Is WorldRemit the Cheapest Way to Transfer Remittances from Abroad to M-PESA?

Worldremit mobile app
Worldremit mobile app. [Photo/ Courtesy]

Approaching its 10-year anniversary of operation within Kenya, M-PESA has been a dominant player in Kenyan mobile banking. However, one issue that still remains for Kenyans is finding a cheap way to send and receive money from abroad. WorldRemit, it seems, may be offering a competitive solution.

WorldRemit (verified company) is a remittance company that isn’t much older than M-PESA itself. It’s a British firm that operates in countries all over the world, facilitating the remittance of 70 different currencies, and is regulated by the FCA, ASIC, and FINTRAC.

The company grew more popular as people understood the drawbacks of using traditional banks for sending money abroad. The exchanges leave customers out of pocket with vast, wasteful spreads, along with charging extortionate flat fees of around $30 USD.

Whilst there have always been FX brokers that deal with remittance over the phone, they were always focused on businesses and large transfers. Given that M-PESA is the antidote to this, WorldRemit equally does things in a different way.

To send money with WorldRemit, it’s a matter of downloading the app and using it similar to mobile banking. Minimum transfers are as low as £1, and sending money – whilst often incurring fees – is free of fees when using M-PESA.

For example, sending £100 from the UK to Kenya (through M-PESA), WorldRemit will deliver Ksh14,792 at a Ksh147.92 exchange rate – with no fees. The real, interbanking rate at this given time is Ksh151.91, so in a perfect world, the recipient would receive Ksh15,191.75 – meaning there was around a 2.6 percent exchange spread, and Ksh399 was lost in the transfer.

This isn’t a terrible situation, particularly given that GBP-KES isn’t a common currency pairing.

How does this compare with Wise?

Wise (formerly TransferWise) is another London-based start-up, though this one has a greater market presence being a unicorn company. Wise is often considered to be one of the easiest ways to send and receive money abroad, whilst maintaining good rates.

Sending £100 GBP to KES through Wise would result in the recipient receiving Ksh14,726, which is Ksh66 less than when using WorldRemit – making it just over 3 percent in wasted fees. This is slightly closer to what we would expect with a high street bank, although still more preferable as there’s no flat fees.

However, this is when using the fast & easy transfer on Wise. If you’re willing to wait a little longer for the process and avoid a debit card, £100 GBP will return Ksh14,765, which is very close to the amount at WorldRemit.

Clearly, WorldRemit isn’t the only option when someone wants to transfer money from the UK to Kenya. To transfer money from the USA to Kenya, however, WorldRemit wins again but by a similarly small margin – this time both companies incur larger fees. Transferring money from the UK to M-PESA is still the most convenient route, though, given that mobile banking infrastructure is fast and easy, where fewer contact details are needed also.

How to open an M-PESA account?

When opening an M-PESA account, users will need a mobile phone, valid Safaricom SIM card, and official identification document – either the Kenyan National ID, Passport, Kenya Military ID, or Kenyan Foreigner ID.

Activating the account is relatively easy. A 4-digit pin will be sent via SMS to the corresponding phone number. This number and SIM are important to keep private to you. An ID number will need to be entered, and confirmation should be sent with the user’s balance.

Whenever sending money through WorldRemit or other platforms, make sure to select ‘Mobile Money’ as the delivery method and mobile partner. There are other mobile partners to choose from, but this is up to the user which one fits their needs.

There are some small M-PESA tariffs that users must be aware of, such as transferring to unregistered users and ATM withdrawals. However, it is a very fast service and means only needing a mobile phone to pay, send, and receive money – which is a safer alternative to carrying cash.

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