Outflows from Italy are much higher than inflows: the amount of money leaving the country through formal channels in the form of remittances has been incredibly increasing from 2005 to 2011 (+ €3.5 billions), but remittances have been dropping since the following year. The
1541050 1970780 1816330 2537080 2674457 1097859 819129 2008 2009 2010 2011 2012 2013 2014
Source: Adaptation from the World Bank, 2013.
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fall seems to be in line with the fact that migrants families are less integrated than before and that more migrants are unemployed. The country recording the greatest reduction of remittances from Italy is China, while countries like Pakistan, Sri Lanka and Moldova have recorded an increase of inflows (Banca d’Italia, a).
Market structure. The Italian money transfer industry is mostly constituted by EU-operators,
while Italian ones are just a small portion. At the end of 2012, Italian Payment Institutions providing remittance services were nineteen, but just three years later they were nine; on the contrary, EU providers are almost 300.
As for market concentration, three operators own the 75% of the total market share (Camera Dei Deputati, 2016); the dominant players are Western Union and MoneyGram, but Ria Finacial and Coinstar are also common. In addition, there are some MTOs serving merely some corridors (e.g. remittances to Senegal are provided by Money Express and Choice Money; those to Rumenia by Smith & Smith, to India by ICICI Bank and Remit2India; to China by Money2money) (Giangaspero, 2009).
The Italian remittance market is continuously expanding: in 2009, 6,500 branches were open and the entrance of some online providers into the market (e.g. Skrill, World Remit, Transferwise, Xendpay) have led the “historical” operators to introduce cash-to-bank accounts and online transfer services. Poste Italiane signed an agreement with Money Gram; some banks tried to expand the migrant banking market (e.g. Mutual banks, Banca Popolare di Sondrio, Banca Popolare di Bergamo, Banca Sella); Western Union launched the so-called Direct to bank service and it has recently entered into partnerships with Intesa San Paolo and Unicredit. The former agreement allowed introducing remittance services via ATMs or internet banking, while the contract with Unicredit resulted in the setting up of the service Unicredit - AgenziaTu allowing customers to remit money from AgenziaTu branches via Western Union (Giangaspero, 2009 and 2014).
Costs. In 2014, Poste Italiane was the cheapest provider of remittances services. Remittances
costs have been falling over time and the introduction of online services may contribute to further reductions of costs both for providers and for customers. On average, transfers to Asia are the most expensive, while those to Latin America are the cheapest. Cost analysis made in 2014 demonstrated that account-to-account and cash-to-account money transfers through banks are the cheapest tools for remitting money, while cards are the most expensive; online and mobile payments are not as expensive as cards, but still more costly than bank accounts. African corridor has recorded a significant cost reduction, except for Nigeria that, on the contrary, has become more costly (Frigeri, 2014).
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Amount of remittances. Data on remittances published by the Bank of Italy show a constant
increase of money outflows up to 2011; since then, remittances have started decreasing (Banca d’Italia, a), probably because of the effects of the economic crisis on migrants’ income. However, except for China and a few other countries (Brasil, Philippines, Ecuador), the decline of money transfers was limited to 2012: we can hence confirm the counter-cyclical characteristic of remittances (Frigeri, 2014). In fact, the drop of remittances outflows in the last few years has been mainly due to a meaningful decrease of money transfers to China; since authorities were afraid that the decrease was due to the use of other (even more risky) channels to move money, they initiated some investigations which finally revealed that migrants addressed to EU-Payment Institutions that did not attentively record transactions and did not communicate their data about remittances (Camera Dei Deputati, 2016).
On 16 February 2016, the Bank of Italy published a new ruling (Provvedimento recante disposizioni in materia di raccolta di informazioni statistiche per la bilancia dei pagamenti e la posizione patrimoniale verso l'estero) according to which, from 1 March 2016 on, banks, Poste Italiane, Italian Electronic Money and Payment Institutions are no more subject to communication requirements about remittance services; EU-MTOs may instead communicate data on a voluntary basis (Banca d’Italia, 2016). This provision may however distort the assessment of remittances’ impact on the country’s economy; in fact, as I explained in the first chapter, remittances flows are recorded in the Balance of Payments of the country and
Average cost per product (October 2014)- computed on € 150
Average cost for different providers (October 2014)- computed on € 150
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are fundamental to compute the real trade balance and the sustainable deficit. In the next years, the lack of information about remittances outflows and inflows may lead to distorted computations of the Balance of Payment.
Money Transfer Operators regulation. Money transfer agents’ must be listed in the official
list of financial activities agents because they are very vulnerable to abuses (Fondazione Icsa, 2012). According to d.lgs. 385/1993 (TUB), remittance services can be provided by Payment Institutions and Electronic Money Institutions authorized by the Bank of Italy; they must comply with rules on minimum capital, professional requirements for corporate executives as well as requirements about corporate organization and internal controls. Bank of Italy has supervisory, investigation and disciplinary powers (Camera Dei Deputati, 2016).