Remittance companies make a bigger margin on remittances than banks.
IMMEDIATE past president of the Jamaica Money Remitters Association Jacinth Hall Tracy indicates that Jamaicans in possession of US dollars will not be able to send these funds abroad via local remittance counters.
There is a wide variation in pricing between the cambios in the island which sell US dollars and other currencies and the rate for the US dollar offered at the remittance counter.
While US dollars can be purchased at market rates at cambios, the rate charged by remitters is usually much higher. The sender pays at these higher rates to send funds abroad.
The Jamaica Observer reached out to the Money Remitters Association to find out if money obtained at cheaper rates from the cambio could be used to send to relatives abroad. Hall Tracey said “remittance transfers are done in Jamaican dollars.”
Similarly, while US and other foreign currency are remitted through local companies, payout is made by the remittance company at rates set by the company receiving.
Three ways of earning
Remittance companies earn from fees charged for sending, higher rates on currency sold, and lower rates paid for currency received from overseas sources and handed over in Jamaican dollars on the island.
Jamaicans abroad send an average of US$240 million monthly to relatives and other contacts in Jamaica. In 2021, a record year for remittances, US$3.5 billion was remitted.
A hefty amount is also sent abroad monthly to dependents living in other nations including the United States and for other reasons such as to do business.
The Business Observer reached out to GK Money Services Limited for an explanation of an eight dollar difference between cambio selling rates and Western Union charges for the US currency. GK Money Services is Western Union’s largest remittance partner in the English-speaking Caribbean. A response was promised but never delivered.
Jamaicans who need to remit money abroad to relatives have the option of using wire transfers made available by commercial banks. But, the sending fees attached are significantly higher than remittance companies and the receiving bank abroad also adds charges.
