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A new calculator on our website: the cost of the remittances

9 May 2022

Sending or transferring money abroad without spending a fortune is not easy, especially when small payments are involved. This is the case, for example, of migrants' remittances, that is, the part of a foreign worker's income that is saved and sent to their family in their country of origin. 

Thanks to the calculator now available on our website, you will be able to compute, for a given amount of money, how much the beneficiary will receive in their country of origin and, in particular, the cost of the transaction. Sending money at the lowest possible price is very important both for the people making the transfers and for the countries that receive them.

For some countries, such as Ukraine, remittances make up 10 percent and over of the gross domestic product (GDP). At a global level, remittances to middle- and low-income countries amount to around $540bn (2020). Given that the weighted average cost of the remittances is about 5 percent, people spend $27bn just to transfer money to middle and low-income countries. To put it in perspective, the global expenditure for official assistance for this kind of countries is roughly $190bn annually. Therefore, the revenue forgone by these countries due to the cost of the remittances are equal to 14 percent of the total amount of money earmarked globally for development assistance!

As far as Italy is concerned, the remittances sent abroad in 2021 amounted to around €7.7bn. The first destination country was Bangladesh, with an 11.3 percent share. The most prosperous and populous Italian regions (Lombardia, Lazio e Emilia-Romagna) topped the list in terms of the amounts sent.

In the last quarter of 2021, according to the World Bank data, the global average cost of the remittances was 6.0 percent, an amount still far from the 5 percent goal that has been reiterated many times by public authorities at an international level. In the last two years, the decline of the average cost seems to have accelerated slightly, due to the spread of new digital financial services. In 2021, Italy reached the 5 percent goal, but the average cost, 4.5 percent, is still not negligible.

Finding the most cost-effective way for sending money to one’s country of origin is not always easy. Usually, you will find it out through experience and, in any case, you must always be aware of the cost, as prices may change. In particular, financial innovation spurred by technology development (FinTech) is allowing into the market new service providers, online or via app, that offer better prices. Together with the calculator, you will find some tips for making better choices. In a nutshell, the best strategy is, compare many different offers before making a transfer and check the cost effectively charged after making it. For this latter purpose, in particular, the calculator will be of great help!