Transferwise aims to slash cost of sending cash home for Gulf expats

The lion’s share of Gulf outward remittances head to South Asia. (AFP)
Updated 22 October 2019

Transferwise aims to slash cost of sending cash home for Gulf expats

  • Transferwise targeting multi-billion-dollar Middle East money transfer market with a new hub planned for Abu Dhabi
  • The lion’s share of Gulf outward remittances head to South Asia

LONDON: A UK-based money transfer companies aims to slash the cost of sending cash home for hundreds of thousands of expatriates across the Arab world.

Transferwise is targeting the multi-billion-dollar Middle East money transfer market with a new hub planned for Abu Dhabi that aims to offer an alternative to sometimes costly bank transfers.

Money transfer businesses have mushroomed across the Gulf states and are used by the region’s army of expatriate workers to send funds home each month from Mumbai to Manila. But a raft of new technology startups is rapidly disrupting the sector and driving money transfer costs lower.

UK-based Transferwise, started in 2011 by Estonian entrepreneurs 2011 Kristo Käärmann and Taavet Hinrikus, processes remittances by using two local transfers instead of one international one — avoiding expensive banking fees.

“Money transfers from dirhams have long been one of our most wished for currencies, so we always knew we’d begin our expansion into the Middle East in the Emirates,” said Kristo Käärmann, CEO and co-founder of TransferWise. “The latest World Bank data shows an uptick in the cost of sending money from the Middle East, and there’s such a strong expat community locally who desperately need a better way to manage their money across borders.”

The company has been granted a license to bring its money transfer platform to the UAE and its local unit will be regulated by the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority, it said in a statement on Tuesday.

The company, which serves 6 million customers worldwide, claims to offer money transfers that are up to eight times cheaper the banks in its biggest markets.

It processes $5 billion in customer payments every month and it says that 25 percent of its international transfers are instant.

The company reported revenues of £179 million in the fiscal year ending March 2019, and net profits of £10.3 million. Its backers include Richard Branson and PayPal.

The lion’s share of Gulf outward remittances head to South Asia. Global remittances to South Asia grew 12 percent to $131 billion in 2018, according to World Bank data. That compared to 6 percent growth in 2017.

“The upsurge was driven by stronger economic conditions in the US and a pickup in oil prices, which had a positive impact on outward remittances from some GCC countries,” said the World Bank’s latest Migration and Development Brief.

It estimated that officially recorded annual remittance flows to low- and middle-income countries reached $529 billion in 2018. Global remittances, which include flows to high-income countries, reached $689 billion in 2018, up from $633 billion in 2017.

However, the global average cost of sending $200 remained high, at around 7 percent in the first quarter of 2019, according to the World Bank’s Remittance Prices Worldwide database.


S&P downgrades trio of Dubai developers as pandemic hits property and retail

Updated 44 min 29 sec ago

S&P downgrades trio of Dubai developers as pandemic hits property and retail

  • Gulf states are being hit hard by the coronavirus pandemic that has come at a time of weak oil prices

RIYADH: The credit ratings of three Dubai property companies were downgraded by S&P as the coronavirus pandemic hits confidence in the retail and real estate sectors.
S&P Global Ratings reduced the credit ratings for the real estate developer Emaar Properties as well as Emaar Malls to +BB from -BBB with a negative forward outlook, adding that it sees a “weakening across all its business segments” in 2020. S&P also cut its rating for DIFC Investments to +BB from -BBB, while keeping a stable outlook.
Gulf states are being hit hard by the coronavirus pandemic that has come at a time of weak oil prices, heaping pressure on governments, companies and employees.
The ratings agency expects the emirate’s economy to shrink by 11 percent this year
“The supply-demand imbalance in the realty sector appears to have been exacerbated by the pandemic. We now expect to see international demand for Dubai’s property to be subdued, and the fall in residential prices to be steeper than we had expected, lingering well into 2021” S&P reported.
Despite easing restrictions and the opening of the economy, S&P said that overall macroeconomic conditions remained challenging.
Global travel restrictions and social distancing constraints “significantly weigh on Dubai’s tourism and hospitality sectors” the rating agency reported.
Still, Dubai’s tourism chief was upbeat on the emirate’s prospects when international tourism resumes.
“Once we do get to the other side, as we start to talk about next year and later on, we see very much a quick uptick. Because once things normalize, people will go back to travel again,” Helal Al-Marri, director general of Dubai’s Department of Tourism and Commerce Marketing told AFP in an interview.