The ultimate guide to digital remittances in the UAE

Online money transfers have surged since stay-at-home measures were introduced earlier this year

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The global remittance sector has undergone a digital transformation since stay-at-home measures were introduced earlier this year, with millions of people now relying on digital channels to send their money home.

According to leading money transfer companies in the UAE, this habit is set to continue across the MENA region, with residents preferring the convenience, speed and safety of digital remittance channels amid social distancing measures and hygiene concerns about handling cash.

Thanks to its majority expatriate population, the UAE ranks as one of the highest outward remittance countries in the world. The Institute of International Finance said in June that global remittances to emerging markets could fall as much as 30 per cent this year as the coronavirus-induced recession affects countries worldwide, particularly those that account for the bulk of outflows.

And according to the World Bank, remittance flows are expected to drop by about $100 billion (Dh367.3bn) in 2020, which represents roughly a 20 per cent drop from its 2019 level. The Asian Development Bank also warned on Monday that global remittances could fall by $108.6bn in 2020 if it takes a year to contain the coronavirus pandemic and reopen economies.

But US-based market research and consulting company Grand View Research says the global digital remittance market size was valued at US$15 billion in 2019 – and this is expected to grow 12.2 per cent from 2020 to 2027. "The market growth can be attributed to the growing need for safer, secure, and quicker cross-border monetary transactions," it says in its latest research report, published in May.

Here, we guide you through the various options to remit money digitally from the UAE.

Online channels: Online transfers have been possible through a dedicated portal (www.orientexchange.com) for the past two years. There is no app for money transfers.

Increase in digital remittances: Orient Exchange has reported a growth of 20 to 30 per cent month on month for the past three months, with digital remittances accounting for fewer than 15 per cent of overall transactions.

Customer registration: The customer needs to be present in the branch for first-time registration. Before on boarding a customer, the compliance team needs to screen them through internal systems.

Fee: Fees for online remittances are similar to branch fees, however, they vary from corridor to corridor. For India, Sri Lanka and Bangladesh, if you remit below Dh1,000, the fee is Dh16 and for more than Dh1,000, it is Dh22. For the Philippines, the transfer charges are a flat Dh20. For euro and US dollar remittances, the charges are Dh50.

Time taken to remit funds: It takes a couple of minutes for funds to be credited if they have been transferred through the website. If the transaction is done after 3pm, then it is credited the next day. If funds are sent from a physical branch, they are credited to the account before the customer leaves the location. Orient Exchange's system is connected through API (application programming interface) to banks in the recipient country. Once a remittance is done, it is directly transferred to the beneficiary's bank account without involvement of any other party. The transfer is done within seconds.

Beneficiary benefits: You can transfer to a bank account or a digital wallet, depending on the country of transfer. The receiver does not have to pay a fee for receiving the funds digitally.

2. Lulu Exchange

Online channels: The LuLu Money app is available on Android and iOS. Launched in late 2017, the app to date has more than 600,000 users, with 15 per cent of its online customer base aged between 18 and 24. The app has grown at an annual rate of 200 per cent in 2019 and 150 per cent in the first five months of this year. A website is under construction.

Increase in digital remittances: There has been a month-on-month growth of 40 per cent in digital transactions over the past three months. Digital remittances account for nearly 15 per cent of transactions at the exchange.

Customer registration: Until it integrates its e-KYC facility, new customers in the UAE first have to register at one of the group's 74 branches across the country.

Fee: Online transaction fees are the same as when you send money from a branch using the instant transfer facility. The transaction charge for sending money up to Dh1,000 is Dh17 (inclusive of tax), and for sending money above Dh1,000, it is Dh23 (inclusive of tax). A special scheme has been launched to waive these fees for medical professionals in the UAE.

Time taken to remit funds: LuLu Money performs instantaneous transfers. Generally, it takes only 15 minutes to transfer the money to banks that the exchange has direct arrangements with. Other banks might take longer depending on processing times.

Cap on remittances: There is a cap of Dh75,000 per regular transaction and Dh5,000 per day for transactions conducted using a salary card.

Beneficiary benefits: No fee is imposed on the receiver. Transfers to bank accounts and cash pick-up facilities are allowed globally, while a wallet facility will be unveiled exclusively for Filipino users soon.

According to the World Bank, remittance flows are expected to drop by about $100 billion (Dh367.3bn) in 2020, which represents roughly a 20 per cent drop from their 2019 level. Pawan Singh / The National

3. Western Union

Online channels: Western Union launched its mobile app and revamped website in the UAE in January 2019. Customers can pay for transactions either on the website or within the app using debit and credit cards or bank transfers. Customers can also choose to begin a transaction online and then pay cash in person at Western Union agent locations in the UAE. The app is available in more than 40 countries.

Increase in digital remittances: In May, Western Union registered 99 per cent growth in global digital transactions, its highest in a decade. Digital services was the fastest-growing division of Western Union's business in 2019.

Fee: Costs associated with transactions in cash differ from transactions associated with accounts, such as wallets, bank accounts or cards. Globally, the average cost of transferring money through Western Union (including fees and foreign exchange rates) is about 5 per cent of the amount sent. The average person-to-person principal send value via Western Union in 2018 was about US$300 (Dh1,101). Currently, customers in the UAE can send money starting from Dh15 per transaction online for amounts up to Dh34,890.

Time taken to remit funds: Once the transaction is complete, money will be available within minutes for a cash pick-up by the receiver, and within one to three business days for a bank account transfer, depending on the receiver's country.

Cap on remittances: Customers in the UAE can now send up to Dh34,890 when using Western Union's mobile app or its website.

Beneficiary benefits: Western Union's Global Payout Network now includes bank account and wallet payouts in more than 100 countries. Western Union recently expanded its capability to send cross-border, cross-currency money transfers and payments in real time to 50 countries when paid into selected banks and digital wallets. Receiving money is free of charge except if the receiver chooses to receive the funds in a different currency, or has it transferred to a device or a bank account during pick-up.

Western Union registered a 99 per cent growth in digital transactions at a global level in May 2020, the highest in a decade. Razan Alzayani / The National

4. Mashreq Bank

Online channels: A money transfer feature is embedded in Mashreq's mobile apps and all digital channels, including online banking. Using the Mashreq app, an individual can transfer money within the Mashreq network, or to local or international banks. Customers can use a variety of methods, including mobile contacts to transfer money locally. For international transfers, there is Quick Remit, an instant or same-day remittance service for 37 countries.

Increase in digital remittances: Digital is the preferred channel for money transfers among customers, with more than 95 per cent of all retail payments being sent electronically. Within digital channels, the percentage of mobile-originated transactions has been growing. However, it has recorded a surge in digital payments during the pandemic due to challenges visiting branches in person.

Fee: Fees vary for different corridors and ranges from Dh0 to Dh25. These are flat fees and there are no further correspondent bank charges of any kind. Additionally, fees are lower for digital transfers than they are at branches.

Time taken to remit funds: In addition to the SWIFT-based money transfer to any part of the world, Mashreq offers a Quick Remit service for small remittances online. The Quick Remit service offers an instant remittance facility to 34 countries, including India, Pakistan, the UK, Singapore, the Philippines, Sri Lanka, Indonesia and all of Europe, as well as same day remittances to an additional three countries. Instructions received at branches are processed using the SWIFT network, which can take anywhere from 24 to 72 hours.
Beneficiary benefits: Transferring to a bank account is the preferred choice for Mashreq customers, but the bank is also exploring digital wallet options for low-value payments. The credit transfer to digital wallets is subject to local regulations that apply in the recipient country. Recipients do not pay additional fees for transactions remitted via Quick Remit.

Cap on remittances: There are transaction limits for online channels depending on the country and the method the customer chooses to send the money.

5. Al Fardan Exchange

Online channels: Al Fardan Exchange has had a strategic partnership with Western Union for two years for both the website and an app – Wu.com. This covers more than 200 countries and 550,000 agents.

Increase in digital remittances: The exchange says its digital remittances have surged about 300 per cent since movement restrictions came into effect in the UAE this year.

Customer registration: Customers need to visit physical branches to get their KYC validated. It has developed an e-KYC registration feature, but is waiting for approvals from the regulatory authority.

Fee: Starts from Dh15 for amounts below Dh1,000. At branches, the fee starts from Dh16 for amounts below Dh1,000.

Time taken to remit funds: It ranges from within a few minutes to the same day, or is credited to a bank account the next day depending on which country the money is being remitted to. The time frame is similar at branches.

Beneficiary benefits: The money will be deposited into a digital wallet or bank account if the app has been used. The receiver does not have to pay a fee.

Cap on remittances: As per the Central Bank of the UAE, there is a cap of Dh34,890 on transactions done through the app for all corridors. In general, there are no caps on transactions done through branches. It depends on the KYC, customer profile and receiving countries. The exchange has internal policies to combat money laundering and terrorism finance.