Competition in the money transfer business is heating up after Emirates Post and India Post agreed to jointly launch a service that will deliver payments to customers’ doorsteps.
The alliance will offer an electronic money order service using the United Postal Union’s secure International Financial System (IFS) – a global network of 660,000 post offices.
The partners hope the scale of the operation will enable them to challenge Western Union Money Transfer, which dominates the remittance market globally.
India Post has a network of 155,333 post offices, the largest in the world, which covers the remotest corners of the country.
“We will offer a cost-effective electronic money order facility for Indian consumers,” said MG Khan, Director-General of India Post. “As our post office network covers the length and breadth of the country, we are in a position to provide a service that is unmatched by private operators.”
Western Union and other money exchange companies that dominate the $30 billion-a-year (Dh110bn) remittance to India business are fighting back by establishing special arrangements with banks, finance companies and mobile phone operators.
Western Union, which recently pushed up its charges, has an arrangement with India Post and operates in the country through 8,500 post offices and 14,000 bank branches.
The service being launched by the two mail operators will deliver money orders payable at post office counters on the day they are sent. Money orders payable at the addressee’s door will be handed over within two days through the IFS network. Outside the IFS network, delivery will take place within five days.
Money sent from India to the UAE will be available for collection at Emirates Post offices on the same day.
The competitors, though, don’t seem worried. Paul Sunny, marketing manager of Redha Al Ansari Exchange, said: “The postal services in both India and the UAE work like government departments.
“They cannot beat the experienced private money exchanges that have access to the wide Western Union network. Apart from delivering money to the customers’ doorstep, we can compete on all other fronts.
“We will improve our services. Even if they are offering a cheap rate for remittance, customers who normally send Dh1,000 a month will not be bothered. Only customers who send huge amounts consider remittance fees and exchange rates.”
Other exchange firms said they would increase working hours to take advantage of the time difference between the two countries and times when post offices are shut.
“Post offices remain closed on public holidays, weekends and during strikes,” said the manager of a Dubai money exchange who did not wish to be named. “It may take four or five days to receive money. Most customers want to receive money instantly and safely.”
Officials at Western Union and the UAE Exchange in Dubai declined to comment.
But Edouard Dayan, Director-General of the Universal Postal Union (UPU) international trade body, said millions of people needed reliable electronic money transfer services, which postal networks could easily provide.
The lack of high-speed internet access had been holding up the rapid expansion of the international postal financial network. But, guided by the UPU, an integrated international network was being set up progressively by developing regional exchanges, especially in Africa, Asia and the Arab countries.
The postal sector worldwide has about five million direct employees – up to 10 million if associated sectors are included.
Meanwhile, Western Union has announced a pilot mobile phone low-value money transfer scheme in India in association with telecoms firm Bharti Airtel. The partners have applied to the Reserve Bank of India, the country’s central bank, for approval. Bharati Airtel has access to 50 million mobile users.