The ease of remitting money to almost anywhere in the world is one of the main reasons why more and more migrants are sending money back home. This is, in turn, directly related to the number of migrants worldwide, which is rising rapidly due to a myriad of reasons: job opportunities, natural disasters, climate change, as well as internal conflict and war.
The money sent to their families in developing countries has led to the increase in benefits such as investments in trade, health and education.
What are the steps involved?
Just sign up for the services of a reputable company, of which there are quite a number in Malaysia, and you’re on your way. Here are some examples:
1) MoneyGram
With almost 350,000 agent locations worldwide in addition to a strong online presence, this company allows users to transfer funds through a variety of options: online, in person, bank account or mobile wallet.
If you choose to do it via an agent, just find the one nearest to your location and fill in the Money Transfer Form provided. Provide supporting documents, the amount of money you want to wire over (up to USD10,000 which is approximately RM43,000), and pay the necessary fees.
You can also opt to transfer via the convenience of your bank account, as MoneyGram is linked to both Maybank and CIMB. Make sure to check how much the exchange rate and transfer rate is using the cost estimator provided, so that you won’t be caught off-guard with the amount deducted from the total.
2) PayPal
Providing a safe, simple and secure method of payment to almost anyone worldwide, all that’s required is for both the sender and receiver to have a PayPal account (which is absolutely free to sign up for).
Only the recipient’s email address or phone number is required to be able to transfer funds. He/she will then receive an almost-immediate notification that there was a transaction and they will be able to choose what to do: keep the funds in the PayPal account; transfer the funds to their bank account at no cost for withdrawal; or request for a cheque from PayPal.
Of course, there is a minimal fee involved when one uses its services. In Malaysia, for domestic payments you will be charged 3.9% + RM2*, whereas for international payments the charge is 4.4% + RM2*.
*A fixed fee, which you can find out more about in Paypal’s user agreement here.
3) WorldRemit
Alternatively, there are also online apps which provide money remittance services. WorldRemit is a London-based startup that has been growing exponentially, banking on the two billion people who are still ‘unbanked’ (pun intended) – that is, those without a traditional bank account.
By offering the option to send money while on-the-go (through a smartphone, tablet or laptop), WorldRemit is a low-cost alternative that is not only convenient, but effective. Senders will be able to choose how the receiver gets the money: cash pickup, bank deposit, mobile money or mobile airtime top-up.
All you’d need to do is to select the recipient’s country, method of delivery, the amount and key in the recipient’s personal details. Pay the fee stated and within minutes, your money will be instantly transferred.
How to compare between companies
There are a couple of factors to look out for when it comes to finding the money remittance company best suited for your needs:
1) Exchange rate
Perhaps the most important factor, the exchange rate will determine how much of our local currency is needed for recipients to get the exact amount they want in their respective currencies. As the Ringgit’s value suffered a decline recently, you’re going to need more than usual!
2) Transfer amount
Most companies have a minimum transfer amount, with the exact figure differing from provider to provider. But did you know that some companies also have a maximum amount? This is because certain countries have their own set of rules relating to money transfers.
3) Transfer fee
Another important factor to consider since a company may have the lowest exchange rate in the market, but charge an exorbitant amount of fees for their services. Check if it’s a flat fee, a percentage or no fee at all, which is usually displayed before you send/pay.
4) Transfer time
It used to be that sending money online to a bank account takes a few working days before the amount is reflected. Modern technology has changed that, as many non-bank companies offer services that are instantaneous or near-instant, allowing for funds to reach their recipients in urgent situations.
5) Pickup method
These days, not only do you get to skip the tedious paperwork, you also get to skip the queue at banks to pick up the funds. Select the company that has a few options for you to choose from, just in case your recipient is ‘unbanked’, or on the go.
6) Customer service
Your transaction went wrong somehow, so who do you speak to? Check to see if the company whose services you’re about to engage provides customer service support on weekends and public holidays, and whether it is a 24-hour service.
Some facts on money remittance:
It’s no secret that many Malaysians harbour hopes of being able to work in countries where the foreign currency is strong. The higher salary rates and weakened Ringgit are two major factors; it allows for Malaysians to put away more money in savings than they could back home, in addition to also sending money home to their loved ones.
The rest of the world thinks the same way too, as the facts and figures (taken from World Bank) below indicate:
1) Money remittance flows are more than three times the combined official development assistance (a term used to describe international financial aid) from all sources.
2) It is projected that one in seven people worldwide will be involved in the process of remitting money – either sending or receiving –amounting to more than USD450bil (roughly RM1.93tril) in 2017. This is 51% more money than a decade ago. More than 200mil workers in foreign countries will be supporting an estimated 800mil family members globally, according to the International Fund for Agricultural Development (IFAD).
3) The World Bank reports that the people who live outside their countries of birth amount is expected to surpass the 250mil mark (that’s 3.4% of the world’s population) this year. The Mexico-United States corridor is the largest migration corridor in the world, followed by Russia-Ukraine and finally Bangladesh-India.
4) In 2016, the World Bank also projected that the flow of money remittance to low- and middle-income countries reached USD442bil (roughly RM1.89tril), an increase of 0.8% over 2015.
5) Asians seem to be on a mission to divide and conquer! A report by the United Nations state that nearly half of all international migrants across the globe were born in Asia, with Asia receiving 55% of all remittance flows. Between 2000 and 2015, Asia added more international migrants than any other major region, or a total of about 26mil additional migrants.
6) Locally, Malaysia has made the list of top remittance-sending countries according to the World Bank Group’s 2016 Factbook. In 2014, Malaysia clocked in at USD8.1bil (roughly RM34.8bil), which is 2.4% of the GDP.
