This is a typical scene in any remittance center, pawnshop or courier agency especially in the Philipines.
Besides lotto outlets inviting long lines every single day, authorized pawnshops and cargo and courier agencies now also offer money remittance services. The purpose is the same – easy delivery and receipt of money (perang padala) from a family member to another family member in a different city or province.
The first time I sent money through a delivery agency, I was surprised at the service fee for the small amount I sent; thus, everytime someone asks me to send money to another (I can add “delivery girl” to my resume) through a pawnshop or courier agency, I always ask them why they prefer these centers instead of a bank?
The fact is, these money remittance centers have a graduated table of rates, charging 4% upwards depending on which bracket the amount to be delivered falls into (Php 1 to Php 5,000 and up).
In comparison, when you deposit to someone’s account, some banks don’t charge any service fee at all while some banks charge a fixed fee for any amount deposited (based on experience, Php 50) regardless of the bank branch where the account has been opened .
So why do some Filipinos prefer remittance centers for pera padala services instead of banks?
- Not all Filipinos have savings accounts. For one, especially for the lower-middle to low income households, there are no savings to start with; thus, the bank is not seen as an important institution to “bank on”.
- Banks require several documentations before one can set up a savings account or any account for that matter. This makes remittance centers attractive in that they only require an ID or other light documentary proof before releasing cash to customers. Senders would only need to fill-up the form and give the cash plus service fee and the transaction is done.
- Pawning jewelries and other valuable items for quick cash to address an urgent need can be provided by pawnshops but not banks.
- Pawnshops and courier agencies have branches even in remote areas which makes it accessible to the general public compared to banks.
The said reasons justify the popularity of these centers. True enough, the general public needs them.
However, if you have the means, it is more advisable to open a bank account and send money inter-bank. They have savings accounts that only need a small maintaining balance. Ask your bank of choice for preferences. Putting money in a banking institution also somewhat encourages someone to save more (if really motivated) aside from using it only as a wire transfer facility.
If you’re an OFW or a family member, you might also be interested in reading the below articles and assess the best choice for remittances from abroad:
What’s your take on this? Feel free to comment below.