SUDHESH GIRIYAN, COO - XPRESS MONEY
“We’ve seen that exclusive arrangements tend to restrict consumer choice, and create hurdles in free market operations, and can sometimes lead to monopolistic structures. Working towards lower transaction costs for consumers is an important principle for Xpress Money, and open, non-exclusive remittance architectures are an excellent way of doing that,” says Xpress Money’s COO, Sudhesh Giriyan.
The exclusivity scenario arises when a money transfer operator enters into an exclusive agreement with an eventual service provider (such as banks, exchange houses, local money transfer companies, retail entities, etc.) restricting it from working with any other brand in the market. A healthy business environment is the one that nurtures competition and does not succumb to a monopolistic way of life.
Oman was the first GCC country to abolish exclusivity clauses in 2010, with the move prompting year on year remittance growth for the country. Oman registered USD 8.08 billion in outward remittances in 2012 and USD 9.09 billion for 2013. In 2014, remittances rose to a high of USD 10.29 billion – an increase of USD 1.2 billion over the previous year.
Non-exclusivity arrangements such as the one pioneered by Oman have helped reduce average remittance costs for the MENA region from 11.10% of the total amount remitted in 2008 to 7.46% in 2015. The figure is marginally lower than the current global average of 7.53% but is over double the target fee of 3% advocated for by the United Nation’s Sustainable Development Goals by 2030.
Xpress Money has made it a priority to reduce remittance costs, with the brand’s customers currently enjoying global average remittance fees of around 2%.
“An open remittance infrastructure reduces remittance costs, which in turn adds to the attractiveness of regional economies, helps them attract worldwide talent, and boosts GDP. Competitive costs also encourage customers to eschew grey channels of informal money transfer, such as the “hawala” system. This also benefits the anti-money laundering and anti-counterfeiting initiatives that money transfer brands and regulators are collaborating towards,” says Giriyan.
“Further cost reductions can only be achieved if the industry works together, and cooperates with governments and regulators to bring competition to the market. We commend the Central Bank of Oman for acting upon this industry need by abolishing exclusivity,” he concludes.