Democratisation of Remittance

  • December 10, 2020

The bulk of Remittances globally are sent by migrant workers back to their families to their home countries as Maintenance support and Savings. When migrants send money internationally back home to their families, it promotes economic activity and also supports incomes for some of the developing countries of the world. Remittances contribute a high share in the GDP of some low and middle Income countries, where remittances inflows surpass flows from Foreign Direct Investments made by International Investors in businesses in those countries. For these countries, the Foreign Exchange so received forms a critical source of their requirements of Foreign Exchange for imports of Oil and other critical products. A drop in remittance flows adversely affect countries’ economies and leads to economic challenges for Governments. A live example of that in recent times is a country where its diaspora who have migrated around the world and who used to remit money back to the country for both maintenance and investment in better times, simply stopped remitting funds except for investment in recent times, which caused a run on their currency, huge inflation and political and economic chaos.

Remittance Service Providers (RSP) in Middle East

RSP includes Local Money Exchange Companies that provide money transfer and currency exchange services to the residents. Middle East used to be one of the fastest growing economies in the World. Migrants from different parts of the world flock here. This region accommodates diverse demographic diaspora from different countries. Due to high concentration of migrants, there has been a high and constant demand for faster and cheaper methods of Money transfer from this region.

Exchange companies in Middle East are regulated by Central Banks of each country to be the entities to operate cross-border Remittances. They either use their own bilateral Bank tie-ups or platforms of regional /global Money Transfer Operators. The cross-border remittances from Exchange companies have been quick, easy, secured, cost efficient and multi-optional.


A World Bank report on global remittances mentions that the average cost of sending 200 USD remittances to the Sub-Saharan Africa continued to be the highest at 8.71% whereas remittances to South Asia have the lowest average remittance costs at 4.92%. The average remittance costs for the other regions are Middle East and North Africa (7.17%), East Asia and Pacific (6.96%), Europe and Central Asia (Excl. Russia) (6.61%), Europe and Central Asia (6.27%) and Latin America and the Caribbean (5.77%). According to the World Bank Remittance Prices Worldwide (RPW) records of Q2 2020, Banks continue to be the costliest RSP type with an average cost of 10.57% whereas Money Transfer Operators (MTOs) are much more reasonable with 5.78% average cost.

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While this data represents global averages, the fixed cost of sending remittances from Kuwait to various countries through Exchange companies are even lesser. On an average, the fixed cost of remittances for sending 200 KD (USD 650 approx.) from Kuwait to these countries are as below:

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In order to reduce the cost of services, Exchange Companies tirelessly work to collaborate with multiple Banks and International Service providers. Bilateral arrangements reduce the dependency of any third party and the disintermediation brings down the cost which is passed on to the customers. Multiple arrangements in the same geography also bring cost optimisation and ensure service continuity. Costs are also to evaluated against the speed, efficiency and consistency of the transfers, especially since there are very stark differences in these between Exchange companies inter-se.


Exchange companies are palpable across Middle East. To provide ease of access to customers, Exchange companies have opened multiple branches across each country where they operate under license from the Central Bank of that country. Exchange Company branches are ubiquitously found in Souq (Local Markets), Residential colonies, Co-operatives, Malls, etc. Most of them are operational for 12-14 hours a day and work throughout the week and 365 days a year. Availability of smart self-service Kiosks by some of the Exchange Companies makes the accessibility more prominent. Further, some Exchange Companies offer Online and App Remittances which are available 24/7. No other Financial Service outlets match their omnibus presence.


In order to render fast and secured remittance, Exchange Companies have established API connectivity with various Banks across many countries. This technology has hugely helped in reducing the Turn Around Time for remittances. Credit to Bank account takes place in minutes. For some countries, with a stable and strong API, it is seen that 97% of the remittance transactions are credited within seconds. A credit to Bank account in UK may take as less as 7 minutes whereas in earlier days this would usually take 48-96 hours. API also enables the customers to receive the feedback as soon as the amount is credited to their Bank accounts as a part of normal credit notification unlike the traditional systems where the fate of each transaction is to be separately enquired and is available only on the customer’s demand.

Online services being offered by Exchange Companies are robust and these adopt best of UI design principles. For Al Mulla Exchange, the platform is individually customised to offer a personalised rate, choices of fastest credit, better rates with a lag option, place order for choice rates and payment options including pay at branches.

Diversified Services:

Some of the Exchange Companies have diversified their offerings. They offer remittance services to Mobile Wallets (M-Pesa, Equitel, others) in Africa, Govt. services (SSS, Pag-IBIG, PhilHealth, etc.) for Philippines, etc. These position the Exchange companies as a single touch point for customers for all their remittance needs.

Customer experience:

Exchange companies have deployed multilingual staff at the branches to cater to the needs of the customers. Customer support staff are typically available from 7 AM till 11 PM to serve the customers. Customer support is extended through various channels as Direct Hotline, Email, WhatsApp, Social Media, webchats, etc. and customers enjoy an exciting and enriching omni-channel experience. Al Mulla Exchange has taken the customer engagement to the next level and are able to offer personalised exchange rates based on the customer’s transaction history and value of the remittance. It also offers a free life insurance service to every remitter and an extended KD 5000 life insurance cover for online transactions.

Risk and Compliance Practices:

Exchange companies are authorised and regulated by the respective Central Banks. They follow Standard Compliance Practices as prescribed by the Central Bank, as also International best practises. Some of the exchange companies including Al Mulla Exchange have implemented very robust Know Your Customer (KYC) policies, Anti-Money laundering practices, Fraud Prevention procedures, etc. Every staff has to go through compulsory, comprehensive and regular AML training. Dedicated team of skilled compliance officers monitor every transaction closely from its source till destination. We at Al Mulla Exchange have undertaken a comprehensive and rigorous risk profiling exercise for customer and beneficiary which would be at par with Global best practice and would enable us to monitor the transactions from risk and compliance angle.


Exchange companies play a vital role in remittance space in Middle East. They have hugely dominated the remittance market in these areas by providing the remitters unmatched and World Class services in terms of Cost, Accessibility, Innovation, Compliance practices, Security and quick Turn Around Times (TAT). They have earned the trust and patronage of customers. By meeting the aspirations of millions of expatriates, these have truly led to the democratisation of remittance services.

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