Amongst the major money transfer players in Nigeria, MoneyGram has the lowest transfer fees. Using the estimation calculator on their websites and a base amount of $500, making a $500 transfer will attract a fee of $7 dollar which is 1.4 percent as compared to $20 or 4 percent fee charged by Western Union and $9.99 or 1.9 percent charged by World remit.
World Bank’s Migration and Remittances Factbook 2016 revealed that more than 250 million people or 3.4 percent of the world population live outside their countries of birth. However, Members of the Nigerian diaspora are not absent in this trajectory as they remain closely attached to their home country, a fact revealed in the prevalent practice of remitting money to family still in Nigeria or remitting money from Nigeria to other countries around the world.
The international remittance market have grown significantly in Nigeria looking at World Bank estimates that in 2017 alone Nigeria received over $22 billion in remittances, making it the largest recipient in Africa and fifth largest recipient globally.
However, that transfer costs as indicated by the World Bank to sub-Saharan Africa were among the most expensive in the world. These costs had spawned the emergence of digital transfer operators in competition with the traditional players in the field.
Nigerian money transfer business was liberalized since 2002; the international money transfer market in Nigeria before 2008 was largely controlled by Western Union and MoneyGram, by the use of exclusivity agreements which gave them an almost monopolistic hold over the market.
However, things are beginning to change, in the past, Western Union and MoneyGram would have been the only alternative, nowadays there are a lot of far cheaper solutions which are getting cheaper year in and year out.
World Remit for example is beginning to take over. It is already in partnership with three banks, that is, GTB, First Bank and Fidelity. Its cost is way below that of western Union and may decrease in subsequent years.
Reducing the costs of remittances has been a high-level goal for the World Bank, as well as these payment providers which are commercial entities. They are obviously aiming for profitability but at the same time, they have to be able to outperform their competitors by offering lower attractive rates.
