Follow the Money: The cost of sending money home

Sam Fenwick (0:02)

It's Monday lunchtime in a house in London, and Reza, the housekeeper, has just finished her morning's work. She's spending her break doing what she does two or three times every month, sending money home to the Philippines. Today it's 410 pounds, about 540 dollars, and by the time it reaches her family, some of that will have gone into someone else's pocket.

Millions of people around the world do the same. So once the money leaves Reza's phone, who takes a cut on the way, who gains from it, and who ends up paying? Hello, I'm Sam Fenwick, and this is Business Daily on the BBC World Service. Today we're following the money home.

Before we get into the money chain, let's establish how much money we're talking about. Gideon Long, who produces Follow the Money, is with me, and he's been looking into this. So how much is it, Gideon?

Gideon Long (1:02)

It's a huge amount. The World Bank estimates that migrants sent $905 billion across borders in 2024

And three quarters of that, $685 billion, went to low and middle income countries. That's more than those countries received in foreign direct investment and overseas aid put together. The Philippines is the fourth biggest recipient in the world of these transfers, which are known as remittances. And last year, Filipinos working abroad sent a record $35.6 billion home.

Sam Fenwick (1:33)

And a lot of that money starts with women like Riza.

Riza (1:36)

Okay, my name is Riza.

I came from Philippines. I'm now working as a domestic worker, a housekeeper here in London, 45 years old, two kids.

Sam Fenwick (1:48)

Riza's been in the UK for four years, and before that she worked in the Middle East for 12 Her children, who are 18 and 21, live with her mother back home.

So in total, how much do you send? A month.

Riza (2:02)

A month, I send almost 1,000-plus pounds.

Sam Fenwick (2:06)

1,000 pounds?

Riza (2:07)

Yes.

Sam Fenwick (2:08)

Okay. And as a percentage of your salary, is that quite a high percentage?

Riza (2:13)

Oh, my salary is just 1,500.

Sam Fenwick (2:16)

So some of it goes to her sister, to look after their mother who's 80 The rest pays for her children's college fees and their food.

Riza uses two money transfer apps, and on a payday, she picks whichever is offering the best exchange rate. At the other end, her family either collects the money in cash or gets it on their phone in a mobile wallet called Gcash. On the day we spoke, she just made a transfer. How much did you send and how much did it cost you?

Riza (2:45)

I sent 410 And then the exchange rate, the fees, the transfer fee is 3.99.

Sam Fenwick (2:53)

Right. So it cost you £3.99 on a transfer fee. What rate did you get today?

Riza (3:00)

Today is 82.3. I don't wait for the good rate. If they need the money, even the rate is lower. It's lower. I have to send the money, you know?

Sam Fenwick (3:10)

Gideon, now you've done the sum on that transfer. So what have you got?

Gideon Long (3:14)

So Reza got 82.3 Filipino pesos for every pound that she sent. And as she said, an upfront fee of nearly four pounds, which is about $5.30.

But then there's the exchange rate to consider. She's given one that's worse than the market rate that you'd see on something like the news or on a Google search. And that adds another $3.50 onto the cost, making nearly $9 in total on a transfer of $540.

Sam Fenwick (3:40)

So the fee is the part that Reza can see and the rest is took away in the exchange rate. Even the part she can see feels like a lot to her.

Riza (3:48)

It's like you can buy three kilos of rice. So it's like three or four pounds.

It's too expensive for the transfer fee. In London, it's just four pounds. But in the Philippines, you can save one day food, you know, one meal.

Sam Fenwick (4:05)

If you could tell the companies, the transfer companies, if you could tell them one thing, what would it be?

Riza (4:11)

Charge us less. We help the economy by sending money. We contribute because of our sending money, because of the serenitance. So help back to us.

Sam Fenwick (4:24)

So who's making money on every transfer? Between Riza's phone and her family sits a company. That might be a big global bank like HSBC or Citibank, or a specialist money mover like Moneygram or Western Union. But these giants are facing increasing competition from digital firms like Remitly, Gcash, Revolut, and in particular, Wise, which was set up in London in 2011 and now moves more than twice as much money across borders as Western Union.