Remittance companies bullish as transfers hit new record
Avia Collinder, Business Writer
On the back of record remittances in 2011 that narrowly edged out pre-recession highs, companies in the money services sector say they are expecting the pace of inflows to improve even further this year and are edging their bets through network expansion and new partnerships.
Remittances rose to a new high of US$2.025 billion of inflows last year. The last time Jamaica hit that mark was in 2008 when inflows were recorded at US$2.021 billion.
The improvement tracks with a rise in job prospects in the United States from where 58 per cent of total remittances to Jamaicans now flow.
The other top markets are United Kingdom, 17 per cent; Canada, 11 per cent; and Cayman Islands, six per cent.
jockeying for business
Inside Jamaica, as the market heats up, so has the jockeying for business.
GraceKennedy Money Services for example, which holds the Western Union franchise for the Caribbean, cut money transfer fees towards the end of last year to beat back any incursion by other players.
GKMS expects business to remain fairly robust even with problems being faced by indebted Eurozone countries.
"... Since the majority of remittances that come into Jamaica may be described as non-discretionary transfers - that is to say, money is sent for daily care purposes, example, spouse, children and parental care - this form of remittance will continue, even if there is a recession," said GKMS Vice-President Noel Greenland.
"In times of crises among senders, non-discretionary flows may reduce in size, but they will not cease. Discretionary flows, however, will be affected," he said.
Though not as well-known a player, one of Jamaica's largest credit unions is also positioning for business, having seen strong growth last year.
Chief executive officer of COK Sodality, Jacqueline Mighty, said last Tuesday that subsidiary COK Remittance Services Limited (COKRS) experienced a 35 per cent growth in the number of transactions disbursed in the year relative to 2010.
COK's growth rate far outpaced the remittance market which grew 6.2 per cent.
The majority of the industry flows, US$1.714 billion, were through remittance companies, according to the Bank of Jamaica's December 2011 Remittance Report
Growth for Victoria Mutual Money Transfer (VMTS) was also above the market average.
General Manager Natasha Service said last Wednesday that VMTS saw a rise in both the number and average size of remittances, resulting in increased inflows in excess of 17 per cent compared to the previous year.
"In 2012, we expect to see further increases in the volumes and values of transactions, continuing the trend that started in 2010 following the 2009 downturn," said Service.
"We anticipate the increases to occur across all markets served by VMTS subject to the resolution of the current economic challenges being faced by the Eurozone."
Service said VMTS consistently reviews its business model to adjust to market conditions, with the end goal being accelerated growth in business volumes.
Mighty said 66 per cent of the business flowing to COK originates from the United States and 20 per cent from Turks and Caicos Islands.
"Spikes in the trend line for transactions sent to Jamaica in 2011 are noticeably higher during the holiday seasons where transactions increase by an average of 50 per cent," she told Sunday Business.
COKRS is looking to develop new partnerships with overseas remittance agencies, and expanding payment outlets, as ways to grow business in 2012, Mighty said.
COKRS already has partnerships with Unitransfer, Caribbean Airmail, Vigo Money Transfer, Reggae Money Exchange, JN Money Services, Tropical Money Systems, Lasco MoneyGram, Capital & Credit, and People2People for intra-island transfers. The company has 75 local service points.
"The remittance company is reporting growth in the added service offered to customers where the sender may request the funds sent to be deposited to the credit union or any other financial institution's savings account, loan payment and or bill payment," Mighty said.
JN Money Transfer, a subsidiary of JNBS, is similarly pursuing a network expansion strategy, recently announcing in a press release expanded services in major international cities and provinces including New York, London and Ontario; as well as Caribbean territories, such as The Bahamas and the Cayman Islands.
JNMS simultaneously stepped up its marketing campaign to entice new business.
Its new locations have grown the JNMS network to more than 250 branches and agents throughout the Americas, the United Kingdom and Africa, the company said in the press release.
Lasco Financial Services Limited (LFSL), which acquired Supreme Venture's MoneyGram business last year, said its operation was affected by the lotto scam but that it still managed to improve on per-formance.
Said Managing Director Jacinth Hall-Tracey: "2011 did not show its usual robust growth for LFSL; we had growth nonetheless. This is directly attributed to the first-quarter restrictions and closures due to lotto- scamming activity in Montego Bay."
Hall-Tracey said the company recovered in the latter part of the year and ended up outperforming the industry's six per cent growth.
"For the new financial year, we expect to out-turn significant growth, having expanded our network and with the scamming under a modicum of control, all parties can refocus their attention on re-energising the brand," she said.
The BOJ itself expects remittance flows to be positively affected by new technology, namely the Zoompass Mobile Wallet, which uses digital currency, payment cards and other credentials accessible through a mobile device to receive and request currency.
And JNMS is bullish about world trends, specifically World Bank estimates that global remittances will grow to US$375 million this year and US$404 billion in 2013.