Cross-border payments: Missed opportunity to put a cap on money-transfer fees and help tackle inequality worldwide
Brussels, 28 March 2018 – Finance Watch welcomes today’s proposals by the European Commission that would make cross-border payments cheaper within the EU and better inform users of dynamic currency conversion services.
Choosing not to cover money transfers from EU to non-EU countries in the regulation review is, however, a missed opportunity: The extremely high average money-transfer industry fee of 7% on remittances remains untouched, even though these costs erode much needed financial flows towards developing countries.
According to the new Finance Watch Policy brief on remittances, which was released today, migrant families in Europe pay 3.6 billion Euros in unjustified extra charges per year when sending money to the families in their home country – more than the entire European emergency aid annual budget (ECHO).
Olivier Jérulsalmy, senior research and advocacy advisor at Finance Watch and author of the policy brief on remittances said:
“The unreasonably high cost of remittances is a major societal issue. Taking action on the costs of cross-border transactions in these proposals would have been an important contribution towards achieving one of the UN’s Sustainable development goals: reducing inequality.”
“Barriers to competition remain one of the key obstacles to ensuring user protection and the proper functioning of the remittances market.”
In its 2017 consultation on transparency and fees in cross-border transactions in the EU the European Commission announced that its 2018 review would engage the EU’s weight in the battle towards reaching United Nations Sustainable Development Goal (SDG) Number 10. It appears today that the Commission’s ambition has fallen short of this goal: Even if EU citizen’s transactions will now be protected from abuses, the right to fair transaction costs of up to 35 million Europe residents continues to be ignored.
Finance Watch urges the European Commission to consider solutions to remove the many barriers to a fair competition on money-transfers and improve the quality of life of millions:
- Develop a targeted EU strategy to ensure that migrants are not excluded and that they are guaranteed access to a basic payment account;
- Investigate and remove competition barriers, including exclusivity agreements that limit access to distribution and payment systems;
- Introduce a 3% cap on fees as part of a regulation on remittances designed to improve user protection and ensure the proper functioning of the market.