How do remittance agents make profits?

How do remittance agents make profits?

• Answer:

  They profit several ways, whether they're a small dealer or a major company like Western Union. First: There's a set fee based on the amount of money you send. Second: Usually the currency is sent to a different country which means it has to be converted to local currency, and the exchange rate they charge gives them a better deal than you could get elsewhere. Example: Send $100 from US to Philippines at Rite-Aid. Fee: $5.95. Cost to you $105.95 Amount that arrives in Phils: 4,750 Peso (which equals $97.70). This means their profit is $8.25 and their only expense was administrative expense creating the control number. The agents at each end are employees of the stores and Western Union doesn't have to pay them. The stores are also holding the money, so Western Union doesn't have to do that. Now multiply this by 150 million and that's what Western Union does every year.