Fees for a USA to Philippines remittance have plummeted since the first time I sent a Philippines remittance. The first time I sent money to the Philippines from the USA, I nearly choked on the fees. Of course, that was about 1990, and I didn’t have many choices. It was pretty much Western Union or nothing. I could have sent money via my bank – if only my recipients had a bank account. And of course, they didn’t. I also would have paid a ridiculous fee. Luckily, things have changed since the 1990’s.
The Problem With Philippines Remittance
The sad truth is that many Filipinos have no bank account. That makes a money transfer through your bank nearly impossible. Worse yet, most American banks have jacked up their fees since they caused the financial meltdown in 2008. And some services charge a higher fee if your recipient doesn’t have a bank account to deposit your remittance. On top of all that, many Filipinos lack the proper ID required to pick up a remittance.
The Good News
In spite of the difficulties, whatever method you use to transfer money is easier today than it was years ago. This is due to two important factors. The first is the explosion of internet access and cell phones. Before 1995 about the only way to access the internet was in an internet cafe. Having a home phone (land line) was, and still is, almost impossible due to the poor service provided by PLDT.
By far the most important change has been the increase in competition. Depending on your location, you may have an almost unlimited number of choices. If you live in an area with a large Asian population you may find even the smallest Filipino or Asian market can send money for you. Some of these local options may offer an exchange rate a peso higher than the big players, but their fees can be so high that it makes your total cost higher. You may find a better deal locally than with a nationwide remittance service. But probably not.
We are going to compare the three major players in the USA to Philippines remittance industry. Western Union is the oldest of the three, followed by Xoom and the newcomer, Remitly.
Let’s compare USD to PHP exchange rates on December 13, 2014.
On this date, the “official” exchange rate was 44.51 PHP = 1 USD. A local market was offering PHP 44.25. The fee for a $250 remittance was $7.00.
Now compare the fees for a $250 USA to Philippines remittance:
|Service||Pay with Bank Account||Pay with Debit/Credit|
|Remitly||$0 (3 days)||$399|
|Western Union||$0 (5 days) or $2.99||$6.00|
The least expensive transfers are bank account transfers. Western Union and Remitly both offer no fee transfers from a bank account. Any “pay with a bank account” transfer will take three to five days. If you pay with a debit or credit card, the money transfers in seconds. The drawback is that these options cost more. A credit card is always the most expensive way to pay. This is because the credit card companies charge higher fees for a credit card transaction. Also be aware that your credit card company may decide that your remittance is a “Cash Advance” and charge you a cash advance fee. If they do that, they will also charge you their cash advance interest rate from the day you make send the Philippines remittance. That could be as high as 30%.
Policies vary between these services. There is no minimum amount for Western Union. Remitly has a $10 minimum and XOOM has a $25 minimum. Maximums vary, also. Western Union and XOOM have a $2,999 maximum. Remitly has a tiered structure shown below:
| Tier||24 Hours||30 Days||180 Days|
|Connect to Facebook or request increase (additional information may be required).|
|We will require a government issued id and depending on account history, we may request additional information.|
|In addition to meeting Tier 3 requirements, we will also require more information from you to verify your identity. Please call us for more information.|
Taking all this into account, Remitly, the newcomer, is the hands down winner for sending a Philippines remittance. No matter what amount you want transferred, from a bank account, debit, or credit card. Whether you need it delivered in seconds or days. Unless you want to send less than $10 in five days, then I would choose Western Union. But frankly, I don’t see a reason to send anything less than $10 to anyone.
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