Dubai: Money exchange houses in the UAE have increased the service fees for high-value remittances to some Asian countries to cope with rising operational costs, Gulf News has learnt.
Starting this month, transactions above 50,000 Indian rupees, Bangladeshi takas, Nepalese rupees and Sri Lankan rupees will cost Dh5 more at Al Fardan Exchange, UAE Exchange, Al Ansari and Wall Street, among other money transfer operators in the country.
Fees for transactions below 50,000 remain unchanged at between Dh15 and Dh25, depending on the service provider and remittance destination.
Osama Al Rahma, CEO at Al Fardan Exchange and chairman of the Foreign Exchange and Remittance Group (Ferg) said the increase was an individual decision among remittance companies, not a unified move. There was also no prior approval from the UAE Central Bank.
“We decided this on our own. It is up to every single exchange house to either go with the increase or keep their fees unchanged, but a lot of them are expected to follow suit, considering the inflation we’ve been experiencing,” Al Rahma told Gulf News in a phone interview.
Money transfer operators interviewed by Gulf News maintained that the increase, the first price adjustment implemented in about seven to eight years, is very minimal and does not affect the majority of their customers.
“About 85 per cent of the money transfers that we facilitate are under 50,000 in different Asian currencies,” an exchange house manager told Gulf News.
“The transaction fee was not hiked and has been steady for so many years, in spite of the ever increasing operational costs. Now the costs have touched their pinnacle, hence fee revival became inevitable,” said Sudhir Kumar Shetty, chief operating officer (COO), global operations at UAE Exchange.
The World Bank considers the UAE as one of the cheapest locations to send money from. The UAE and other Gulf Cooperation Council (GCC) countries have an estimated population of more than 15 million expatriate workers that remit more than $80 billion (Dh294 billion) to their home countries every year.
The majority of remittances from the UAE are being sent to Asian countries, also considered the top recipients of funds from migrant workers worldwide which sent a total of $71 billion to India, $26 billion to the Philippines and $60 billion to China last year.
Al Rahma pointed out that money exchange houses in the UAE have been saddled with high operational costs and heavy regulatory business burdens. “Rents for our various outlets, for example have gone up by 30 to 50 per cent in a year. Besides that, we have to increase our investment in technology to comply with the Central Bank’s regulation against anti-money laundering. Then there’s Emiratisation, which requires us to hire more locals and this means added expense on compensation,” added Al Rahma.
Money exchange companies also argued that while they are being regulated by the Central Bank, they don’t need to seek prior approval to adjust their rates. “The industry has behaved well for sometime and besides, the hike we are talking about is very nominal. There is no such awakening situation yet for a regulator to intervene,” said Shetty.
Last year, the UAE Central Bank revoked the licences of two exchange companies for non-compliance of “financial regulations” and involved in money laundering. Remittance service providers have recently turned down a proposal by Central Bank to reduce the charges on domestic money transfers.
