UFC-Que Choisir has announced that they have filed a lawsuit against Western Union and MoneyGram for "deceptive marketing practices", which shows weak competition in international money transfers and high tariffs, which vary from country to country.
The French consumer association UFC-Que Choisir published on November 27 a study aimed at international money transfers. "This is usually about sending between relatives (foreign residents, parents sending money to students abroad, etc.) for one time or repeated operations," he noted in his analysis.
The organization claims to have filed a lawsuit against Western Union and MoneyGram for "deceptive marketing practices" and called on the government to "create conditions for fair competition." "Both Western Union and MoneyGram clearly tell their customers how to charge foreign exchange fees," said UFC-Que Choisir. In total, transfer company transfer fees are 2.5% higher than online companies, and even 7 times more than the exchange fees charged by the bank.
At this cost, the association made an "anesthetic" finding from the competition, proving the difference in tariffs practiced: for Tunisia, this varies according to the amplitude of 34%, the maximum cost of € 11.40 for transfers of 170 euros in Ria, against 8.50 euros in MoneyGram.
10.3 billion is transferred outside the euro area
The association explained. Of the 19 billion euros sent each year from the French region abroad, 10.2 billion euros is transferred to countries outside the euro area. "Nearly half of this volume (52%) is sent to the Middle East and North Africa (Morocco, Algeria, Tunisia and Turkey). 1.9 billion euros (19%) are sent to the Asia-Pacific zone (Vietnam, China and India) while 1.5 billion was sent to sub-Saharan Africa (Senegal and Cameroon), or 15%. "
In France, sending money abroad (excluding the eurozone) from individual costs averages 6.7% of the amount sent. Consumers pay for cost-for-service fees, "which are prices of foreign receipts, processing and payment services", and exchange costs, "which come from the difference between the conversion rate applied by the provider and the market level," said the study.
Traditional transfer companies are more expensive
Traditional transfer companies (Western Union, MoneyGram, Ria, etc.) charge a fee of 7.3% of the amount sent. "This service fee is up to 12.4% as part of the La Banque Post partnership with Western Union".
New online players (TransferWise, WorldRemit) are cheaper on average 2.6%, but services are more limited. This transfer can also be done through a bank, which charges 6.9% of the amount sent on average, or La Poste service, which gives itself 5% of the amount transferred.
Behind this average cost hides large differences, varying from one to two times depending on the destination. Thus, "a transfer of € 179 made to Morocco costs € 8.30, or 4.9% of the amount sent"; "The same amount transferred to Algeria is billed 16.20 euros, or 9.5% of the amount," the report notes. In total, the transfer rate to Algeria is 64% more expensive than the average transfer fee from France.
"For the eight main transfer destinations, French tariffs are on average 14% more expensive than our European neighbors," the association said. "The most exorbitant rates are found in Algeria (+ 11%), Morocco (+ 17%), India (+ 22%) and Vietnam (+ 25%)."
There is no relationship between the volume transferred and the transfer price
For consumer organizations, "account of serious market failure for this excess price". While several studies by the World Bank documented the inverse relationship between the level of remittances and volume traded between the two countries, this dynamic did not function in France.
Thus, "the cash-to-cash transfer fee to Algeria (the second zone of destination) reaches 9.4% of the amount sent". "In contrast, the transfer fee to Cote d & Ivoire (fifteenth country in terms of volume sent) is only 5.5% of the amount sent."
Conclusion from the association: "Competition does not benefit consumers in the money transfer market". In particular, "difficulties for consumers to assess the total cost of transferring money".
Exchange fees are not too transparent
UFC-Que chose tips, especially exchange fees. For sixteen main objectives, this represents, based on a weighted average, 26% of the total bill of transfer fees made by consumers. "This fee is up to 42% of the transfer bill to Tunisia but is not charged for the purpose of having a CFA franc," said the study.
Players in the money transfer market abroad do not use the same practice when it comes to informing consumers about the amount of exchange fees charged to them. As a result, almost 15% of companies do not provide billing information, according to the World Bank.
With Jeune Afrique