Expatriates in the UAE are poised to face a significant financial setback following the recent decision of the Foreign Exchange and Remittance Group (FERG) to implement a 15 per cent increase in remittance fees. This decision underscores the challenges expatriates encounter as they strive to support their families back home amidst economic uncertainties and policy changes.
The recent fee hike, approved by FERG and equating to Dh2.5, marks the first adjustment in five years and reflects the evolving regulatory landscape and associated cost increases. While the fee increase primarily affects remittance services provided through physical branches, it is anticipated that fees for mobile app transactions may remain unchanged or even reduced to maintain digital competitiveness.
“This move ensures that exchange houses can sustain the delivery of high-quality services while addressing the changing regulatory requirements and associated operational costs, all of which were maintained without fee increases for the past five years,” said Mohammad A. Al Ansari, chairman of FERG.
The UAE is one of the world’s largest remittance markets, with most of the remittances flowing to India, Egypt, Pakistan, Bangladesh, the Philippines and other Asian and Middle Eastern countries. The UAE also has one of the highest populations of foreign workers, accounting for nearly 85 per cent of the UAE’s population.
FERG said this is the exchange houses' first fee adjustment in five years to meet related cost increases since the previous update. Expatriates, often serving as the primary breadwinners for their families back home, now face the daunting task of balancing their financial needs with fulfilling their obligations to send money abroad. This fee hike exacerbates their financial burden, posing significant challenges to their ability to support their loved ones.
The granted approval follows a detailed evaluation of the expenses associated with maintaining high levels of service standards and complying with regulatory requirements. This decision aims to strike a balance, ensuring that exchange houses remain competitive while addressing the increased costs.
Despite the approved adjustment, it is anticipated that the average remittance cost of sending $200 equivalent will remain at less than 3.5 per cent, significantly below the global average which stood at 6.2 per cent during 2023 according to the World Bank’s Remittance Prices Worldwide database.
The revised pricing remains well within the United Nation’s Sustainable Developmental Goals which aims to eliminate remittance corridors with costs higher than five per cent by 2030.
Mohammad A. Al Ansari, Chairman of FERG, said: "I commend this decision to allow exchange houses a fee adjustment, highlighting the significance of adapting to the industry's changing dynamics. This move ensures that exchange houses can sustain the delivery of high-quality services while addressing the changing regulatory requirements and associated operational costs, all of which were maintained without fee increases for the past five years."
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