This document discusses global remittance trends and the role of African postal operators. It notes that remittances to developing countries reached $438 billion in 2014, but that costs remain high, particularly in Sub-Saharan Africa. The World Bank has worked to lower costs through its General Principles for Remittance Services, focusing on transparency, consumer protection, competition, and infrastructure improvements. Post offices offer the cheapest remittance services but lack transparency. The document argues postal operators could play a larger role by directly implementing the principles, improving services, and leveraging existing infrastructure to increase financial inclusion.

1. Global remittance trends and the role
of African Postal Operators
Marco Nicolì
Payment Systems Development Group
African Conference on Remittances and Postal Networks
Cape Town, South Africa | March 4-5, 2015

2. Payment Systems Development Group
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A large
portfolio
• 100+ countries in all
Regions assisted in
various projects of
reform of their national
payments system;
A well-
established
program
• Global products:
standard setting,
GRWG, Remittance
Prices Worldwide,
Greenback, Global
Surveys…
A leading
team
• 40+ specialists in
payment, securities
settlement, and
remittance systems
• 18+ years of activity in
this space
Working with IFAD, UPU, WSBI, UNCDF on the
African Postal Financial Services Initiarive

3. Remittances continue to grow:
$438 billion to developing countries in 2014
(source: Migration and Remittances Team)
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4. Why do we care about remittance prices?
• The cost of sending remittances is an indicator of the safety and
efficiency of the market for international remittances
• Lower costs would mean more money in the hands of migrant
workers and their families
• The availability of safe, efficient, reliable, accessible, and cost
efficient means to transfer money internationally could reduce
flows through unregulated channels
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5. What have we achieved in the last five years?
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6. In Q4 2014 the Global Average
cost of sending USD 200
reached 7.99%, down from
8.58% one year ago and from
nearly 10% in 2008
The International Money Transfer
Operator (MTO) Index reached
8.23%, down from 8.74 one year
ago and from over 10% in 2008
Average cost of remittances from nearly 10 to below 8 percent
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7. Sub-Saharan Africa the most expensive Region,
not showing enough improvement over the last five years
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8. The cost of sending remittances through
Banks showed a considerable decrease of
from over 14% to less than 12% since
2008, but still remaining the most
expensive type of provider
Post Offices have been the cheapest
provider consistently since 2013 and now
stand at 5.06%
The cost of sending money through MTOs
has decreased from over 8% in 2008 to
6.63% in Q4 2014
MTOs are the most transparent providers:
99% transparent services (75% for banks,
53% for Post Offices)
Post Offices offer the cheapest services…
…but struggle to provide all information to customers
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9. World Bank –
CPSS General
Principles for
International
Remittance
Services
GP1. The market for
remittances should be
transparent and have
adequate consumer
protection
GP2. Improvements to
payment system
infrastructure that have
the potential to
increase the efficiency
of remittance services
should be encouraged
GP3. Remittance
services should be
supported by a sound,
predictable, non-
discriminatory and
proportionate legal and
regulatory framework
GP4. Competitive
market conditions,
including appropriate
access to domestic
payments
infrastructures, should
be fostered in the
remittance service
industry
GP5. Remittance
services should be
supported by
appropriate
governance and risk
management practices
Role of Remittance Service Providers
• Participate actively in GPs implementation
Role of Public Authorities
• Evaluate actions to achieve public policy objectives through GPs implementation

10. Brazil: Allowing
Business
Correspondents to
pay out remittances
Malaysia: the
professional and
sound
management of
the industry by
MSB Act and
Principal Agent
Indonesia: BI
regulation on
Consumer
Protection
Mexico: Banned
exclusivity
agreements and
increased
competition.
4.51% in
1Q2014
UAE highly
competitive
market
allowed a
reduction of
remittances
around 4%
US FinCEN’s
MSB website
to support
RSPs in
compliance
with regulation
US/Mexico:
proportionate
ID
requirements
contributes to
competition
among
regulated
RSPs
Japan Payment
Services Act
has led to
increased
competition and
cost reduction
by 3.34pp since
the reform
Rwanda Cost
reduction from
19% (2010) to
15% (2012)
after NPS
reform
US Dodd-Frank
Act to increase
transparency
and consumer
protection
Sri Lanka Cost
Reduction
from 10% to
5% after NPS
reform
GP2
PSI
EU-PSD led to
significant cost
reductions in
most European
countries in
RPW.
GP3
Leg -
Reg
GP5
Gov
Risk
Aus/NZ Cost
Reduction by
2.9pp and
2.1pp,
respectively
with Send
Money Pacific
GP1
T&CP
Bangladesh:
Banned
exclusivity
agreements and
increased
competition.
4.27% in
1Q2014 GP4
Comp
MKT
Role of RSP Role of Authorities
- UK: Industry Code of
conduct
- Creation of Industry
Associations: UK, US,
Malaysia, Indonesia, Jamaica,
Uganda
- Italy: Public/Private Forum
- Pakistan: Pakistan
Remittance Initiative
- Creation of interagency
coordination: US, UK,
South Africa, Japan,
Implementing the WB-CPSS General Principles
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11. Challenges and opportunities at the last mile
• The General Principles apply at both sending and receiving end
• Common challenges at the “last mile” include:
• Level of development of payment system infrastructure;
• Insufficient network coverage, especially in rural and remote areas;
• Restrictive regulation;
• Anti-competitive behaviors (for example, exclusivity agreements);
• Low use of cashless payment instruments;
• Low number of bank/transaction accounts.
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12. So, what can the Post do?
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• Provide better information to customers on both side of
the transaction
• Improve customer service and handling of complaints
• Leverage existing payments infrastructure
• Value the potential of the network
• Become more competitive
• Improve governance, compliance, risk management
Directly implement General Principles
• Be allowed to offer more services by removing unfair
regulatory barriers
• Be granted access to payments infrastructure
• Be leveraged for government payments and other
government initiatives (also to strengthen their role and
increase competition)
Benefit from implementation of General
Principles

13. • “Universal access to financial services is within reach –
thanks to new technologies, transformative business models and
ambitious reforms”
• “As early as 2020, such instruments as e-money accounts, along
with debit cards and low-cost regular bank accounts, can
significantly increase financial access for those who are now
excluded”
Jim Yong Kim
President, World Bank Group
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14. THANKS!
mnicoli1@worldbank.org
remittanceprices.worldbank.org
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