developing low-cost money wiring, banks hope to persuade these
customers to use other products, from savings accounts and credit
cards to car and mortgage loans.
The National Bank of Greece recently introduced a remittance product
and launched a new ATM service (1,300 locations across the country) so
that immigrants from Albania, Bulgaria, Romania, Armenia, Georgia,
Moldova, Ukraine, Russia, India, Pakistan and the Philippines may
deposit cash directly for family back home. The standard cost is 10
euros per transaction. It would cost 17 euros if the money was
transferred over the counter.
The immigrant customers of this service, which is called Family Fast,
may also sign up for the ETHNOcash card that allows them direct access
to accounts from abroad. They may also apply for a mortgage loan.
Foreign banks are also getting into the lucrative money-tranfser game.
The American Bank of Albania, which has four branches in Greece
(Athens, Peristeri, Piraeus and Thessaloniki), launched a new service
earlier this month to facilitate transfers. The bank formed a
partnership with Albania's post office. Money transfers cost six euros
per transaction.
Remittance lifeline
Remittances from Greece to countries like the Philippines and Albania
are throwing lifelines to families tinkering on the verge of poverty
and helping to keep the national economy afloat.
Albania, Europe's poorest country, is receiving about a billion euros
each year, according to the World Bank. The total was 934 million
euros last year and is expected to reach more than one billion euros
this year.
According to Elvin Meka, secretary-general of the Albanian Association
of Banks, remittances total 13 percent of Albania's growth domestic
product and 3.6 times the foreign direct investment.
"Remittances are also enough to finance half the country's trade
deficit," Meka told the Athens News.
Meka was also quick to note the growing power of remittances. "In
three to five years... remittances could be redirected into
agriculture, services or tourism," he said. "I think this is the main
projection."
Greek Finance Minister George Alogoskoufis, addressing the 4th Poverty
Reduction Strategies Forum for Western Balkan Countries in Athens
earlier this year, acknowledged the significant contribution of
Albanian migrants' remittances to their homeland's economy.
"During the very critical period of the initial transition of Albania
to a market economy, Greece welcomed as many as 700,000 immigrants,"
he said. "In turn, they supported their families and their country's
economy with the remittances they were sending back home."
According to the European Central Bank, remittances are higher when
migrants have been away from their country for a short period of time.
"Remittances will tend to decline the longer a migrant lives outside
the country of origin. Crucially, the ability to remit depends on
salary levels - which is often directly related to a person's skill
levels - and the cost of living in the country of residence," the bank
reported last October.
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June Samaras
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