Amy Booth moved to the United States in 1994 with hopes of sending a chunk of her paycheck home to her family in the Philippines each month.
It wasn’t as easy or cheap as she thought.
First she tried sending personal checks to avoid fees, but she found the monthlong processing wait cumbersome. Then she opted to pay Western Union $25 to send about $600. Then she tried services Money Gram at $10 and Xoom at $4.99.
Now, she pays about $4.19 to transfer the same amount of money as fast as a text message through Seattle-based service Remitly.
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Booth, 44, who works as a loan coordinator in Vancouver, Wash., is one of thousands of working immigrants largely from Mexico, the Philippines and India who regularly send money back home.
The amount of money migrants send home to their families is triple the amount of foreign aid worldwide, according to the World Bank. It estimates remittances to developing countries reached $406 billion in 2012, an increase of 6.5 percent from 2011.
While veteran money-transfer services like Western Union and Money Gram still dominate the market, the growing industry has attracted a slew of newer companies trying to make it easier, faster and cheaper to send money overseas.
Formed in 2011, Remitly sends money from a computer, smartphone or iPad to any major bank or 10,000 pickup locations in the Philippines. The World Bank says the Philippines is the fourth-largest remittance recipient in the world, with the money constituting about 8 percent of the country’s GDP last year.
Remitly CEO Matt Oppenheimer realized the struggle of sending money abroad while working for Barclay’s bank in Kenya. “It was just a pain to get money across borders,” he said. “People were using cash, and other expensive, inefficient and crazy systems.”
Remitly profits from customers willing to pay rush delivery fees and from the conversion of dollars to pesos. Consumers have a choice to pay under $5 for an immediate transaction or wait three days free of charge.
National remittance rates vary widely according to destination country, exchange rate and transfer speed.
For example, Booth could expect to pay Western Union about $15 to send about $500 in three to five days. To send it more immediately, it might cost about $24.
Booth said that in the past, she would have to notify the receiver that she sent the money or take extra measures to ensure its arrival. Other times, she had to deal directly with tellers who did not understand her.
Today, she no longer needs to speak with a live person, and an email or text message alerts her recipients of the pickup details.
Appleseed, a nonprofit network of public-interest justice centers, including a Seattle location, works to increase transparency and protections for immigrants sending money abroad.
The agency found immigrants working in Austin, Texas, were worried about the money they sent home, according to Annette LoVoi, its national financial-access and asset-building program director.
“They did not always understand the exchange rate, or the fees,” LoVoi said, meaning, “sometimes their families got less money than they thought they had processed.”
Appleseed pushed for the Consumer Financial Protection Bureau to reform the remittance process. Starting Oct. 28, rules will require remittance providers to disclose certain fees and attempt to recover funds from errors in account information.
While mobile technology has the potential to revolutionize access to remittance services and combat poverty, the World Bank says regulatory barriers remain.
For example, companies must collect information about customers, screen it and take other measures to combat terrorism financing and money-laundering.
Appleseed is currently researching the future of the mobile remittance market.
“The early thinking is that a shift to mobile is probably likely,” LoVoi said. “But will that occur in a year, two years, five or 10 years? I’m not sure.”
“It’s a big, hairy goal,” said Nick LeCuyer, Western Union’s vice president of strategy and distribution, “but we’d like to figure out how to ensure that every individual has an opportunity to use our service from a mobile or PC.”
Western Union’s prices might be cushioned by what LeCuyer calls a “reliable brand” and much wider service reach. For the one country Remitly services, Western Union serves 12 mobile-to-mobile capable countries and 25 through other methods.
Oppenheimer said Remitly has expanded to 18 states and is able to serve more than 80 percent of the U.S. Filipino population.
Some like Booth already reap the benefits.
For her and her two sisters and brother in Cebu, Philippines, “It’s getting better all the time,” she said.
Alysa Hullett: 206-464-2718 or firstname.lastname@example.org