Remittance charges set to rise by 15% at UAE exchange houses

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DUBAI, UAE, Feb 12: In a significant development, remittance fees processed through UAE-based exchange houses could undergo a 15 percent rise. The Foreign Exchange and Remittance Group (FERG), an industry association, revealed that all exchange houses operating under UAE authorities’ jurisdiction have been approved to implement an ‘optional’ strategic fee adjustment.

According to FERG, this adjustment permits a ‘minimum increase’ of 15 percent, which translates to approximately Dh2.50. The move, the first fee adjustment in five years, acknowledges the evolving regulatory landscape and associated cost escalations since the previous update, as stated in a FERG statement.

Notably, the fee hike will solely affect funds sent through physical branches. With the increasing prevalence of apps provided by currency houses, banks, and platforms like e& money and Botim, which already handle a significant portion of remittances, the 15 percent hike is expected to drive more senders towards digital channels.

Sources within exchange houses attribute the fee adjustments to inflationary pressures and efforts to standardize fee structures across markets.

Despite the approved 15% adjustment, FERG anticipates that the average remittance cost for sending the equivalent of $200 will remain below 3.5%, a figure significantly lower than the global average of 6.2% recorded in 2023 by the World Bank’s Remittance Prices Worldwide database.

FERG emphasized that the revised pricing aligns with the United Nations’ Sustainable Development Goals, which aim to eliminate remittance corridors with costs higher than 5% by 2030.

Furthermore, remittances processed through exchange houses’ apps are likely to remain unchanged or even reduced to maintain digital competitiveness, according to FERG.

FERG acknowledged its pivotal role in conducting extensive market research and collaborating with regulatory bodies to facilitate this crucial initiative. Mohammad Al Ansari, Chairman of FERG, commended the decision, emphasizing the importance of adapting to the industry’s evolving dynamics while ensuring the provision of high-quality services without fee increases over the past five years.

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