Remittance Service Providers in the United States: How Remittance Firms Operate and How They Perceive Their Business Environment

World Bank Financial Sector Discussion Series

80 Pages Posted: 25 Jan 2007

Abstract

This paper presents the findings of a survey of 73 remittance firms in 6 U.S. states, where company executives were interviewed in person. The paper finds that the largest obstacles to doing business that remittance firms face are related to obtaining bank accounts, licensing and bond requirements, and competition from the informal sector. Along with obtaining licenses, building agent networks and compliance systems are seen as the major barriers to entry into the remittance business. If we measure success by an increasing number of transactions, our study indicate that a higher number of agents, combining remittance products with other services, the use of technology, and operational efficiency are the key factors of success.

The paper presents transactions, volumes, cost elements, and financial data for the firms. It describes in detail how remittance firms conduct their business and operations, and it looks at functions such as funds capture and disbursement, settlement and communications infrastructure, float yield and currency conversion, and marketing. It addresses pricing, transfer time, and the geographical scope of firms, and the roles of the different agents in the remittance industry.

Keywords: Remittances, Retail Finance, Economic Theory & Research, Competitiveness and competition policy, Financial infrastructure, Business environment, Financial regulation, Access to finance

JEL Classification: D21, F22, F23, F31, G20, G28, G30, L89, O51

Suggested Citation

Andreassen, Ole E., Remittance Service Providers in the United States: How Remittance Firms Operate and How They Perceive Their Business Environment. World Bank Financial Sector Discussion Series, Available at SSRN: https://ssrn.com/abstract=958810 or http://dx.doi.org/10.2139/ssrn.958810

Ole E. Andreassen (Contact Author)

University of Tromsø ( email )

UiT Norges arktiske universitet
Postboks 6050 Langnes
Tromsø, 9037
Norway

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