Remittances’ cash premium revealed to hit vulnerable customers the hardest

• New data from FXC Intelligence shows that cash pay-outs are consistently more expensive than those to bank accounts – an issue that is likely to be felt most harshly by vulnerable customers.
• Using FXC Intelligence’s FX pricing dataset, it was calculated that sending $500 from the US cost on average an extra $5.55 in March to send if paying out in cash instead of paying into the recipient's bank account.

Today, FXC Intelligence published a report revealing the extent of the cash premium in the remittances market and its impact on vulnerable customers. 

Using data from FXC Intelligence’s FX Pricing Data to determine how much of a premium cash pay-outs require, it was calculated that sending $500 from the US cost an extra $5.55 on average if paying out in cash instead of into the recipient’s bank account.

Using data from March 2024, the research focused on standard pricing to send $500 from five major providers across 10 geographically spread corridors. It used averages of the median FX margin, median fee margin and median total cost of sending $500 on each corridor across the five providers. To reach the final numbers, FXC Intelligence calculated the difference between the results for cash pay-outs and for bank account pay-outs.

Notably, it was found that some providers charged a much greater premium for cash versus bank account pay-outs than others did.

While three of the five providers (B, C and D) charged an extra $4-6 on average for cash pay-outs versus bank accounts, one (E) charged only an additional $0.66 on average, while the remaining company (A) charged an extra $13 on average across the 10 countries.

It is likely that the primary reason companies charge extra for cash pay-outs is because of the additional cost required to maintain an effective and well-managed retail network. However, these additional costs have a disproportionate impact on customers in countries where a smaller proportion of the population have bank accounts, as a cash pay-out is often the only option.

Lucy Ingham, Editor-in-Chief and Head of Content at FXC Intelligence, said:

“The impact of the cash premium falls most harshly on vulnerable customers, highlighting the importance of keeping the cost difference between cash pay-outs and bank account pay-outs as minimal as possible.

“With the UN and G20 goals of reducing the cost of remittances, it is vital that companies are using data and insights to ensure that their pricing strategies are fair and that customers who are reliant on cash are not being overcharged.” 

To read the report in full click here.

Further information

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