Remittance companies make a higher margin on remittances than banks.
IMMEDIATE past president of the Jamaica Money Remitters Association, Jacinth Hall Tracy, says Jamaicans in possession of US dollars will not be able to send those funds overseas through local remittance outlets.
There is a wide price variation between the cambios on the island that sell US dollars and other currencies and the US dollar rate offered at the discount counter.
While US dollars can be purchased at market rates at cambios, the rate charged by shippers is usually much higher. The sender pays these higher rates to send funds overseas.
the Jamaica Observer contacted the Money Remitters Association to find out if money obtained at lower rates from the cambio could be used to send to relatives abroad. Hall Tracey said that “transfers of funds are made in Jamaican dollars”.
Similarly, while US dollars and other foreign currencies are transferred through local companies, payment is made by the transfer company at rates set by the receiving company.
Three ways to win
Money transfer companies earn fees charged for sending, higher rates on currency sold, and lower rates paid for currency received from foreign sources and remitted in Jamaican dollars on the island.
Jamaicans abroad send an average of $240 million per month to relatives and other contacts in Jamaica. In 2021, a record year for remittances, 3.5 billion US dollars were transferred.
A considerable sum is also sent abroad each month to dependents living in other countries, including the United States, and for other reasons such as doing business.
the Business Observer contacted GK Money Services Limited for an explanation of an eight dollar difference between cambio’s selling rates and Western Union’s charge for US currency. GK Money Services is Western Union’s largest money transfer partner in the English-speaking Caribbean. A response was promised but never delivered.
Jamaicans who need to send 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 fees.