International Remittances: Information on Products, Costs, and	 
Consumer Disclosures (17-NOV-05, GAO-06-204).			 
                                                                 
Remittances are personal funds immigrants send to their home	 
countries. The United States is the largest remittance-sending	 
country in the world, with more than $36 billion remitted in	 
2003, according to the International Monetary Fund. The majority 
of these remittances are sent to Latin America and the Caribbean 
and they are a very important source of financial flows to many  
countries. In 2004, the United States, with other countries,	 
pledged to reduce fees for remittances. Remittance senders in the
United States can send funds through entities in the formal	 
financial sector such as money transfer operators, banks, and	 
credit unions or other informal means such as couriers. This	 
report provides information on (1) the methods of transmission	 
available to remittance senders in the formal financial sector	 
and the advantages and disadvantages of each, (2) the costs to	 
send remittances through the formal financial sector, and (3)	 
disclosures remittance providers typically provide to senders.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-204 					        
    ACCNO:   A41621						        
  TITLE:     International Remittances: Information on Products,      
Costs, and Consumer Disclosures 				 
     DATE:   11/17/2005 
  SUBJECT:   Banking regulation 				 
	     Cost analysis					 
	     Credit unions					 
	     Electronic funds transfer				 
	     Fees						 
	     Financial institutions				 
	     Immigration					 
	     National banks					 
	     Remittances					 

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GAO-06-204

     

     * Report to the Committee on Banking, Housing, and Urban Affairs, U.S.
       Senate
          * November 2005
     * INTERNATIONAL REMITTANCES
          * Information on Products, Costs, and Consumer Disclosures
     * Contents
          * Results in Brief
          * Background
          * Remittance Senders Have a Variety of Options Available to Send
            Remittances but Continue to Predominantly Use MTOs for Multiple
            Reasons
               * Remittance Senders Have a Variety of Formal and Informal
                 Methods to Transfer Funds
                    * Money transfer operators
                    * Banks
                    * Credit Unions
                    * United States Postal Service
                    * Online Providers
                    * Hawalas and Courier Services
               * Remittance Providers in the Formal Sector Have Their
                 Advantages and Disadvantages, yet MTOs Remain the Dominant
                 Choice of Provider
               * Some Federal Banking Agencies Are Involved in Initiatives
                 That Use Remittance Products and Services as a Means of
                 Bringing Immigrants into the Mainstream Banking Sector
          * Standard Costs for Sending Remittances to Certain Regions of the
            World Have Fallen, but These Costs Vary among Providers and
            Products
               * Competition Has Produced Reductions in Remittance Costs from
                 the United States to Latin American Countries
               * Remittance Transfer Fees Vary Depending on a Number of
                 Factors
               * Foreign Exchange Commissions Also Vary, but, Fees Have
                 Fallen for Some Countries
               * Additional Costs May Exist, Depending on Provider, Product,
                 and Service Offered
          * Although State and Federal Disclosure Requirements Vary,
            Remittance Providers Offer Basic Information on Cost and Error
            Resolution
               * Remittance Providers Consistently Presented Disclosures on
                 Costs and Error Resolution for Cash- to-Cash Products, but
                 Disclosures Varied for Other Remittance Products
               * State Disclosure Laws Vary and Federal Disclosure Laws Do
                 Not Apply to All Remittance Products
               * Remittance Providers Disclose Certain Cost Information, but
                 Consumers May Need to Do Additional Work to Compare Costs of
                 Different Providers
          * Observations
     * Objectives, Scope, and Methodology
     * Description of Products That Are Offered by Providers We Interviewed
     * Transfer Fees to Mexico and the Philippines for the Providers We
       Interviewed
     * GAO Contact and Staff Acknowledgments

Report to the Committee on Banking, Housing, and Urban Affairs, U.S.
Senate

November 2005

INTERNATIONAL REMITTANCES

Information on Products, Costs, and Consumer Disclosures

Contents

Tables

Figures

Abbreviations

November 17, 2005Letter

The Honorable Richard C. Shelby Chairman The Honorable Paul S. Sarbanes
Ranking Minority Member Committee on Banking, Housing,     and Urban
Affairs United States Senate

According to the International Monetary Fund (IMF), in 2003, personal
remittances amounted to about $100 billion for developing countries. These
personal remittances can be used for various purposes including basic
consumption, housing, education, and small business formation. The United
States is the largest remittance-sending country in the world. According
to the IMF, in 2003, more than $36 billion was sent from the United States
to other countries. The majority of these funds were sent to Latin America
and the Caribbean, and substantial amounts were also sent to Asia and
Africa. These personal remittances also serve as an important financial
source for some countries. For example, the Inter-American Development
Bank estimated that in 2003 remittances to Latin America and the Caribbean
exceeded all combined foreign direct investment and official development
assistance to the region, and accounted for at least 10 percent of gross
domestic product for six countries in the region.

Community groups and some U.S. government officials have raised concerns
that remittance senders pay excessive fees to send funds to their home
countries. The United States and other major industrialized nations
committed in 2004 at the Sea Island Summit of G8 countries to lead an
international effort to reduce remittance fees.1 Another concern raised by
community groups is that remittance senders are not obtaining sufficient
information on the total cost of the remittance transaction and their
rights to dispute transactions. Finally, some federal banking agencies,
members of Congress, and community groups have expressed interest in
exploring ways to bring a greater percentage of immigrants into the
mainstream financial system, such as by encouraging remittance senders to
use banks or credit unions to send remittances.

Remittance senders in the United States have a variety of options to
transfer money to their home countries. Senders can use the formal
financial sector, which includes money transfer operators (MTOs), such as
Western Union and MoneyGram, as well as banks and credit unions. They may
also choose the informal financial sector, using options like personal
couriers and hawalas-an Arabic word that means "transfer"-to send funds.2
Our work focused primarily on remittances sent through the formal
financial sector.

In light of the large volume of remittances and the need for better
understanding of these flows and the methods that remittance senders use,
you asked us to undertake a review of remittances from the United States.
Specifically, we examined (1) the methods of transmission available to
remittance senders and the advantages and disadvantages of each, (2) the
various costs to the remittance sender to use different methods, and (3)
information remittance providers disclose to senders and the federal and
state disclosure requirements. You also asked us to review available
estimates on remittances from the United States, which we plan to address
in a separate report.

To examine the methods of transmission available to remittance senders, we
developed a set of structured questions and used them to interview
selected MTOs, banks, credit unions, and Internet-based remittance
providers. We spoke with and reviewed documentation from a total of 28
remittance providers. To examine the various costs to the remittance
sender to use different methods, we asked the remittance providers we met
with for the transfer fees and any additional fees to send $300, primarily
to Mexico and the Philippines, which are among the largest recipients of
remittances from the United States. To examine what information remittance
providers disclosed to remittance senders, we asked the providers what
they provided to remittance senders during a remittance transaction and
also collected and reviewed documentation they provided to us such as
receipts, brochures, and terms and conditions they provide to consumers.
We also reviewed federal and selected state laws to determine disclosure
requirements for various remittance products. Appendix I provides
additional details on our scope and methodology. We conducted our work
from December 2004 to October 2005 in accordance with generally accepted
government auditing standards.

Results in Brief

Remittance senders in the United States have a range of methods to send
money abroad, including money transfer operators, banks, credit unions,
and the U.S. Postal Service. However, most transactions in the formal
financial sector-the scope of this report-are conducted through MTOs. In
the formal financial sector, mechanisms and products for transferring
money offered by remittance providers range from more traditional
cash-to-cash wire transfers to account-based transfers, stored value
cards, or Internet-based transfers. In the informal sector, remittance
senders may use couriers or hawalas, which generally transfer funds
outside of the formal financial sector. There are a number of possible
reasons remittance senders continue to choose MTOs over other providers,
including the extensive network large MTOs have both in the United States
and abroad, as well as customers' familiarity with the products MTOs
offer. Additionally, even though the fees remitters incur when using an
MTO may be higher than the fees incurred when using other providers,
remitters may choose an MTO because it has a name they trust and may offer
the convenience of service 24 hours a day. Banks and credit unions offer
remittance senders the benefits of deposit insurance and access to other
banking products, but limited banking hours, language barriers, and
inconvenient locations may make it difficult for them to use this service.
Two federal banking agencies have undertaken some new initiatives in an
effort to move more remittances through formal financial institutions and
bring more immigrants into the financial mainstream.

Research shows that competition in the remittance market has resulted in a
drop in the cost to send remittances from the United States to certain
regions of the world. For example, according to the Inter-American
Dialogue, the cost of sending remittances from the United States to Latin
America (particularly Mexico) has fallen since around 2001 and, more
specifically, since 2003, the average cost of sending $250 has fallen from
12.5 percent to 7 percent.3 However, the cost reductions have stabilized
recently. Little is known about the trends in costs of remittances from
the United States to other regions of the world. The standard costs to
remittance senders are the transfer fee and the foreign exchange
commission, which is the fee to convert currency. These costs vary for
different products and providers. In our review of products from 28
remittance providers, we found that the transfer fee could differ based on
provider and product used, the amount sent, and the destination. However,
the MTOs, banks, credit unions and the U.S. Postal Service with whom we
spoke that offered the predominant cash-to-cash product, had similar
transfer fees to send $300 to Mexico, charging approximately $10.
Additionally, banks offered lower-cost alternatives to send remittances,
such as card-based products or account-to-account-based products. For
example, the transfer fee to use a dual ATM card to send remittances to
Mexico could be as low as $1.50. The foreign exchange commission can also
vary according to factors, such as the provider and product used or the
level of competition among sending agents. The results of an Internet
tracking exercise we conducted with five MTOs and one bank showed that in
general the foreign exchange commissions were lower to Mexico than to the
Philippines. Depending on the provider, product, and service used,
remittance senders may incur additional costs such as those associated
with maintaining a bank account or fees for home delivery.

Providers we met with generally presented remittance senders with basic
information on the transaction fee and the exchange rate that would be
applied to the transaction, as well other terms and conditions of the
transaction, such as a customer's right to a refund. The way in which
information was presented varied among providers. Receipts we examined
from MTOs, banks, credit unions, and the U.S. Postal Service that offered
the cash-to-cash product consistently provided the transfer fee, exchange
rate, amount of local currency to be received, as well as information on
error resolution, at the time of the transaction. Banks that offered other
remittance products, such as account-based transfers, including dual ATM
cards, presented disclosures in various ways, such as in a fee schedule
given to customers when they opened an account or on a monthly statement.
Additionally, disclosure requirements vary based on whether the provider
is regulated at the state or federal level, as well as the type of
remittance product offered to the customer. MTOs are generally regulated
at the state level, and each state may set its own disclosure
requirements. For example, California's law requires its MTOs to be
licensed and stipulates specific information that must be contained on
receipts for each transaction regarding cost and a right to a refund.
Montana, on the other hand, has no specific money transmitter laws. In
contrast, banks and credit unions are subject to a specific federal
disclosure law. However, some banks we spoke with told us that they
believed this law did not apply to all of their remittance products, such
as stored value cards. While information on the cost of the remittance
transaction is available to remittance senders, they may have to do
additional work to compare costs across different types of remittance
products because of various fees and types of disclosures. Although there
was no consensus among the officials we spoke with on whether customers
need additional disclosure information to make informed decisions, efforts
are under way to provide some customers with more aggregated information
on the cost of remittances across different providers and products. For
example, the Mexican consumer protection agency publishes information on
the Internet, on transfer fees and exchange rates offered by a cross
section of providers sent to Mexico from nine cities in the United States.

We make no recommendations in this report. We requested and received
technical comments on relevant sections of a draft of this report from the
Bureau of Economic Analysis, the Federal Deposit Insurance Corporation,
the Federal Reserve Bank of Atlanta, the United States Postal Service, and
the National Credit Union Administration.

Background

Remittances have become an important source of financial flows to
developing regions. For some countries, these funds constitute the single
largest source of foreign exchange and can often rival foreign direct
investment. Table 1 shows that remittance flows for selected countries
exceed flows of various economic indicators such as official development
assistance, foreign direct investment, and gross national income.

Table 1: Remittances as a Percentage of Various Economic Indicators for
Selected Countries for 2003

Country     Remittance as a  Remittance as a percentage of Remittance as a 
                 percentage of  foreign direct investment net   percentage of 
                      official                        inflows  gross national 
                   development                                         income 
                    assistance                                
Dominican             3,372                            750              13 
Republic                                                   
India                 1,847                            408               3 
Mexico               14,148                            135               2 
Philippines           1,069                          2,470               9 

Source: World Bank.

Notes: Remittances comprise workers' remittances and compensation earned
by nonresident employees. The countries selected are some of the top
recipients of remittances in their respective regions.

Figure 1: Regional Destinations of Workers' Remittances Sent from the
United States, 2003

Remittance Senders Have a Variety of Options Available to Send Remittances
but Continue to Predominantly Use MTOs for Multiple Reasons

Remittance senders in the United States have a number of methods and
product options available to them when sending money to their home
countries through the mainstream financial sector. However, many continue
to use MTOs for a number of reasons. A remittance sender in the United
States can send money through formal financial channels, such as banks,
credit unions, or MTOs. These different providers offer traditional
remittance products like cash-to-cash transfers and account-based
transfers, as well as newer products like stored value cards. Remittance
senders can also use informal value transfer systems to transfer money,
such as personal couriers and hawalas. Each type of remittance provider
and product has its own advantages and disadvantages. For example, most
banks and credit unions we spoke with that offer remittance services only
send to Latin American countries, with the majority of those sending to
Mexico. Thus, a remittance sender might gain the security of using the
mainstream financial sector, but the receiving countries available to the
sender may be limited. An MTO may have a wider distribution network but
may charge a higher fee for this service, especially for countries where
there is relatively little competition. Remittance senders nevertheless
continue to use MTOs because of factors such as convenience and trust. In
an effort to move more remittances through mainstream financial
institutions such as banks and credit unions and bring immigrants into
these institutions, some federal banking agencies have undertaken
initiatives to encourage remittance senders to use banks or credit unions
to send remittances.

Remittance Senders Have a Variety of Formal and Informal Methods to
Transfer Funds

There are a number of different types of providers inside and outside the
formal financial sector offering remittance services. Traditionally, MTOs
have dominated the remittance industry in the formal financial sector.
Recently though, more banks, credit unions, and Internet-based providers
have started offering remittance services to customers. As more remittance
providers enter the market, the range of products has also expanded. Table
2 shows the types of products that may be offered by the different types
of formal providers. Appendix II has a more thorough description of the
products offered by the providers we spoke with.

Table 2: Remittance Providers and the Different Product Types They Offer

              Cash-to-cash Cash-to-account   Account/   Account-to-account   ATM   Stored Money 
                                              credit                       product value  order 
                                           card-to-cash                             card  
MTOs               X              X         X (via an                                X      X   
                                             on-line                                      
                                            transfer)                                     
Banks              X              X             X               X             X      X    
Credit unions      X                            X               X                         
USPS               X                                                                        X   
Internet-only                                   X                                    X    
providers                                                                                 

Source: GAO.

Money transfer operators

Traditionally, MTOs have dominated the remittance industry in the formal
financial sector. One recent estimate from a private research firm states
that the four largest MTOs sent approximately 40 percent of remittances
from the United States.4 Larger MTOs in the United States may serve upward
of 170 countries, while some small MTOs may serve only one country or
region.

Generally, a sender can walk into an MTO, provide cash to cover the
transfer amount and fees, provide basic identification information for
themselves and the recipient (most often a name, address, and phone
number), and the money will be wired to a specified agent location in the
recipient's country. This type of transaction is referred to as a
cash-to-cash transaction because a sender provides cash to the money
transmitter and the receiving agent pays out cash to the remittance
recipient in either U.S. dollars or local currency.5 Figure 2 shows how
this process operates.

Figure 2: Cash-to-Cash Remittance Transaction

MTOs provide a variety of places to send or receive cash. The majority of
MTO users initiate cash-to-cash transactions at an MTO-dedicated
storefront or an affiliated agent. Examples of the latter include
convenience stores, supermarkets, check cashers, and ethnic-run retail
stores.6 One MTO we spoke with has moved away from this model in favor of
a branch-based system where the company runs all its remittance branches
and does not have any contracted agents. All of the branches are located
in areas where Latinos live and work. A company official told us the
company moved toward this model because it allows greater flexibility in
its pricing structure, and the company can pass additional savings on to
the customer. Other sending and receiving options offered by MTOs include:

o Cash-to-account-This is a relatively uncommon option in which some MTOs
have formed partnerships with banks that allow the sender to pay in cash
and have the funds deposited in the recipient's bank account. One provider
we spoke with offers a cash-to-account product to the Philippines. This
service allows U.S. dollars to be transferred to the recipient's bank
account.

o Web sites-Some MTOs have Web sites where customers can initiate a
remittance over the Internet, pay for the transaction with a credit card,
and the payout would be received in cash at a corresponding agent
location. The MTOs we spoke with that offer transfers over their Web sites
said a very small volume of their transactions is conducted this way.

o Money orders-Some MTOs we spoke with also sell money orders that could
be used as remittance products. The sender purchases the money order with
U.S. dollars and sends it to the recipient, who then cashes it in at a
bank for local currency.

Most MTOs we spoke with offering cash-based transactions (for example,
cash-to-cash) said that the money is available to the recipient within 24
hours, and some MTOs offer a same day transaction for a higher fee. While
most recipients usually retrieve remittances at the provider's place of
business, sometimes the money can be delivered to the recipient's home.7
Some MTOs also offer a free 3-minute international phone call to senders
so they can inform the recipient the money has been sent and one provider
we spoke with will send a text message to the recipient's mobile phone
alerting them that the money has been sent.

Banks

Both large and small banks have entered the remittance market in an effort
to attract immigrants as a new client base. Researchers, as well as
officials from the Federal Reserve, estimate that banks accounted for
about 5 percent of all international remittances sent from the United
States in 2004. Traditionally, banks have wired money from a customer's
account to a recipient's account as the primary method for transferring
money abroad. This was not marketed as a remittance product, and banks
targeted this option at high-volume account holders who send large sums of
money for retail or investment purposes, and they generally charge more
than the cost

of a remittance transfer.8 Most U.S. banks we identified offering
remittance products and services do so only for Latin America, with a few
also serving India and the Philippines. Some banks have developed their
own remittance products, such as account-based products, which usually
require the sender, and in some cases the receiver, to have an account.
For account-based products, as shown in figure 3, the money is transferred
from the sender's account to the recipient's account (account-to-account)
or it is paid out in cash (account-to-cash). Banks offering account-based
products usually transfer the money to branches they have abroad or to
banks with which they have formed partnerships.

Figure 3: Account-Based Remittance Transaction

Some of the larger banks we spoke with have recently acquired Mexican
banks, providing them with an instant distribution network for
remittances. Banks also offer other remittance options, such as
traditional remittances paid for with cash, dual ATM cards, or stored
value cards. The cash-based products operate in a manner similar to that
described above. Like cash-to-account or account-to-account products, a
dual ATM card is linked to a customer's bank account. A recipient could
withdraw the money from a special remittance account linked to the
sender's regular bank account or directly from the sender's regular bank
account or directly from the sender's savings or checking account. If the
money is withdrawn from a separate remittance account, the senders can
either transfer funds from their accounts into the remittance account or
make a deposit directly into the remittance account. We spoke with five
banks that are offering a dual ATM product. Three of these banks limit the
amount that can be transferred on a daily basis through them to $200 or
$400 as a security precaution, since they are linked to a customer's
account. As shown in figure 4, a remittance sender using this type of
product sends an ATM card to the receiver, who can then use it to withdraw
money at a local ATM.

Figure 4: ATM-Based Remittance Transaction

With stored value cards, as shown in figure 5, senders purchase a card
from a bank for a certain dollar amount, which is posted to the card
before it is sent to the recipient. This card can also be used to withdraw
money from an ATM or used as a point-of-purchase card to buy goods. The
card may be reloaded with more funds and is usually branded by one of the
major credit card issuers. Three of the 12 banks we spoke with that offer
remittance services are offering a stored value card. According to one
researcher we spoke with, account-based remittances currently constitute a
small part of the total remittance flows leaving the United States, as
many immigrants lack bank accounts, are not aware of the products or the
technology, or their banks do not offer the service. Two banks we spoke
with told us they have opted to act as agents of an MTO and provide
cash-to-cash services because this is a low-cost way for them to enter the
remittance market. Another bank we spoke with is considering this option
because of the low level of interest in the other remittance products it
offers. Furthermore, one community bank told us it has allowed an MTO to
open a kiosk in its branch because it does not have the resources to offer
its own remittance services, and it want to meets the needs of its
customers.

Figure 5: Stored Value Card Remittance Transactions

Credit Unions

Credit unions have entered the remittance market in an effort to meet the
needs of some of their immigrant clients for lower-cost remittance
products and possibly attract new members. Many credit unions in the
United States offering remittances do so through an electronic platform
developed by the World Council of Credit Unions, Inc. (WOCCU) called the
International Remittances Network (IRnet).9 IRnet provides credit unions
access to the means by which they can offer remittance services. On the
sending side, WOCCU has contracted with two MTOs to serve as the
transmitter of account-to-account, account-to-cash, or cash-to-cash
remittances for IRnet participant credit unions. A credit union that joins
IRnet can choose which MTO's services it would like to offer to its
members. WOCCU officials told us they provide a choice of MTO to each
credit union in an effort to offer remittance senders and receivers more
options for transferring and receiving funds. Remittance senders using an
IRnet participating credit union can send money to countries in Latin
America, Asia, Africa, Europe, and Australia. According to WOCCU, as of
August 2005, there were 174 credit unions that were members of IRnet, the
majority of which were located in California and Texas.

Many of the credit unions we spoke with said that remittances are not a
significant part of their business. For example, of the seven credit
unions we spoke with, one reported that it conducted more than 250
remittance transactions a month through IRnet in 2004 and another reported
conducting around 80 transactions a month. The other five credit unions we
spoke with reported conducting fewer than 25 transactions a month in 2004
with some fewer than 15 transactions for the year.

United States Postal Service

The United States Postal Service (USPS) provides remittance services
abroad through international money orders and cash-to-cash wire transfers.
Remittance senders can mail international money orders to 30 countries,
many of which are sent using USPS's international mail services.
Recipients can then cash these money orders either at their destination
country's local post office or at banks in destination countries,
depending upon the acceptance policies of those post offices and banks. In
1996, USPS entered into a partnership with the Mexican bank Bancomer (now
BBVA Bancomer) to offer a wire transfer service called Sure Money, branded
Dinero Seguro at participating post offices. The service mirrors
traditional money transfer operations, with cash being wired from U.S.
post offices to financial institutions that BBVA Bancomer has entered into
agreements with, including, but not exclusive to, BBVA Bancomer branches.
In order for the recipient to access the money, the sender must provide
him with the confirmation number and the recipient must provide proper
identification upon pickup of the funds at the participating payout agent.
The recipients are not required to have an account with BBVA Bancomer or
any of the payout agents to collect funds. In 2004, USPS expanded Dinero
Seguro to nine additional countriesalso in partnership with BBVA
Bancomer.10

Online Providers

Recently, some Internet-based money transfer companies have begun offering
remittance services. Unlike traditional MTOs that might allow customers to
send money through their Web sites, these MTOs operate solely online and
do not have agents or branches. Remittances initiated at an online
provider must be paid for with a credit or debit card. On the recipient
end, the money is disbursed to either a stored value card or in cash at a
correspondent agent location. We spoke with officials of one online
provider who told us they entered the business because they felt they
could offer a competitive advantage over physical providers with a
lower-cost product and greater convenience. While online remittance
providers currently have a small share of the market, a 2005 report on
remittances and technology from a communications firm projects that by
2007, more than 5 million foreign-born households will do some form of
online banking and at least half of these will use an online transfer or
card-based product for remittances.11

Hawalas and Courier Services

Some remittance senders choose not to send money through formal financial
channels. It is difficult to gather information about these informal money
transfers, since some of them occur through cultural arrangements with
little or no documentation. Informal value transfer systems are often used
in places where formal financial transactions are unavailable, expensive,
or unreliable. Two common types of informal value transfer systems are
courier services and hawalas. Courier services carry funds across the
border often along with other goods. The courier may hand-deliver the
money to the recipient or may have a storefront where the recipient can
retrieve it. According to one study on the United States-Mexico remittance
corridor, couriers play a significant role in transferring money between
the residents in the two countries.12 The hawala system operates
differently. As shown in figure 6, a customer using a hawala would hand
cash to the hawaladar and request that an equivalent amount be delivered
in local currency to the recipient. The hawaladar would then contact a
hawaladar in that receiving country and ask that the funds be disbursed to
the recipient. In most cases, no fees are discussed. Rather, the
transaction cost is factored into the quoted exchange rate or the amount
that will be delivered to the recipient. Remittances sent through hawalas
are delivered anywhere from within a few minutes to 48 hours, depending
upon the urgency and destination of funds. While the hawala system
operates in the informal sector, hawaladers often hold bank accounts and
use the formal financial channels to settle their outstanding balances.

Figure 6: Hawala System for Remittances

Remittance Providers in the Formal Sector Have Their Advantages and
Disadvantages, yet MTOs Remain the Dominant Choice of Provider

There are advantages and disadvantages to the remittance sender of using
each type of provider in the formal sector. Factors such as trust in the
provider, speed of transaction, reliability and security of the
transaction, and cost were all cited by remittance providers and a limited
group of senders we spoke with as reasons thought to be important to a
remittance sender when choosing a provider and product. Most remittance
senders first choose the provider and then choose a product type offered
by that particular provider. Remittance senders, though, may be limited in
their choice of provider based on the convenience and accessibility of the
payout location for the recipient.

Remittance providers we spoke with said that there are a number of
possible reasons remittance senders continue to choose MTOs over other
providers. For example, MTOs have established extensive networks both in
the United States and abroad that allow them to initiate transactions and
distribute money in and throughout more countries than any other type of
provider. Some of the largest MTOs we spoke with told us they have between
75,000 and 225,000 agent locations worldwide in more than 170 countries.
The large numbers of agent locations, including convenience stores,
grocery stores, check cashers, and ethnic-run retail stores provide the
remittance sender with more locations from which to send funds and may
better equip MTOs to deliver money in rural areas than other types of

providers. Six of the 10 MTOs we spoke with said that customers prefer to
use them because they have multiple sending or receiving locations. MTOs
also offer convenient hours of operation and locations and some may offer
service 24-hours a day. Of the 10 MTOs we spoke with, half identified
convenient hours of operation as a reason a consumer uses them. In
addition, MTOs offer relatively quick and reliable transactions. Many MTOs
we spoke with said their cash-to-cash transaction-the most common one they
offer-is available within a few hours, and some said within a few minutes.
Some MTOs also offer a free 3-minute international phone call to senders
so they can inform the recipient the money has been sent. In addition,
remittance providers believe that senders are familiar with and
comfortable with MTOs and the products they offer and may choose an MTO as
a provider because they trust the service the MTO offers. A 2004 study of
Latin American immigrants to the United States found that 78 percent of
those surveyed used MTOs to send money home to their families.13 A similar
study of remittance recipients in the Dominican Republic found that 66
percent of them had a bank account, but 84 percent of recipients surveyed
received remittances through an MTO either at the agent location or
through home delivery.14

Remittance providers and senders we spoke with said there also are some
possible disadvantages to sending money through an MTO. Some remittance
senders may find that there are high costs associated with using MTOs. A
remittance sender also could encounter language barriers when sending
money, especially at some of the agent locations. For example, a sender
may go into a chain supermarket that also serves as an agent of an MTO.
This supermarket's checkers may not speak the language of the sender since
handling remittance transactions is only a small part of their job. A
limited group of remitters that we spoke with echoed the concern of the
higher cost of using some MTOs.

Remittance providers we spoke with said that banks that offer remittance
services have the advantage of offering remittance senders the option of
some lower-cost products that are secure and reliable. Bank remittance
products, such as dual ATM cards and account-based transfers, tend to be
lower in cost than cash-based products offered by MTOs. As discussed in
greater detail in the next section, the bank products we looked at had
transfer fees ranging from no charge to $10.00 for a $300 transaction to
Mexico, while the range of transfer fees for sending this amount through
an MTO, according to those we spoke with, was $4.90 to $15.00.

One barrier to using a bank for some remittance senders is that the
senders may be required to have a bank account. Of the 12 banks we spoke
with that are offering remittance products, 9 require a remittance sender
to be an account holder for at least one of their products, and some of
the others offer lower fees to account holders. Providers said that many
immigrants may have come to the United States from countries with unstable
banking systems and may distrust banks; others may think they do not have
the proper documentation to open an account. Four banks we spoke with told
us that lack of proper identification may keep someone away from using
their remittances services. The banks offering remittance services that we
spoke with all accept the Mexican consular identification card as a valid
form of identification.

Additionally, limited banking hours, language barriers, or inconvenient
locations may make it difficult for an immigrant to use this service. Five
banks we spoke with said their inconvenient location may be a barrier,
while three said limited hours of operation may be a barrier. Most banks
we spoke with are not open in the evenings or on the weekend, when
immigrants often have time off from their jobs to take care of personal
business. Some of these banks have or are considering opening branches in
communities where immigrants live and work and are offering expanded hours
in an effort to make their services more accessible to this market. In an
effort to serve more customers, one community bank we spoke with has
addressed this issue by opening a kiosk in a Latino grocery store that
offers extended hours 7 days a week. Most of the tellers of this bank are
bilingual in an effort to better serve the community they work with. This
bank told us the grocery store is also an agent of a large MTO, and it has
been able to draw many of these customers to its remittance product as it
is offered at a lower cost than others and the bank has been able to bring
them into the formal banking sector at the same time. Another bank said it
had remodeled a branch in a predominantly Latino community, and the decor
will have Mexican art and a color scheme that will remind customers of
their homeland.

Trust in the provider, low cost of service, reliability and security in
the transaction, and language accessibility were all advantages cited by
credit unions we spoke with as reasons customers use them to send
remittances. Six of the seven credit unions we spoke with cited low cost
as a reason customers use them to send remittances. The IRnet remittance
service used by most credit unions offering remittances is offered as a
lower-cost alternative to MTOs. Five of the seven credit unions we spoke
with told us that those who use their remittance services are attracted to
the service because of the security of the transaction. They also
mentioned that many of their tellers speak Spanish, the language of the
majority of those sending remittances. Perhaps the most significant
disadvantage to using a credit union for remittances is that of access.
That is, credit union services may be limited to those who are members. If
someone is not a member or does not have an account at the credit union,
that person cannot use any of the services offered. All seven credit
unions we spoke with cited this as a disadvantage. Some of the credit
unions we spoke with said they would consider offering remittance services
to nonmembers in the hopes of drawing those people in as members if they
could get the proper approval from their regulators. Other reasons an
immigrant may not use a credit union are similar to those for a bank,
including inconvenient locations (four of the seven credit unions we spoke
with cited this reason), perception that the remitter lacks the proper
identification to open an account, and the slow transaction time.

USPS officials said that the advantages to remittance senders of using
their services are the reliability and security of the transaction, low
cost, and trust in the provider. These officials believe sending
remittances using USPS offers a level of security to some senders that
other providers may not afford, since transfers are being conducted by an
independent establishment of the U.S. government and USPS is a name many
people trust and are familiar with. Additionally, USPS offers both of its
products at a competitive cost (see the section on costs for a comparison
of the cost of these products to others). USPS also has the advantage of
offering other products and services that many people use (such as mailing
and stamps), so it may be a convenient option. Disadvantages to the
remittance senders in using USPS include possible language barriers,
inconvenient location for pickup, and inconvenient hours of operation of
either the USPS locations or payout agents. USPS employees may not speak
the language of the remittance sender, and the lack of a common language
could be a barrier to a transaction. Furthermore, most USPS locations are
open during standard business hours during the week (8 a.m. to 5 p.m.) and
weekend hours are limited.

Some Federal Banking Agencies Are Involved in Initiatives That Use
Remittance Products and Services as a Means of Bringing Immigrants into
the Mainstream Banking Sector

In an effort to bring immigrants into the formal banking system, some
federal government agencies (in conjunction with certain foreign
governments, banks, credit unions, and community groups) have launched two
new efforts: the New Alliance Task Force (NATF) and the Federal Reserve
Automated Clearing House (ACH) International wire transfer service
(Directo a Mexico). These efforts intend to provide banking services
primarily for Latin American immigrants in the United States.

The NATF-an initiative focused on providing accounts with low-cost
remittance services and financial education to immigrants-is a partnership
formed in Chicago in 2003 by the Federal Deposit Insurance Corporation
(FDIC), the Mexican consulate, banks, and others. According to FDIC, as of
September 2005, the NATF was composed of 65 members, including 40 banks,
government agencies, and nonprofit advocacy and community groups in the
Chicago and Milwaukee areas.

FDIC reported that as of September 2005, more than 10,000 people had
participated in NATF financial education workshops and more than 50,000
new bank accounts had been opened by those living in the areas where the
NATF is active. The Mexican consulate participates in this effort by
providing immigrants who come to the consulate or mobile consular sites
with financial education on opening and using a bank account and educating
banks about the Mexican consular identification card (also known at the
matricula consular) as a valid form of identification for opening an
account. Most banks or credit unions we spoke with said that they require
two forms of identification, one of which usually is a photo
identification. If an immigrant does not have a driver's license or other
identification, he or she may avoid the banking sector. The banks involved
with the NATF all accept the matricula consular card and other valid forms
of identification. Many have started offering remittance products to
customers as a means of attracting them to the bank.

NATF-based initiatives have recently been launched in Austin, Texas, and
Los Angeles, California. Additional NATF programs are planned for other
cities across the country in the coming months. FDIC officials told us
that banks have been eager to get involved in these initiatives because of
a strong interest among banks and community leaders to bring immigrants
into the financial mainstream.

The Directo a Mexico service began in February 2004 and allows a customer
of a U.S. bank to send money to a recipient with a Mexican bank account at
a low cost through the Federal Reserve's ACH network. This network
connects most banks in the United States to the Federal Reserve and allows
them to receive and post electronic payments. The Directo a Mexico service
operates at a cost of 67 cents per transaction to the bank and, according
to officials at the Federal Reserve we spoke with, most banks that offer
the service are charging their customers between $2.50 and $3 per
transaction. The recipient bank in Mexico gets a share of the 67 cents,
and the bank is not permitted to impose a pickup fee or other fees on the
recipient side. Federal Reserve officials also told us that the Directo a
Mexico service offers a favorable exchange rate to bank customers. When
the program was launched, funds were available 48 hours after they were
sent, but the Federal Reserve recently cut the delivery time in half in
response to feedback from customers that they would like the money
available sooner. As of October 2005, 50 banks in 20 states had enrolled
in Directo a Mexico. Federal Reserve officials told us banks have been
slow to sign up for this service and, of those that have, a small number
are actively using it. Officials said they are making some changes to the
program based on feedback they have received and hope that as more banks
learn about the service, use will grow.

Standard Costs for Sending Remittances to Certain Regions of the World
Have Fallen, but These Costs Vary among Providers and Products

Research conducted by the Inter-American Dialogue has shown that an
increase in competition in the remittance market has resulted in a
decrease in the cost of sending remittances from the United States to
certain regions of the world. The standard costs to remittance senders are
the transfer fee and the foreign exchange commission, which is the fee to
convert currency. These costs vary for different products and providers.
In our review of 28 remittance providers we found that transfer fees can
vary for numerous reasons, including provider, product type, and the
receiving countries we focused on. However, we found that for the
cash-to-cash product, transfer fees to send $300 to Mexico were similar
across the providers with whom we spoke. Also, we found that some banks
offered card-based and account-to-account-based products that cost less
than the cash-to-cash method. The foreign exchange commission also can
vary for multiple reasons, such as the provider and product type or the
level of competition among sending agents. In the case of Latin America
and the Caribbean, the foreign exchange commission has come down since
2001, according to the Inter-American Dialogue. Finally, additional costs
outside of the transfer fee and the foreign exchange commission may exist
for certain products.

Competition Has Produced Reductions in Remittance Costs from the United
States to Latin American Countries

Since the early 2000s, there has been increased competition among
remittance providers from the United States to Latin America. The
marketplace for remittances to this region has evolved as new players have
entered the market. As a result, the total cost to the remittance sender
to remit funds from the United States to Latin America has fallen in
recent years. For example, according to the Inter-American Dialogue, the
total cost of remittances from the United States to Latin America and the
Caribbean, particularly Mexico, has fallen since 2001 and the average cost
of sending $250 has fallen from 12.5 percent in 2003 to 7 percent in 2005.
However, the price reductions have leveled off recently. Based on the
Inter-American Dialogue's analysis of 14 Latin American and Caribbean
countries as shown in figure 7, total costs, which include transfer fees
and the foreign exchange commission, have fallen for remittances sent
across all types of providers since 2001. Among providers surveyed by the
Inter-American Dialogue, large national MTOs continue to charge the
highest total costs for the remittance senders. According to an official
from the Inter-American Dialogue, these higher costs are driven primarily
by higher transfer fees rather than higher foreign exchange commissions.
Compared with these large national MTOs, banks and credit unions
consistently had lower total costs.

Figure 7: The Total Cost of a Remittance Transfer as a Percentage of the
Amount Sent by Industry Sector for 14 Latin American and Caribbean
Countries, 2001-2004

Note: The total cost includes the transfer fee and the foreign exchange
commission. The transactions that were analyzed were cash-to-cash
transactions. The numbers of providers that data were collected from
varied by year depending on factors such as which providers were in
business. Specifically, data were obtained from 45 companies in 2001, 76
in 2002, 75 in 2003, and 60 in 2004. These companies were chosen based on,
among other things, the criteria that they served at least one country in
Latin America and the Caribbean, were present in at least one state in the
United States, and included the largest providers to specific countries in
the region. The National Money Transmitters Association (NMTA) has about
12 members, who are typically medium-sized and small providers. The U.S.
banks and all credit unions include those institutions that are offering a
remittance transfer product either as agents of an MTO or as companies
with their own platforms. The selection was based using the list of banks
accepting the Mexican consular identification card as well as the list of
credit unions that are agents of Vigo or MoneyGram. "Other" includes about
30 providers that are typically smaller regional players and are not
members of NMTA.

Remittance Transfer Fees Vary Depending on a Number of Factors

Almost all providers we spoke with charged remittance senders a fee to
transfer funds, which varied depending on such factors as the provider,
product type, and where the sender initiated the transaction or where the
money was received. We found that for the most common cash-to-cash
remittance product, the average transfer fees to send $300 to Mexico were
similar in cost regardless of provider. As shown in table 3, among the
limited number of providers we spoke with that offered a cash-to-cash
product and provided us with detailed cost information, MTOs charged
approximately $11, credit unions charged approximately $10, USPS charged
$10, and banks charged approximately $9 to send $300 to Mexico. There was
a greater range for sending $300 to the Philippines using a cash-to-cash
product.

Table 3: Average Transfer Fees to Send $300 to Mexico and the Philippines
for Cash-to-Cash-Based Product Offered by the Providers

Country       MTOs' average Banks' average  Credit unions'a USPS's average 
                 transfer fees  transfer fees                   transfer fees 
               in U.S. dollars        in U.S. average transfer        in U.S. 
                                      dollars     fees in U.S.        dollars 
                    (number of                 dollars (number                
                  respondents)     (number of  of respondents)     (number of 
                                 respondents)                    respondents) 
Mexico            $10.70(4)       $8.80(5)        $10.29(6)      $10.00(1) 
The                12.43(4)       25.00(1)         12.33(5)    Not offered 
Philippines                                                 

Source: GAO.

Note: Some providers offered multiple cash-to-cash products or charged
different fees typically depending on how the funds were distributed, and
in those cases these were included as separate data points in our
calculation of the average. Additionally, in this cost summary, we
excluded information from providers with whom we spoke who did not supply
us with detailed cost information on their remittance products or who were
not actively providing remittance products when we met with them.

aAll customers using remittance services were required to be members of
the credit unions we spoke with. Members can debit their account to send a
remittance, conducting an account-to-cash transfer. However, all credit
unions we spoke with had formed partnerships with an MTO to offer a
product that was similar to the typical cash-to-cash transfer product.
Therefore, we have categorized credit union remittance products as
"account-to-cash or cash-to-cash (MTO)" and have included credit union
products in table 3.

Officials of some MTOs we spoke with told us that that the transfer fee
they or their agents charged for sending $300 from the United States to
Mexico or the Philippines using a cash-to-cash product could vary
depending on the originating and receiving locations. Officials indicated
that competition from other MTOs in a certain area was a reason why their
transfer fees from various locations in the United States to the same
country could differ. Officials from some MTOs also told us that
agreements they had with their various paying agents in the receiving
countries could also affect the transfer fee and fees could differ based
on the specific location to which the remittance was sent.

Besides the cash-to-cash product, remittance providers we spoke with also
offered other remittance products, some of which had a lower transfer fee
to send $300 to Mexico or the Philippines. Table 4 shows the range of
transfer fees across the remittance products offered by the 23 providers
we surveyed that provided us with detailed cost information. Banks offered
a low-cost alternative to send money to Mexico through account-to-account
transfers. Four banks we spoke with, three large national banks and one
community bank, provided this service with transaction fees costing up to
$8, generally to send between $1,000 and $3,000 to Mexico. To use this
product, typically both the sender and the receiver were required to have
accounts at a participating bank. However, the community bank that offered
this service through the Federal Reserve's Directo a Mexico service
enabled nonaccount holders to send cash for a higher price of $4.00
instead of $2.50 for account holders. Additionally, two other banks
enabled the recipient to pick up cash when money was sent to Mexico, and
in one case, the bank charged the sender $8 to enable a cash pickup
instead of $5 to send funds to a bank account. Of the banks we spoke with,
only one large national bank provided an account-to-account transfer
service to the Philippines and charged $8 to transfer up to $1,000 per
day. As discussed earlier, however, banks have around a 5 percent share of
the remittance market; thus these products while less costly, are used to
a much lesser extent than the cash-to-cash product.

Table 4: Range of Transfer Fees to Send $300 to Mexico and the Philippines
for All Remittance Products Offered by the Providers

Country      MTOs' range of   Banks' range of          Credit USPS's range of 
                 transfer fees  transfer fees in unions'range of   transfer fees 
               in U.S. dollars      U.S. dollars   transfer fees in U.S. dollars 
                                                 in U.S. dollars                 
                    (number of        (number of      (number of      (number of 
                  respondents)      respondents)    respondents)    respondents) 
Mexico      $4.90-$15.00(6)  $0.00-$10.00(10) $8.00-$16.00(6) $3.25-$10.00(1) 
The          8.00-$16.88(6)   2.00-$25.00a(4)  8.00-$16.00(5)     Not offered 
Philippines                                                   

Source: GAO.

Note: Some banks and credit unions offered the traditional wire product as
a way to conduct international transfers. Fees for this product were
generally about $30 or $40. However, we excluded these products from our
summary of costs because they are typically not viewed as a remittance
products.

aOne bank offers remittances through its dual ATM card for free if the
customer has a specific bundled set of services with the bank.

Banks are also providing new lower-cost card-based products, such as dual
ATM and stored value cards.15 For example, to withdraw money using a dual
ATM card, U.S. banks typically charge account holders a fee of $5 or less
for each withdrawal, and the withdrawal fee could sometimes be as low as
$1.50. One bank offering an ATM product charged the account holder a fee
when funds were deposited into the ATM account or transferred from a
separate account for the recipient, and there was no fee charged when the
recipient withdrew funds at designated ATMs in the receiving country.
Banks we spoke with that offered a stored value card charged the remitter
a fee ranging from $2 to $10 to load the card. All five banks we spoke
with that offered a dual ATM card product required the remittance sender
to have an account with them. However, of the three banks we spoke with
that offered a stored value card product, only one required customers to
hold an account to use this product. However, one bank charged a higher
fee to nonaccount holders. For a more detailed presentation of the
transfer fees and additional costs of the different remittance products
among the 28 providers we interviewed, see appendix III.

Foreign Exchange Commissions Also Vary, but, Fees Have Fallen for Some
Countries

Most remittance providers also charge a fee to convert currency, that is,
to change U.S. dollars into local currency. Customers generally receive a
"retail" price for the conversion of U.S. dollars to the local currency.
This quoted price is normally higher than what providers pay to originally
purchase the currency. This difference is known in the industry as an
exchange rate spread, and the higher the spread, the less advantageous it
is to the remittance sender. We attempted to gain an indication of the
average percentage difference between the exchange rate offered by five
MTOs to remittance senders and the exchange rate set by the central bank
of the recipient country. We obtained exchange rate information for these
MTOs over the Internet for transfers distributed in cash funded through a
credit card or a bank account for a 35-day period from mid-June to the end
of July 2005. (See app. I for more detail on our methodology.) We found
that, on average, the exchange rate spread for Mexico among these five
MTOs ranged from negative 2.15 percent to 3.65 percent, as shown in figure
8. The MTO that offered a negative 2.15 percent exchange rate spread,
offered on average a better exchange rate than the central bank rate.
Figure 8 also provides the average exchange rate spread for the
Philippines among the five MTOs. For the Philippines, in general the MTOs
had a higher exchange rate spread than for Mexico, with the exception of
MTO 1. In addition, for one bank, we obtained exchange rate information
over the phone for its account-to-account transfer product to Mexico and
dual ATM card for the Philippines. Its exchange rate spread was 2.59
percent for Mexico and -0.04 percent for the Philippines.

Figure 8: The Average Percentage Difference in Exchange Rate from the
Central Bank Rate Offered by Five MTOs, June-July 2005

Note: The average percentage difference was calculated by taking the daily
difference between the providers' exchange rate and the central bank rate
divided by the central bank rate and computing the average of all
available days. A negative value means that on average, the provider
offered a higher exchange rate to the remittance sender than the rate
established by the central bank. These figures were taken for remittances
between California and Mexico and California and the Philippines.

In addition, when comparing the daily exchange rate offered by all six
providers with the rate offered by the Central Bank of Mexico, they all
follow a pattern of a decreasing rate over time, as shown in figure 9. One
provider offered a fixed rate over this period, which was higher than that
offered by the Central Bank of Mexico.

Figure 9: The Exchange Rate Offered by the Six Providers and the Central
Bank of Mexico, June-July 2005

Note: Gaps in the line indicate that data were missing for that particular
day.

For the Philippines, the exchange rate offered by the six providers and
the Central Bank of the Philippines followed somewhat of an increasing
trend, as shown in figure 10. For the most part, all of the providers
offered an exchange rate lower than that of the Central Bank over the time
period we looked at.

Figure 10: The Exchange Rate Offered by the Six Providers and the Central
Bank of the Philippines, June-July 2005

Note: Gaps in the line indicate that data was missing for that particular
day.

Research conducted by the Inter-American Dialogue between 2001 and 2004 on
the cost of currency shows that the exchange rate spread for remittances
to Latin America and the Caribbean has decreased since 2001, as shown in
figure 11. In particular, the research shows that the exchange rate spread
had significantly fallen by 2004. For Mexico, this is consistent with what
we were told by an official from a company that works with entities in the
United States, such as large banks, credit unions, and national MTOs, to
facilitate transfers to Mexico. He told us that he did not see a great
deal of variation in the exchange rate spread among approximately 200
client companies. He stated that most companies charged a 1 percent to 1.2
percent spread.

Figure 11: The Exchange Rate Spread among Various Remittance Providers to
14 Latin American and Caribbean Countries, 2001-2004

Remittance providers we spoke with said that the spread on the most
popular cash-to-cash product can vary for different reasons. For example,
some providers said that contracts with paying agents in each country
could affect the spread, as well as the amount of currency a provider
purchases. Officials from some MTOs that we spoke with said competition
between sending agents could influence conversion rates. Most banks and
credit unions that had partnerships with MTOs to provide the
cash-to-cash-based service told us that the partner MTO set the exchange
rate.

For other remittance products, the exchange rate offered to customers was
determined in varying ways. Large national banks we spoke with that
offered account-to-account transfers generally told us that they, with
their partner banks in receiving countries, determined the exchange rate.
The exchange rate offered to customers who use the Directo a Mexico
service is a 0.21 percent markup from the wholesale rate determined by the
Central Bank of Mexico. For the card-based products, such as the dual ATM
or the stored value card, providers we spoke with indicated that other
institutions such as banks in the receiving country or credit card
associations generally determined the exchange rate each time the card was
used.

Additional Costs May Exist, Depending on Provider, Product, and Service
Offered

While the transaction fee and the foreign exchange commission apply in
almost all remittance products we examined, consumers may incur additional
fees, depending on the provider, product, and service offered. For
example, one MTO we spoke with told us consumers may incur additional fees
to send funds to rural areas, use home delivery, pay with a credit card,
or receive a confirmation that the money was sent. The MTO said that it
disclosed such fees to the customer at the time of the transaction. MTOs
and banks that offer stored value cards may also charge additional fees to
initially purchase or set up the card, deliver the card to the recipient,
or maintain the card on a monthly basis.

Additionally, because some products offered by banks and credit unions
require customers to hold accounts, indirect fees related to establishing
or maintaining an account may apply. Such products were typically
lower-cost products, as noted earlier, such as dual ATM cards or
account-to-account transfers. Seven of the 10 banks we spoke with offered
at least one product that required the customer to have an account. These
banks typically charged a fee to open or maintain an account that was
waived if the customer met direct deposit or minimum balance requirements.
For example, many banks charged a fee of $3 to $5 per month if such
requirements were not met. All credit unions we spoke with required
customers to become a member to use their remittance products and maintain
a minimum balance in their account, typically $50 or less. Most credit
unions charged a monthly service fee if members did not meet minimum
balance requirements, ranging from $1 to $6.

Although State and Federal Disclosure Requirements Vary, Remittance
Providers Offer Basic Information on Cost and Error Resolution

Remittance providers we met with generally provided customers with basic
disclosure information on the transaction fee and the exchange rate, as
well other terms and conditions of the transaction. The way in which
disclosure information was presented, as well as what information state
and federal regulators required providers to disclose, varied. Judging
from the receipts we examined for the cash-to-cash product, providers
consistently presented disclosures on costs and error resolution in a
single receipt. Disclosures for other remittance products offered by banks
were presented to customers in multiple forms or at different times, such
as in a fee schedule when customers first opened an account or on a
monthly statement. Because of various fees and types of disclosures, it
may be difficult for customers to comparison shop across different types
of remittance products. There is no consensus among the officials we spoke
with on whether customers need additional disclosure information to make
informed decisions. However, efforts are under way to provide some
consumers with more aggregated information on the cost of remittances
across different providers and products.

Remittance Providers Consistently Presented Disclosures on Costs and Error
Resolution for Cash-to-Cash Products, but Disclosures Varied for Other
Remittance Products

Remittance providers disclosed cost and error resolution information to
their customers in varying ways. Most of the MTOs, banks, and credit
unions we spoke with offering the predominant cash-to-cash product
provided customers with a receipt at the time of the transaction detailing
cost information and terms and conditions of the transfer.16 Receipts we
examined from providers of the cash-to-cash product, including MTOs,
banks, and credit unions, contained information on the transfer fee, the
exchange rate applied for the transaction, and the amount paid to the
recipient. Figure 12 provides an example of cost information found on a
typical receipt. Additionally, providers we spoke with offering
cash-to-cash products that provided us with receipts displayed information
on their receipts in English and Spanish regarding the terms and
conditions for a customer's right to a refund as well as a customer
service telephone number. One MTO that focuses on the Philippine market
presented this information in Tagalog. Some providers of
cash-to-cash-based products disclosed on the receipts we examined that
they made a profit from the currency conversion. Receipts we examined for
the USPS Dinero Seguro product included the exchange rate applied to the
transaction and the interbank rate on the day of the transaction.
Officials from USPS told us that by providing the interbank rate and
retail exchange rate, customers could calculate how much the foreign
exchange commission was and use it to calculate the total cost of the
remittance transaction. Some providers also indicated that they or their
agents informed customers about costs in other ways, such as offering a
toll-free telephone number customers can call to learn what the exchange
rate was for that day, requiring that customers review and sign the
receipt before the transaction is completed, or posting the fees and
exchange rate on signage in their stores.

Figure 12: An Example of a Cash-to-Cash Receipt

In contrast, disclosures on costs and error resolution for other
remittance products and providers we examined varied. For example, banks
we spoke with offering dual ATM cards told us they usually presented fee
information and transaction terms and conditions to customers when they
first opened their account or in monthly statements, generally in English,
as they would for any bank customer. The exchange rate for card-based
products, including the dual ATM or stored value card to send a
remittance, is determined by other parties, such as the bank in the
foreign country or the credit card association, each time the card is
used. Therefore, bank officials told us the remittance sender does not
know the exchange rate that the recipient will receive when withdrawing
funds from an ATM or using the card at merchants.17

For account-to-account transfers, banks told us they disclosed fees in
various ways. Officials from one large bank told us customers obtained
information on the transfer costs in the fee schedule provided when they
opened an account, and in brochures provided to the customer.The customer
could obtain the exchange rate by calling a toll-free number. Both the
transfer fee and exchange rate applied to the transaction would also be
itemized on the sender's monthly statement. According to officials from
another large bank, customers could conduct account-to-account transfers
at an ATM or online, and the machine displayed such information as the fee
and the exchange rate, the amount to be transferred in U.S. dollars, and
the amount to be transferred in local currency. According to officials
from this bank, this information was displayed on the screen and printed
on the receipt. They told us that customers could review this information
on the screen before completing the transaction. A community bank that was
offering account-to-account transfers to Mexico through the Directo a
Mexico service disclosed the transfer fee for account holders in a
brochure. The exchange rate for this product cannot be specified at the
time of transfer because the Central Bank of Mexico determines the
exchange rate the following day.

For account-based bank products, such as dual ATM cards and
account-to-account transfers, officials from banks we spoke with told us
that, like the cost and fee information, terms and conditions of the
transaction were also generally presented in booklets or pamphlets given
to customers when they opened an account with the bank. This information
was generally presented in English. These, along with disclosures on fees,
were standard disclosures that banks were required to provide to all of
their customers who opened an account subject to electronic fund transfers
with the bank. Judging from documents we examined, banks typically
provided customers with fee information in separate booklets or pamphlets
from those that included disclosures on such things as the terms and
conditions of the transfer or ATM card, steps to take regarding
unauthorized transfers, and telephone numbers to contact in the event of
an error.

State Disclosure Laws Vary and Federal Disclosure Laws Do Not Apply to All
Remittance Products

Regulations on remittance product disclosures varied based on the provider
and product. Disclosures could also vary by state if the provider was
regulated at the state level. In 46 states, MTOs are required to have a
state license, and some of these states have specific disclosure
requirements. We reviewed the disclosure laws and regulations of 15
states. We chose states in three categories: those with over 1 million
immigrants; those with immigrant populations of less than 1 million, but
more than 380,000; and, those with less than 15,000 immigrants based on
the U.S. census of 2000.18 Among these states, 6 require licensed MTOs to
provide a receipt to the customer for each transaction. However, each has
varying requirements about exactly what information must be included on
the receipt, as shown in table 5. For example, California's regulations
specify that receipts must include certain information, such as the
exchange rate, the amount of commission or fees, and the total amount to
be delivered to the recipient. California also explicitly stipulated the
exact language providers must use regarding a customer's right to a refund
that must be present on every receipt. In contrast, Massachusetts requires
providers to give customers a receipt, but it does not specify what types
of information should be presented on the receipt. Additionally, of the
states we reviewed, California and Texas specifically require providers to
give information on the exchange rate and present information in languages
other than English, as applicable.

Table 5: States Reviewed That Required a Receipt

State            Receipt contents    
                 Costs                  Error resolution  Receipt language(s) 
California    o Rate of exchange     o Right to a      o English and the   
                                        refund and the    language            
                 o Amount of commission request process   principally used by 
                 or fees                                  licensee/agent to   
                                                          advertise, solicit, 
                 o The amount in U.S.                     or negotiate if     
                 dollars to be                            other than English  
                 transferred                              
                                                          
                 o Total amount of                        
                 currency presented                       
                                                          
                 o Total amount to be                     
                 delivered to the                         
                 recipient                                
Georgiaa      o Dollar amount of     o No requirement  o No requirement    
                 transmission                             
                                                          
                 o Fee charged                            
Illinoisb     o Amount of the        o The licensee's  o No requirement    
                 transmission           refund procedures 
                                                          
                 o Service charge       o Toll-free       
                                        telephone number  
                                        for customer      
                                        assistance        
Massachusetts o No requirementc      o No requirement  o No requirement    
New York      o Dollar amount of the o Statement of    o No requirement    
                 transmission           licensee's        
                                        liability if the  
                 o Fee charged          transmission is   
                                        delayed or not    
                                        delivered         
                                                          
                                        o Statement of    
                                        licensee's refund 
                                        policy            
Texasd        o Amount of currency   o As described in o No requirement    
                 to transfer            table 6, a notice 
                                        on how a customer 
                 o Fees charged         should resolve    
                                        complaints must   
                 o If the exchange rate be posted or      
                 is fixed at the time   included on       
                 of the transaction,    receipts          
                 the receipt must                         
                 disclose the rate of                     
                 exchange; amount to be                   
                 paid in the foreign                      
                 currency; and the                        
                 period, if any, in                       
                 which the payment must                   
                 be made in order to                      
                 qualify for the fixed                    
                 rate                                     
                                                          
                 o If the exchange rate                   
                 is not fixed when the                    
                 transaction is                           
                 initiated, the receipt                   
                 must also disclose                       
                 that the rate of                         
                 exchange will be set                     
                 at the time the                          
                 recipient receives the                   
                 funds in the foreign                     
                 country                                  

Source: GAO.

aIn addition, the receipt for Georgia must also include, among other
things, the date the order was placed.

bIn addition, the receipt for Illinois must also include, among other
things, the date of the transaction and to whom the money is to be
transmitted.

cMassachusetts law does not include specific receipt requirements, but it
says that the receipt used must be a form approved by the state's
Commissioner of Banks.

dIn addition, the receipt for Texas must also include, among other things,
the toll-free or local phone number customers can access at no charge to
receive information about a currency transmission. If the customer
requests, the business must provide the required disclosures before
completing the transaction.

In addition to receipt requirements, disclosure requirements for error
resolution procedures also varied among the 15 states we reviewed. As
shown in table 6, 6 states required such disclosure while the others did
not. States with both receipt and error resolution disclosure requirements
typically specified that receipts must disclose information such as a
customer's right to a refund, the licensee's refund policy, or a phone
number the customer could call regarding complaints. Florida and Colorado
had disclosure requirements, but no receipt requirements, and specified in
their laws that licensees must provide contact information for the state
department for consumer contacts or complaints. Additionally, among the
states we reviewed, some states that did not have explicit disclosure
requirements for MTOs in their laws, such as Georgia and Arizona, did
provide consumer contact and complaint forms on their Web sites.

Table 6: States Reviewed That Specify Disclosure Requirements for Error
Resolution

State      Requires receipt Disclosure contents                            
California Yes              o As shown in table 5, the receipt must        
                               contain a notice concerning the right to a     
                               refund and the basic process for obtaining a   
                               refund.                                        
Colorado   No               o Every licensee must post a state-furnished   
                               notice that provides consumer information      
                               concerning the Colorado Money Transmission Act 
                               and how to file a consumer complaint with the  
                               state's banking department.                    
Florida    No               o Provider must give customers a toll-free     
                               phone number for the purpose of customer       
                               contacts or the address and phone number of    
                               the appropriate state consumer services        
                               office.                                        
Illinois   Yes              o As shown in table 5, the receipt must        
                               include the refund procedures and a toll-free  
                               telephone number for customer assistance.      
                                                                              
                               o Each licensee/seller must post a notice with 
                               the name of the licensee and a toll-free phone 
                               number for the Department of Financial         
                               Institutions, which will provide customer      
                               support for suspected violations of Illinois'  
                               Transmitters of Money Act.                     
New York   Yes              o As shown in table 5, the receipt must        
                               include a statement of the licensee's          
                               liability if the transmission is delayed or    
                               not delivered, as well as the refund policy.   
                                                                              
                               o Licensee's signage must include a phone      
                               number for questions and complaints and a      
                               statement that unresolved consumer complaints  
                               may be mailed to the Consumer Services         
                               Division of the state banking department.      
                               Signage must be in English and in any other    
                               predominant language spoken by the licensee's  
                               customers.a                                    
Texas      Yes              o A notice must be used to let consumers know  
                               how to file complaints. The notice should say  
                               that complaints should be directed to the      
                               state's banking department and give the        
                               address and phone number. The notice must be   
                               provided in the language in which the          
                               transaction is conducted and must conform      
                               substantially with the language in the law.    
                               The law provides specific measures to give the 
                               required notice, such as how it can be posted  
                               and the fact that it may be included on        
                               receipts.                                      

Source: GAO.

aThe law excludes licensees that only sell travelers checks and money
orders.

Although state disclosure requirements varied, MTO receipts we examined
included information on costs and error resolution, such as a customer's
right to a refund.19 Some MTOs we spoke with that had branches or agents
in multiple states told us they typically produced one standard receipt
for their agents across the United States and adhered to California's
disclosure requirements because of their strictness.

In contrast to MTOs, banks and credit unions are regulated at either the
federal level or state level and are subject to federal disclosure laws.
The Electronic Funds Transfer Act of 1978 (EFTA) establishes the rights,
liabilities, and responsibilities of participants in electronic fund
transfer systems.20 Under EFTA, financial institutions must provide
specific disclosures to customers, such as any fees imposed by the
financial institution for electronic fund transfers, a summary of the
consumer's liability for unauthorized transfers, and procedures regarding
how errors will be resolved. EFTA also requires that financial
institutions generally provide monthly statements as well as receipts at
electronic terminals. Receipts must contain information such as the amount
of the transfer, which may include a transaction fee if the amount of the
fee is disclosed on the receipt and displayed on or at the terminal.

The banks we spoke with indicated they believed EFTA did not apply to all
of their remittance products. For example, an official from one bank told
us that the act applied to dual ATM cards and international
account-to-account transfers, but not cash-to-cash products they offered.
An official from another bank that offered customers a remittance product
that enabled customers to conduct account-to-account or account-to-cash
transfers told us that although remittance products were not subject to
EFTA, the bank followed EFTA in providing disclosures for their product.
Additionally, EFTA does not specifically extend to stored value cards.21
Consequently, banks that offer stored value cards, make their own
decisions on the type of disclosures to provide for this product. For
example, disclosures from one community bank offering customers a
reloadable stored value card included information on fees to issue and
maintain the card, how the exchange rate was determined for international
transactions, and the customer's liability in using the card. Such
disclosures, however, did not provide information on the fee to reload the
card or the maximum amount that could be loaded on the card each time.
Additionally, according to officials from a large MTO and a trade
organization that represents credit unions, banks and credit unions that
have formed partnerships with MTOs to offer a cash-to-cash product are
generally viewed as agents of an MTO and follow MTO disclosure laws. An
official from one large bank that we spoke with that offered its own
cash-to-cash based product provided disclosures on fees and terms and
conditions of the transactions to their customers, but indicated the bank
did this voluntarily.

Remittance Providers Disclose Certain Cost Information, but Consumers May
Need to Do Additional Work to Compare Costs of Different Providers

Judging from disclosure documents we examined, providers of cash-to-cash
products typically included information in a single source on cost and
error resolution, while providers of other remittance products presented
more disparate sources and forms of information. As discussed earlier,
disclosure documents for most of the cash-to-cash based products we
examined had information on costs and error resolution presented to the
customer in a single receipt. Providers generally provided this
information in English and another language, typically Spanish. However,
on the basis of disclosure documents we examined, we found that providers
did not always do this for other remittance products. For example, for an
account-to-account transfer product offered by one large national bank,
information on the transfer fee could be found in a fee schedule presented
to the customer at the time the account was opened as well as on monthly
statements. This information was generally presented only in English. The
exchange rate that would be applied on the day of the transfer could be
obtained by calling a toll-free number. The same bank presented
information on dual ATM cards in a similar manner, with information on
transfer fees in one booklet and information on the exchange rate and
account terms and conditions in another booklet. Additionally, some banks
told us that some materials (such as brochures) were provided in multiple
languages such as English, Spanish, and for one bank in Tagalog; and other
disclosure materials (such as monthly statements) were provided in
English, but not in other languages.

Because of various fees and types of disclosures, it may be difficult for
customers to comparison shop across different types of remittance
products. For the cash-to-cash product, providers typically disclose
transfer fees on a single receipt, so the fees are comparable. However,
because the cost of a remittance is based on two components, the transfer
fee and the exchange rate spread, customers may need to do additional
calculations to compare the total cost across providers. For example, one
provider may charge a higher transfer fee, but a more favorable exchange
rate, while another provider may charge a lower transfer fee, but a less
favorable exchange rate. Additionally, comparing costs across other
remittance products could be more complicated for the remittance sender if
there are additional fees that are not related to the remittance itself,
such as a fee to open or maintain an account for account-to-account
products. For other products, such as some card-based products, providers
may not disclose all cost information at the time of the transaction, such
as the exchange rate, because this is determined at the time the card is
used.

There was no consensus among the officials we spoke with about whether
customers use current cost and disclosure information available to them to
comparison shop. Some remittance providers, community groups, and experts
believed remittance senders shopped around and were very aware of the
exchange rate and transfer fees, while others believed that senders were
not aware or paid less attention to such costs and did not shop around.
Additionally, in informal discussions with limited groups of immigrants
who send money home, some immigrants told us they are aware of costs,
including the exchange rate, and these are a factor in their choice of
provider. However, other factors affect their choice of provider, such as
location, the security of the transaction and trust in the provider. Some
of these immigrants also indicated that it was not difficult to find out
and compare exchange rates, but that they did not have time to do so.

Moreover, there was no consensus among officials we spoke with about
whether additional disclosure information would be useful for customers to
make better informed decisions. Some experts and officials we spoke with
believed that information currently disclosed on receipts of large
national MTOs was sufficient for the customer to make informed decisions.
They also did not believe additional information, such as the exchange
rate spread, needed to be disclosed on money transfer receipts. Other
officials noted that with some products, such as the Directo a Mexico
service, it may be difficult to require providers to disclose a fixed
exchange rate at the time of transfer because the exchange rate for such
products is not set at that time. In contrast, other experts and community
groups believed more information could be provided to the customer on the
total cost of remittances or aggregated in a way that would enable
customers to more easily compare costs across different providers and
products.

Although it is not clear whether additional disclosures would be useful to
the customer, there are efforts are under way to provide some consumers
with more aggregated information on the cost of remittances across
different providers and products. For example, in 2003 the Mexican
consulate in Chicago formed a partnership with Procuraduria Federal del
Consumidor (PROFECO), the Mexican consumer protection agency, to publish
on the Internet information on the transfer fees and exchange rates for
remittances sent to Mexico from nine cities in the United States. An
official from the Mexican consulate in Chicago told us that PROFECO relies
on voluntary information from a cross section of providers (banks, MTOs,
and USPS) and updates the Web site on a weekly basis. The United Kingdom
has used a different approach. There, the Department for International
Development and the Banking Code Standards Board commissioned a survey to
examine the costs of 22 money transfer providers to six target countries.
A 2005 report contained these survey results, which are part of a public
awareness campaign to provide information to consumers through pamphlets
and on the Internet.22 Such information includes the names of providers in
the United Kingdom that send remittances to the targeted countries,
transfer fees associated with these providers, and the method by which
remittances are sent. The Internet site also directs users to a privately
owned Web site to obtain information on current market exchange rates. One
researcher we spoke with is in the process of developing a score card on
remittance providers that will include information on fees, the estimated
amount of commission a provider makes on the foreign exchange of the
currency, the provider's presence in certain geographic areas in the
United States and abroad, and the extent the company is involved in
economic development in the receiving country. This researcher told us
that providers have been eager to provide this information, as they feel
they will be rated higher than their competitors. This researcher also
believes this information will be helpful to consumers in making better
informed decisions.

Observations

With the billions of dollars of remittances going from the United States
to other countries, there has been an increased interest in serving this
market, not only from the traditional MTOs but also from other types of
remittance providers, including banks, credit unions, and Internet-only
companies. These providers also continue to increase the variety of
remittance products they offer, thereby giving some remittance senders
more options to send money home. However, many of the banks and credit
unions offering remittance services do so only for corridors to Latin
America, leaving remitters sending to other parts of the world with fewer
choices outside of the traditional MTOs. In their efforts to use
remittances as a vehicle to bring immigrants, primarily those from Latin
America, into the financial mainstream, the banks and credit unions
offering remittance services, in some cases, offer the remittance sender
an option that is less costly and more convenient than the traditional
cash-to-cash products offered through MTOs.

The banks and credit unions that have been successful in the remittances
market have worked at the grassroots level with community groups and local
immigrant businesses to educate the community about their products and
services. They have also located their businesses in the communities where
immigrants live and work and have employed tellers and agents who speak
the language of those they are serving. Some federal agencies, such as
FDIC and the Federal Reserve, have also undertaken initiatives to bring
immigrant communities into the financial mainstream through financial
education programs and the use of the Federal Reserve's ACH system,
through which banks and credit unions can offer a low-cost remittance
product. These initiatives have been conducted in cooperation with Mexican
government entities and have been principally targeted at Mexican
immigrants. To date, efforts to extend these programs to other immigrant
communities have been limited. Despite these efforts, banks and credit
unions continue to have a relatively small share of the remittance market.
The success that banks and credit unions have in effectively using
remittance products as a means of attracting immigrants as customers will
depend on how well they understand and address the factors that are
important for remittance senders in choosing a provider, including cost,
convenience, and trust. It may also require some federal agency efforts
targeted at and working in cooperation with governments of other countries
to extend initiatives like those aimed at Mexican immigrants to other
immigrant groups.

The cost to remittance senders of sending funds from the United States has
decreased in recent years for Latin America and the Caribbean, in part
because of increased competition in the market. Anecdotal evidence
suggests that costs have not come down as significantly for other parts of
the world, but there has been no detailed cost research on areas outside
of Latin America and the Caribbean. Many of the locations for which prices
are still considered high are those without a well-established financial
infrastructure, thus making it more difficult for competition to be
fostered through new or additional entrants into these remittance markets.

Although community groups raised concerns in the past that remittance
senders were not provided with information on the cost of sending funds,
the providers we spoke with disclosed information on the total cost of the
remittance transaction and remitters' rights in the case of error
resolution. These disclosures were made either during the transaction or,
in the case of some bank products, at account opening and in monthly
statements. Receipts for cash-to-cash transactions were generally provided
in English, Spanish, and for one MTO specializing in the Philippines, in
Tagalog. However, if remitters speak another language, they may not
receive this information in that language. Moreover, the disclosure
information provided for account-based remittance products was generally
available only in English, which may make it difficult for non-English
speakers to understand. In addition, with the wide variety of remittance
products and with information presented at different times and not always
in the remitter's native language, it is difficult for the remitter to
compare the different products and providers to determine the most
convenient and cost-efficient method to send funds home. Some remittance
providers who are interested in attracting immigrants have provided
remitters with remittance disclosure information in their native language
and others, such as the Mexican consumer protection agency, have also made
efforts to provide immigrants with more information for them to use to
make better informed remittance choices. These efforts serve as models for
providers who want to serve this market and for others who want to ensure
that remittance senders have access to timely and understandable
information about the cost of sending funds.

We are sending copies of this report to the Department of the Treasury,
the Bureau of Economic Analysis, the Federal Reserve Board, Federal
Deposit Insurance Corporation, Office of the Comptroller of the Currency,
Office of Thrift Supervision, National Credit Union Administration, United
States Postal Service, and interested congressional committees. We will
also make copies available to others on request. In addition, this report
will be available at no cost on our Web site at http://www.gao.gov .

If you or your staff have any questions regarding this report, please
contact me at (202) 512-2717 or [email protected] . Contact points for our
offices of Congressional Relations and Public Affairs may be found on the
last page of this report. GAO staff who made major contributions to this
report are listed in appendix IV.

Yvonne D. Jones Director, Financial Markets     and Community Investment

Objectives, Scope, and MethodologyAppendix I

Our report objectives were to examine (1) the methods of transmission
available to remittance senders and the advantages and disadvantages of
each, (2) the various costs to the remittance sender to use different
methods, and (3) information remittance providers disclose to senders and
the federal and state disclosure requirements.

For this report, we developed a set of structured questions and used them
to interview officials at 8 money transfer operators (MTOs), 13 banks, 7
credit unions, and 2 Internet-only remittance providers. These sources
provided us with descriptive and documentary information on their
operations and their different products. Of the 8 MTOs we interviewed, 4
of them were the largest providers in the United States (in terms of
dollar volume of remittances) and provided remittance services to multiple
countries.1 The remaining 4 MTOs were medium-sized in terms of dollar
volume of remittances, and 2 of these primarily served Latin America, 1
primarily served the Philippines, and the other served multiple countries.
Of the 13 banks we interviewed, 8 were large in terms of assets under
management and were generally national in terms of locations, 1 was
medium, and 1 was a small community bank.2 The banks primarily served
Mexico and some other Latin American countries, and 2 also served the
Philippines, and 1 served India. Of the 7 credit unions we interviewed, 3
were large in terms of assets under management, 1 was medium in size, and
3 were small.3 These providers spoke to us with the understanding that we
would not publish their names in our report; therefore, we refer to each
of them anonymously. We also interviewed two major credit card
associations.

To obtain information about the methods of transmission available to
remittance senders, we interviewed officials at the United States Postal
Service, the Board of Governors of the Federal Reserve as well as the
Federal Reserve Banks of Atlanta, Chicago, and New York; the Federal
Deposit Insurance Corporation (FDIC) in Chicago and Washington, D.C.; the
Office of the Comptroller of the Currency; the Office of Thrift
Supervision; and the National Credit Union Administration. In addition, we
also interviewed officials from the U.S. Department of the Treasury's
Office of International Affairs, Office of International Banking and
Securities Markets, Internal Revenue Service, and Financial Crimes
Enforcement Network, as well as officials from the U.S. Department of
State and the U.S. Agency for International Development. We also
interviewed trade organizations representing money transmitters, banks,
and credit unions. These included the American Bankers Association, the
Credit Union National Association, the Independent Community Bankers of
America, the National Money Transmitters Association, and the World
Council of Credit Unions, Inc. In addition, we interviewed six experts in
remittances and reviewed reports that they had developed.

To identify the advantages and disadvantages of the different remittance
providers and products, we asked our limited group of remittance providers
why remittance senders may or may not use their services. We also asked
the government officials, trade organizations, and experts we met with to
describe the advantages and disadvantages of the different remittance
providers and products. To gain an understanding of the factors that are
important to remittance senders when choosing a remittance provider or
product, we spoke with a limited group of immigrants from Africa, Europe,
and Latin America, in two English as a second language classes in
Arlington, Virginia, and a vocational training class in San Francisco,
California. We also reviewed two reports that included interviews of
actual remitters to Mexico and Latin America.4 The reports, among other
things, described the reasons why these remitters chose one remittance
provider or product over another.

To obtain information on initiatives that are under way to bring
immigrants into the formal banking system, we interviewed officials with
FDIC's New Alliance Task Force, the Federal Reserve Banks of Atlanta and
Chicago, and the Mexican consulate in Chicago.

To identify the cost to the remittance sender of different remittance
products, we asked our select group of providers about the fees associated
with their various products.5 We specifically asked these providers to
provide us with the transfer fees and any additional fees to send $300 to
Mexico, the Philippines, Ecuador, and Nigeria. We reported costs on Mexico
and the Philippines because they are two of the largest remittance
recipient countries from the United States, and most providers we spoke
with served both of these countries. Because of insufficient information
from the providers we spoke with, we chose not to report transfer fees and
additional fees for Ecuador and Nigeria. Some providers noted that the
costs they gave us were the costs that most of their customers paid when
sending $300 to these countries, but that they may vary depending on
factors such the specific location from where the remittance was sent or
where it was received. We excluded costs of traditional international wire
transfers that some banks and credit unions offered because providers we
spoke with told us few customers used this service to send remittances.
During our interviews of these remittance providers, we also asked them
how they set the exchange rate they provided to the remittance sender.

Further, in an effort to determine the difference in the exchange rates
offered by different providers with that of a base exchange rate, such as
one established by central banks, we conducted an online analysis of
exchange rates offered by a select group of 6 remittance providers. We
obtained the exchange rate for 5 of the 6 providers on the Internet, and
called a 1-800 number to obtain this information for the remaining
provider. Five of the providers offered a credit card-to-cash product, and
one provider offered a dual ATM product for remittances to the Philippines
and an account-to-account transfer and a cash-to-cash transfer product for
remittances to Mexico. We specifically looked at the exchange rate to send
$300 from the United States to Mexico, the Philippines, Peru, and Senegal.
We chose these countries because of their location and the ability to
obtain exchange rate information through the Internet for each country
from at least 2 of these 6 providers. We obtained this information, as
well as the exchange rate established by the central banks over a 35-day
period, excluding weekends. Although most remittance senders do not use
the Internet to remit funds, we wanted to understand the fluctuations in
the difference between the exchange rates these 6 providers offer to
remittance senders compared with a base rate, such as a central bank rate.

To obtain information on the total cost of a remittance transaction-the
transfer fee and exchange rate spread-we also relied on information a
leading expert on remittances had compiled over time on the total cost to
remit funds from the United States to Latin America and the Caribbean. We
asked the expert a number of questions about his methodology for
collecting this information in order to gain an understanding of his
methodology and assure ourselves that the data were sufficiently reliable
for the purposes of this report.

To identify the information providers are disclosing to consumers on the
cost of their transactions as well as their right to a refund and how to
resolve errors, we used the set of structured questions to ask the 8 MTOs,
13 banks, 7 credit unions, and 2 Internet-only remittance providers about
what they provide to remittance senders during a remittance transaction.6
We also asked which disclosure regulations, if any, applied to their
remittance products and we collected and reviewed documentation they
provided to us such as receipts, brochures, and terms and conditions they
provide to consumers. In an effort to compare the different state
disclosure requirements for remittance providers, we reviewed state
disclosure laws for MTOs from a sample of 15 states chosen for the size of
their immigrant populations. We also conducted a review of the Federal
Electronic Funds Transfer Act and its implementing regulation, Regulation
E, which protects consumers engaged in electronic funds transfers, to
understand its applicability to different remittance products.

To understand whether additional information is needed to help customers
make informed decisions, we asked government officials, experts, and
representatives from community groups whether they believed customers used
disclosure information to comparison shop and whether additional
information was needed. Additionally, we asked the limited group of
immigrants we met with questions regarding costs and disclosures.

To obtain information on current efforts that are under way to provide
some consumers with more aggregated information on the cost of
remittances, we interviewed a remittance expert and an official from the
Mexican consulate in Chicago and the Department for International
Development in the United Kingdom. We also reviewed documentation and
reports on these initiatives.

Our work was performed in Arlington, Va.; Chicago, Ill.; New York, N.Y.;
San Francisco, Calif.; and Washington, D.C., between December 2004 and
October 2005 in accordance with generally accepted government audit
standards. We requested and received technical comments on relevant
sections of this report from the Bureau of Economic Analysis, the Federal
Deposit Insurance Corporation, the Federal Reserve Bank of Atlanta, the
National Credit Union Administration, the Internal Revenue Service, and
the United States Postal Service.7

Description of Products That Are Offered by Providers We
InterviewedAppendix II

Remittance providers offer a variety of products that can work in
different ways. Table 7 provides a more detailed description of the
products offered by the providers we interviewed.

Table 7: Description of Remittance Products Offered by Providers We
Interviewed

                                        

Provider type        Product type               Product description        
MTOs                                     
MTO 1          Cash-to-cash (next day)   Cash-to-cash transfer. Delivery   
                                            is next day.                      
                  Cash-to-cash (same day)   Cash-to-cash transfer. Delivery   
                                            is generally within 10 minutes.   
MTO 2          Cash-to-account           Cash-to-account transfer. Funds   
                                            are deposited directly into the   
                                            recipient's bank account. Funds   
                                            are available to the recipient in 
                                            2 hours or less.                  
                  Cash-to-cash              Cash-to-cash transfer.            
                  Cash-to-cash (home        Cash-to-cash transfer delivered   
                  delivery)                 to the recipient's home within 4  
                                            hours. Available in the Dominican 
                                            Republic and certain destinations 
                                            in Colombia, El Salvador,         
                                            Guatemala, Nicaragua, and Peru.   
                                            An additional fee may apply.      
                  Cash-to-debit card/       Cash transfer to a reloadable     
                  stored value card         debit or stored value card        
                                            branded by one of the major       
                                            credit card companies. This       
                                            service is available to Mexico    
                                            and the Dominican Republic.       
MTO 3          Cash-to-cash/             Cash-to-cash service involves a   
                  cash-to-account           customer presenting U.S. dollars  
                                            and having the recipient pick     
                                            them up in the local currency.    
                                            For cash-to-account product, the  
                                            MTO has agreements with 14 banks  
                                            in Mexico.                        
MTO 4          Cash-to-cash (home        The sender goes into a branch and 
                  delivery)                 sends a remittance and the funds  
                                            are delivered to the home of the  
                                            recipient. Funds are delivered by 
                                            a third-party distributor in the  
                                            Philippines.                      
                  Cash-to-account           Direct deposit is used for those  
                                            who live in provincial areas in   
                                            the Philippines and for which     
                                            home delivery is not feasible.    
                                            Money is sent in cash to a nearby 
                                            bank account in the Philippines.  
                                            The recipient gets a message to   
                                            pickup his/her money. This is not 
                                            an individual's savings account,  
                                            but an account for the bank.      
                  Cash-to-cash (bank        This service allows customers to  
                  pickup)                   transmit U.S. dollars and have    
                                            these deposited into a            
                                            recipient's savings account. A    
                                            recipient must have an account    
                                            with a bank in the Philippines to 
                                            use this product.                 
MTO 5          Account-to-cash/          Sender sends funds through an     
                  account-to-account        existing bank account.            
                  (Internet-only provider)  
                  Credit card or PayPal-    Sender sends funds through a      
                  to-cash or account        credit card or an established     
                  (Internet-only provider)a PayPal account.                   
MTO 6          Cash-to-cash              Cash-to-cash transfer.            
                  Money order               The money order is purchased at   
                                            the MTO and sent to the           
                                            recipient.                        
MTO 7          Cash-to-cash              Cash-to-cash transfer.            
                  Cash-to-account           The MTO partners with a bank that 
                                            transfers the money for it.       
                                            Customers pay in cash, the system 
                                            captures the information, and the 
                                            money is transferred into the     
                                            recipient's account.              
                  Cash-to-cash (home        Cash-to-cash transfer that is     
                  delivery)                 then delivered to the recipient's 
                                            home.                             
MTO 8          Cash-to-cash/             Cash-to-cash wire transfer except 
                  cash-to-account           in Mexico, El Salvador, or        
                                            Brazil, where the money can be    
                                            sent to a bank account.           
MTO 9          Credit card-to-debit      Money is sent from a credit card  
                  card/ stored value card   to a reloadable debit card or     
                  (Internet-only provider)  stored value card. The recipient  
                                            can withdraw money at an ATM or   
                                            point-of-sale terminal.           
MTO 10         Cash-to-cash/             Cash-based transfer. Money can be 
                  cash-to-account           picked up in cash or as a check   
                                            at a participating bank or        
                                            deposited into a designated bank  
                                            account.                          
                  Stored value card         When sending to Mexico, the       
                                            sender can choose to have the     
                                            money deposited to a stored value 
                                            card. This product is offered by  
                                            a bank. However, the transfer     
                                            takes place over the MTO's        
                                            network.                          
Banks                                    
Bank 1         Dual ATM                  The remittance recipient is sent  
                                            a second ATM card. The sender     
                                            must be an account holder at the  
                                            bank to use this service.         
                  Cash-to-cash (MTO)        Cash-to-cash transfer initiated   
                                            at an MTO that rents space from   
                                            the bank. The customer does not   
                                            need to have an account at the    
                                            bank to use this service.         
Bank 2         Cash-to-cash/             Cash or account-based transfer to 
                  cash-to-account or        bank locations in Mexico. The     
                  account-to-account        sender does not need to have an   
                                            account to use the service but    
                                            the recipient needs an account at 
                                            the Mexican bank to receive money 
                                            in an account.                    
Bank 3         Dual ATM                  The remittance recipient is sent  
                                            a second ATM card. The sender     
                                            must be a bank account holder to  
                                            use the service. There is a daily 
                                            withdrawal limit of $200.         
Bank 4         Dual ATM                  The sender holds an               
                                            interest-bearing account that the 
                                            recipient can withdraw from. The  
                                            exchange rate is set at the time  
                                            of withdrawal. The sender must be 
                                            a checking account holder at the  
                                            bank. There is a daily withdrawal 
                                            limit of $300.                    
Bank 5         Dual ATM                  The sender opens the account and  
                                            receives two ATM cards. One of    
                                            the cards is sent to the family   
                                            in the country of origin,         
                                            separately providing the PIN      
                                            number and directions as to how   
                                            to access the account. Funds      
                                            deposited in the account in the   
                                            United States are directly        
                                            transferred to family when they   
                                            withdraw them at any ATM in the   
                                            country of origin.                
                  Stored value card         This card allows a person to buy  
                                            a prepaid MasterCard with a value 
                                            that is limited to the dollar     
                                            amount prepaid by the purchaser.  
                                            The card is not reloadable.       
                                            Neither the sender nor the        
                                            recipient needs an account to use 
                                            the product.                      
                  Account-to-account        Recipients must have a bank       
                  (Directo a Mexico for     account at 1 of the 23            
                  account holders)          participating Mexican banks that  
                                            are involved with the program.    
                                            The exchange rate is applied by   
                                            the recipient bank in Mexico, and 
                                            it currently takes 24 hours for   
                                            the funds to be received.         
                  Cash-to-Account (Directo  Same as above but there is an     
                  a Mexico for non-account  additional charge for non-account 
                  holders)                  holders.                          
                  Stored value card         The reloadable card is a prepaid  
                                            MasterCard with a value limited   
                                            to the dollar amount prepaid by   
                                            the purchaser, but it can be      
                                            reloaded by credit card on the    
                                            bank Web site or by check in      
                                            person at the bank. No account is 
                                            needed.                           
Bank 6         Account-to-account/       Account-based transfer to Mexico  
                  account-to-cash           only. If the recipient has an     
                                            account in Mexico, the money can  
                                            be transferred to that account.   
                                            There is a limit of $1,500 per    
                                            transfer.                         
Bank 7         Account-to-account        An account-to-account transfer    
                                            that permits a remitter to send   
                                            the local currency equivalent of  
                                            up to $3,000 per day to a         
                                            designated recipient's account    
                                            held with one of the remittance   
                                            network member banks in Mexico,   
                                            Guatemala, El Salvador, or India. 
                  Cash-to-cash              A cash-to-cash transfer to Mexico 
                                            offered in conjunction with       
                                            Bancomer Transfer Services. The   
                                            product allows a remitter to send 
                                            up to $3,000 per day to a         
                                            recipient in Mexico, where funds  
                                            can be picked up at any Bancomer  
                                            branch. The remitter need not be  
                                            an account holder to use this     
                                            service.                          
                  Account-to-ATM            An account that permits the       
                                            account holder to designate an    
                                            authorized cardholder in the      
                                            Philippines. The account holder   
                                            receives a separate ATM card      
                                            embossed with the authorized      
                                            cardholder's name. The authorized 
                                            cardholder can withdraw the       
                                            Philippine Peso equivalent of up  
                                            to $400 per day from the account. 
Bank 8         Account-to-account        Allows for transfers from the     
                                            United States to 22 other         
                                            countries. All transfers must be  
                                            from an account at the sending    
                                            bank to an account held by the    
                                            same bank.                        
                  Account-to-cash           Allows for transfers from the     
                                            United States to Mexico. The      
                                            sender must be an account holder  
                                            but the recipient can pick up     
                                            cash at a corresponding bank in   
                                            Mexico.                           
                  Account-to-stored value   This is a MasterCard branded card 
                  card                      for Mexico and has low minimum    
                                            balance and fees. The customer in 
                                            Mexico can purchase a card from a 
                                            Mexican bank and transfers can be 
                                            made only from a bank account to  
                                            the card.                         
Bank 9         Cash-to-cash (MTO)        The bank has partnered with a     
                                            third-party vender to offer       
                                            point-of-payment pickup at        
                                            non-bank branches. This third     
                                            party vendor is a money transfer  
                                            operator. Money is available in   
                                            15 minutes.                       
                  Cash-to-account           Same as the product directly      
                                            above, but in Mexico the money    
                                            can be deposited into an account. 
Bank 10        Account-to-stored value   The sender transfers money from a 
                  card                      bank to a stored value card. The  
                                            card can be used at any Visa or   
                                            Plus ATM in the world.            
                  Cash-to-stored value card The sender transfers cash to a    
                                            stored value card. The card can   
                                            be used at any Visa or Plus ATM   
                                            in the world. The sender is not   
                                            an account holder, so there may   
                                            be an additional charge.          
                  Cash-to-cash (MTO)        Customers can send funds from the 
                                            bank to any of the locations      
                                            where the contracted MTO has a    
                                            distribution network.             
Credit Unions 
Credit Union   Account-to-cash/          Account-based or cash-based       
1              cash-to-cash              transfer. For an account-based    
                                            transfer, the money is withdrawn  
                                            from the sender's credit union    
                                            account.                          
Credit Union   Account-to-cash/          Account-based or cash-based       
2              cash-to-cash              transfer. For an account-based    
                                            transfer, the money is withdrawn  
                                            from the sender's credit union    
                                            account.                          
Credit Union   Account-to-cash/          Account-based or cash-based       
3              cash-to-cash              transfer. For an account-based    
                                            transfer, the money is withdrawn  
                                            from the sender's credit union    
                                            account.                          
Credit Union   Account-to-cash           Account-based transfer.           
4                                        
Credit Union   Account-to-cash/          Account-based or cash-based       
5              cash-to-cash              transfer. For an account-based    
                                            transfer, the money is withdrawn  
                                            from the sender's credit union    
                                            account.                          
Credit Union   Account-to-cash/          Account-based or cash-based       
6              cash-to-cash              transfer. For an account-based    
                                            transfer, the money is withdrawn  
                                            from the sender's credit union    
                                            account.                          
Credit Union   Cash-to-cash/             Account-based or cash-based       
7              account-to-cash           transfer sent via a corporate     
                                            credit union.                     
                  Cash-to-cash/             Account-based or cash-based       
                  account-to-cash           transfer. For an account-based    
                                            transfer, the money is withdrawn  
                                            from the sender's credit union    
                                            account. The transfer information 
                                            is entered directly into the MTO  
                                            Web site.                         
U.S. Postal   
Service       
(USPS)        
USPS           International money order The money order is purchased at   
                                            USPS and sent to the recipient.   
                  Cash-to-cash (Dinero      Cash-to-cash transfer.            
                  Seguro)                   

Source: GAO.

aAn Internet-based company that allows businesses or individuals to send
and receive payments online. PayPal's service builds on the existing
financial infrastructure of bank accounts and credit cards.

Transfer Fees to Mexico and the Philippines for the Providers We
InterviewedAppendix III

We surveyed 28 providers and obtained detailed cost information on their
remittance products from 24 of them, as shown below in table 8. The
purpose of this table is to present a general gauge of pricing based on
what officials told us. However, it may not be a comprehensive indication
of pricing for all products or services offered by these providers to the
specified receiving country.

Table 8: Product Costs of Providers We Interviewed

Provider                  Product type                    Transfer    Transfer   
  type                                                   fee to send fee to send 
                                                           $300 to   $300 to the 
                                                           Mexico    Philippines 
MTO      
MTO 1    Cash-to-cash (minutes)                          $15.00      $16.00      
MTO 1    Cash-to-cash (next day)                         $9.99       $14.00      
MTO 2    Cash-to-cash/cash-to-account                    Information Information 
                                                         not         not         
                                                         provided    provided    
MTO 3    Cash-to-cash or cash-to-account                 $9.00       NA a        
MTO 4    Cash-to-cash (home delivery)                    NA          $13.00      
MTO 4    Cash-to-cash (bank pickup)                      NA          $9.00       
MTO 4    Cash-to-account                                 NA          $15.00      
MTO 5    Account-to-cash/account-to-account              $4.90       $10.50      
         (Internet-only provider)                                    
MTO 5    Credit card or PayPal-to-cash or account        $9.10       $16.88      
         (Internet-only provider)                                    
MTO 6    Cash-to-cash                                    $9.99       $14.00      
MTO 6    Money order                                     Information Information 
                                                         not         not         
                                                         provided    provided    
MTO 7    Cash-to-cash                                    $9.50       $8.00       
MTO 7    Cash-to-account                                 NA          $13.00      
MTO 7    Cash-to-cash (home delivery)                    NA          $13.00      
MTO 8    Cash-to-cash/cash-to-account                    Information Information 
                                                         not         not         
                                                         provided    provided    
MTO 9    Credit card-to-debit card/stored value card     $14.00      $14.00      
MTO 10   Cash-to-cash/cash-to-account/stored value card  Information Information 
                                                         not         not         
                                                         provided    provided    
Banks    
Bank 1   Cash-to-cash (MTO)                              $10.00      NA          
Bank 1   Dual ATM                                        $5.00       NA          
Bank 2   Cash-to-cash/cash-to-account/account-to-account $9.99       NA          
Bank 3   Dual ATM                                        $10.00b     NA          
Bank 4   Dual ATM                                        $1.50       NA          
Bank 5   Directo a Mexico/account-to-account             $2.50       NA          
Bank 5   Directo a Mexico /cash-to-account               $4.00       NA          
Bank 5   Stored value card (reloadable)                  $2.00       $2.00       
Bank 5   Stored value card (non-reloadable)              $3.00       $3.00       
Bank 5   Dual ATM                                        $2.00       $2.00       
Bank 6   Account-to-cash or account transfer             $0.00       NA          
Bank 7   Cash-to-cash                                    $10.00      NA          
Bank 7   Account-to-account                              $5.00 c     NA          
Bank 7   Account-to-ATM                                  NA          $5.00 c     
Bank 8   Account-to-account                              $5.00       $8.00       
Bank 8   Account-to-cash                                 $8.00       NA          
Bank 8   Account-to-stored value card                    $5.00       NA          
Bank 9   Cash-to-account                                 $3.00       NA          
Bank 9   Cash-to-cash (MTO)                              $8.00       NA          
Bank 10  Cash-to-cash (MTO)                              $8.99       $25.00      
Bank 10  Stored value card (account holders)             $8.00       $8.00       
Bank 10  Stored value card (non-account holders)         $10.00      $10.00      
Credit                                                                           
Unions                                                               
Credit   Cash-to-cash or account-to-cash (MTO)           $10.00      $20.00      
Union 1                                                              
Credit   Cash-to-cash or account-to-cash (MTO)           $10.00      NA          
Union 2                                                              
Credit   Cash-to-cash or account-to-cash (MTO)           $10.00      $10.00      
Union 3                                                              
Credit   Cash-to-cash                                    NA          NA          
Union 4                                                              
Credit   Cash-to-cash or account-to-cash (MTO)           $10.00      $10.00      
Union 5                                                              
Credit   Cash-to-cash or account-to-cash (MTO)           $8.00       $10.00      
Union 6                                                              
Credit   Cash-to-cash or account-to-cash (MTO)           $8.00       $8.00       
Union 7                                                              
Credit   Cash-to-cash or account-to-cash (MTO)           $16.00      $16.00      
Union 7                                                              
U.S.     
Postal   
Service  
(USPS)   
USPS     Cash-to-cash                                    $10.00      NA          
USPS     International money order                       $3.25       NA          

Source: GAO.

aNot applicable (NA) means that officials we spoke with told us provider
does not offer this service to the specified country or has never had
experience sending a remittance to that country.

bThe provider told us it charges $5.00 to the account holder per
withdrawal. However, customers can withdraw $200 each time. Thus, to
withdraw $300, a customer would have to withdraw from the ATM twice and be
charged a total fee of $10.00.

cThis bank also offers this product for free if the customer has a
specific bundled set of services with the bank.

GAO Contact and Staff AcknowledgmentsAppendix IV

Yvonne D. Jones (202) 512-2717 or j  [email protected].

In addition to the contact named above, Barbara I. Keller, Assistant
Director; LaKeshia Allen; Gezu Bekele; Tania Calhoun; William R. Chatlos;
Bruce L. Kutnick; Theresa Lo; Marc M. Molino; Jose R. Pena; David M.
Pittman; and Rachel E. Seid made key contributions to this report.

(250228)

www.gao.gov/cgi-bin/getrpt? GAO-06-204 .

To view the full product, including the scope

and methodology, click on the link above.

For more information, contact Yvonne Jones, (202) 512-2717,
[email protected].

Highlights of GAO-06-204 , a report to the Committee on Banking, Housing,
and Urban Affairs, U.S. Senate

November, 2005

INTERNATIONAL REMITTANCES

Information on Products, Costs, and Consumer Disclosures

Remittances are personal funds immigrants send to their home countries.
The United States is the largest remittance-sending country in the world,
with more than $36 billion remitted in 2003, according to the
International Monetary Fund. The majority of these remittances are sent to
Latin America and the Caribbean and they are a very important source of
financial flows to many countries. In 2004, the United States, with other
countries, pledged to reduce fees for remittances. Remittance senders in
the United States can send funds through entities in the formal financial
sector such as money transfer operators, banks, and credit unions or other
informal means such as couriers. This report provides information on (1)
the methods of transmission available to remittance senders in the formal
financial sector and the advantages and disadvantages of each, (2) the
costs to send remittances through the formal financial sector, and (3)
disclosures remittance providers typically provide to senders.

Remittance senders in the United States have a range of methods available
including money transfer operators (MTOs), banks, credit unions, and the
United States Postal Service. However, most transactions occur through
MTOs. These products range from cash-to-cash wire transfers to
account-based transfers, stored value cards, and Internet-based
transactions. There are a number of reasons remittance senders continue to
choose MTOs over other providers, including their extensive networks and
customers' familiarity with their products. Banks and credit unions offer
some products at lower cost and the advantage of access to other financial
services. However, limited banking hours, language barriers, or
inconvenient locations may make it difficult for some remittance senders
to use these services. Recently, some federal banking agencies have
undertaken initiatives to move more remittances through banks and credit
unions and bring these senders into the financial mainstream.

Research shows that competition in the remittance market has resulted in a
drop in the cost of remittances from the United States to Latin America
and the Caribbean. The standard costs to a remittance sender are the
transfer fee and the foreign exchange conversion fee. The costs vary for
different products. For example, on average, most providers we spoke with
charge approximately $10 to send $300 to Mexico using the cash-to-cash
method, while providers charge less for products such as dual-ATM cards.

Disclosures we reviewed from remittance providers included information on
the transfer fee, the exchange rate, and the right to a refund. The way
this information is presented varies by provider, and a sender may have to
do additional work to compare costs across different providers. Some
efforts are under way to provide consumers with more aggregate information
on the cost of remittances across different providers and products.

Regional Destinations of Workers' Remittances Sent from the United States,
2003
*** End of document. ***