On September 19, 2013 the Inter-American Dialogue hosted a round-table discussion on the state of the remittance industry. Manuel Orozco, Senior Associate and Director of the Migration, Remittances and Development Program at the Dialogue, moderated a lively and engaging conversation with representatives from a number of leading money transfer companies: Eduardo Villalobos of Dolex, Robert Dinkins of InterMex, Leesa Kow of Jamaica National Money Services, Ronald Schwartzman of Uniteller, Paul Dwyer of Viamericas, Barbara Span of Western Union and Eugenio Nigro of Xoom Corporation.
Market consolidation and increasing competition are two of the largest trends currently observed in the money transfer industry, Orozco explained. Dinkins and Nigro echoed these findings, highlighting the benefits that competition brings to the market. Over the last 10 years, prices have decreased which has in turn benefited consumers and increased company efficiency, Dinkins argued. Moreover, the end of certain exclusivity agreements has increased competition on the payout side, Villalobos noted.
Many of the speakers addressed the prospects for growth. Villalobos argued that future growth would likely come from other financial services and products. Kow described the introduction of tailor made products, such as directly transferring money to pay for mortgages, as a promising new area. Growth will come from nontraditional markets, Nigro agreed. While some spoke of mobile-to-mobile growth, Schartzman took a more conservative approach, suggesting that, while mobile will grow, people still enjoy having the money in their hands. Span noted that 90% of the global payments today are still made in cash. The success of new, more highly technological products, she argued, would only come to the extent that they can be smoothly integrated into the lives of populations who are financially excluded.
Another major and continued trend the industry is facing is bank account closures. Both large and small banks continue to close accounts, making it difficult for money transfer companies to maintain the accounts they need to function. According to Paul Dwyer, large banks face an image risk from an industry that generally receives negative attention from the media. Small banks, he continued, have been discouraged by regulators from holding accounts of remittance companies on the presumption that remittance companies have insufficient infrastructure in place to ensure standards are met. Given these dynamics, it has become a challenge for remittance companies to maintain access to bank accounts.
In the remittance industry, the importance of public relations cannot be overlooked, Kow noted. It is an issue that must be addressed, both by individual companies and by industry as a whole. Schwartzman agreed, suggesting that “if you take one thing away from this event, let it be ceasing to use the term Money Service Business (MSB).” Instead, the companies in the industry should be referred to as Licensed Remittance Companies (LRCs), reflecting their reliability and adherence to regulations. LRCs, Schwartzman continued, offer important services to a segment of the population that is too often ignored.
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