This is a test version — we need your feedback to get it right! Write to admin@saveonsend.com

Money Transfer to Philippines: Review and Tips

— Posted by SaveOnSend to Money transfer from USA to Philippines, Western Union, Xoom   |   56 Comments

Are you sending money from USA to Philippines? Want to get the most pesos for your dollars or receive most dollars in Philippines? Not sure which provider is the best, cheapest or fastest? Should your funds be received in pesos or dollars? YOU came to the right place! We will cover all most important topics:

  1. Money Transfer to Philippines: current state and key trends

  2. Pesos to dollar exchange rates and timing

  3. Top money transfer providers

  4. Receiving money transfer in pesos or dollars

  5. Sending larger money transfer amounts

  6. Choosing the best receiving method

  7. Finding the best way to send money

Please note this post is specific to Philippines. If you are looking for general knowledge of how to best send money, please review this other SaveOnSend blog post first.

Before we get started… Great news if you are a consumer sending money from USA to Philippines: it is currently one of the most competitive corridors from USA, attracting more providers and larger investments than many other destinations. You are in luck with variety of choices and lavish promotions which don’t exist for some other destinations. So you could make a relatively safe assumption that when transferring money to Philippines with any top provider, you will get a reasonable price and service. Overall, cost of sending money has been declining worldwide, with providers’ margins dropping 30% just in the last decade:

WorldBank Cost of Sending $200 till Q3 2017

Source: https://remittanceprices.worldbank.org/sites/default/files/rpw_report_september_2017.pdf

But we are recommending trying providers with the cheapest price – this way, you are helping not just yourself but also supporting Philippines’ growth. By always using the least expensive method of sending money home, each 1% in savings generates additional $100MM annually for your families and Philippines’ economy.

Money Transfer to Philippines

1. Money Transfer to Philippines: current state and key trends

According to Pew Research, Philippines is the world’s #3 destination for receiving money after India and China. This position could be in part explained by Philippines being probably the only country in the world that has institutionalized the deployment of its people to work overseas since 1995. Filipinos migrants’ top occupation is seafarers, representing 20% of all remittances. Remittances from OFWs to Philippines account for 8.5% of GDP. Remittances are so important to the economy of Philippines that in October 2017 the government created a bank for OFWs to compete for remittances with private banks and money transfer specialists. The rapid growth in remittances continued through 2017:

Remittances USA to Philippines from 1990 till June 27, 2017

Out of all countries from where OFWs-Filipinos send money to Philippines USA is by far #1:

Top 5 remittance source countries for Philippines in 2015

Source: http://www.pewglobal.org/interactives/remittance-map/

There are 3+ million Filipinos in USA, with around 40+% living in California and another 10% in Hawaii. 35% of USA Filipinos live just in 3 metropolitan areas: Los Angeles, San Francisco, and New York City.

Money Transfer to Philippines: top USA states with Filipinos

In comparison with other migrant groups in USA, Pinoys tend to have an average level of education but earn a higher income (see the chart below). This might be in part due to a higher portion of Filipinos employed as nurses and personal care workers.

Migrants in USA by income and education

Filipinos send money from USA using both an online channel (a provider’s website or mobile app) and via a cash agent. Since many Filipinos get paid in cash they prefer to sending cash transfers to Philippines as well. This way they avoid depositing money into a bank account and potentially facing a tax liability. Transfers are received either in pesos or dollars, depending on the preferences, exchange rates, and other factors (more on this later). Of all transfers being sent digitally 75+% are received via cash agents in Philippines.

If you are reading this and haven’t yet tried sending money to Philippines online, via a website or mobile, you should definitely give it a shot. Most of well-known providers have such tools, and the setup shall only take few minutes. Once you link your bank account or debit card, you might be surprised how easy to send money online and how much you could save. This way, all your past transfers are available for your review any time, plus your future repeat transfers shall take less than a minute to complete since you don’t have to enter the same information again. There are also significant cost advantages (more on this later).

2. Pesos to dollar exchange rates and timing

Are you wondering if you shall wait for pesos to increase in value or for a dollar to fall? Trying to time the best exchange rate is unbelievably difficult if not impossible. If anybody gives you an advise on this topic while not making millions trading on same information, it might be a sign that you shouldn’t follow such recommendation. Still not convinced? Look at the graph below for changes in the exchange rate of pesos to dollar during the last 10 years – do you see any logic in the exchange rate’s short- or long-term movements? While the recent trend is of peso depreciating vs. the US dollar, you can notice long periods when exchange rate decreased or was stagnant:

USD-PHP interbank exchange rate 2005 - Nov 25 2017

 

However, there is a more practical approach to timing money transfers – based on the analysis of FX markup (the difference between a pesos-dollar exchange rate that providers get on the market vs. an exchange rate that you get from a provider). Not only each money transmitter applies a very different FX markup, it also makes daily changes to its FX markup to maximize profits. Some providers are even applying different FX markups for different sending-receiving methods. For example, for sending money from USA to Philippines, MoneyGram has different peso-dollar exchange rates for sending a) online-to-bank, b) other sending-receiving methods; or Wells Fargo has different exchange rates for sending a) $25-250, b) $251-1,000, c) $1,001-2,000, d) $2,001-3,000. So how do we use this knowledge against money transmitters?

Look at this chart showing fluctuations in FX markups across remittance providers for USA-to-Philippines:

FX margins comparison across providers - remittances from USA to Philippines till Jan 13 2018

Despite everything we read about so-called “disruption” in remittances, FX markup has been overall stable across providers. Western Union had been gradually increasing FX markup during 2015 and 2016 but then cut in half in early August of 2016. One of the world’s largest money transfer providers, Ria Money Transfer, significantly increased its FX markup during the summer of 2015 and has pushed it even higher since then.

USA-to-Philippines FX Markup across providers: 2015 till August 20th

USA-to-Philippines FX Markup across providers: 2015 till August 20th

Such swings are, unfortunately, too common among providers and not just when sending money to Philippines:

MoneyGram FX Markup Philippines and Mexico till June 23 2017

It means consumers cannot trust its favorite provider to apply a consistent price and must compare prices across providers with tools like SaveOnSend.com before each transfer. One particular exception is TransferWise which makes all money on charging fees without any FX markup (in the previous graphs, did you notice one line consistently near 0% axis?). The way you could take advantage of this is to compare your favorite provider’s FX markup to its average in the previous few months based on SaveOnSend charts. If FX markup is at or below the average trend, you could proceed with sending money; otherwise, it might make sense to wait 1-2 weeks till your provider’s FX markup comes down to its average level.

Why do providers increase their margins? Shouldn’t more competition drive lower prices? In theory – yes, but only if consumers care about it. Fortunately for providers, Filipinos are known for their loyalty and are not as price-sensitive as other nationalities. For example, compare previous charts with what the same providers are charging Chinese and Indian migrants in USA:

 

FX margins comparison across providers - remittances from USA to China till Jan 13 2018

FX margins comparison across providers - remittances from USA to India till Jan 13 2018

As you could see, Filipinos are being charged 1-2% more by the same providers. Being loyal does not pay…

3. Top money transfer providers

In otherwise competitive field, there are 2 key providers for USA-to-Philippines remittance corridor. Xoom leads among consumers sending money to Philippines online and Western Union among those who transfer money via cash agents. About 1/3rd of Xoom’s revenues comes from money sent from USA to Philippines, and this provider is known for almost instant money transfer and good customer tools and support. Western Union, on the other hand, is known for the largest network of cash agents worldwide, but takes longer to deliver funds (more on pricing comparison later).

Money Transfer to Philippines: Western Union kiosk in Philippines

Money Transfer to Philippines: Western Union kiosk in Philippines

4. Receiving money transfers in pesos vs. dollars

Two tables below are for sending the same amount, $500, between linked bank accounts – first table is for receiving transfers in pesos, second is in dollars. As you could see, the same providers are charging less for receiving in dollars. It works like this because providers don’t lose money on the spread of buying and selling pesos and could pass those savings onto you. Therefore, if your receiving party in Philippines doesn’t need to convert dollars into pesos, send them dollars:

Comparison of Providers - USA-to-Philippines, USD-PHP, $500, bank-to-bank, Feb 17 2017

Comparison of providers: USA-to-Philippines, USD-PHP, $500, bank-to-bank, Feb 17 2017

comparison-of-providers-usa-to-philippines-500-usd-to-usd-bank-to-bank-oct-13-2016

Comparison of providers: money transfers from USA to Philippines, USD to USD, $500, bank-to-bank, October 12, 2016

5. Sending larger money transfer amounts

Let’s now review how much we could save by sending larger amounts. Let’s compare margins of the same providers when customers transfer $20 and $2,999 – see two tables below:

Comparison of Providers - USA-to-Philippines, USD-to-PHP, $20, bank-to-bank, Jan 1, 2018

Comparison of providers: USA-to-Philippines, USD-to-PHP, $20, bank-to-bank, Jan 1, 2018

 

comparison-of-providers-usa-to-philippines-usd-php-2999-bank-to-cash-dec-5-2016

Comparison of Providers: USA to Philippines, USD-to-PHP, $2,999, transfer between bank-to-bank linked accounts, December 5, 2016

As you can see, only Western Union and Remitly are charging a similar margin while other providers charges 10 times higher margin.

For dollar-to-dollar transfers, sending bigger amounts is much more economical across all providers:

Money Transfer Philippines: $2,999, Bank-to-Bank, April 27, 2015

Money Transfer Philippines: $2,999, Bank-to-Bank, April 27, 2015

. Choosing the best receiving method

The number of consumers in Philippines with a bank account is growing, reaching 20-40% across income levels. So let’s review the difference between 2 receiving options: deposit into a bank account vs. a cash pick up. See a table earlier in this article for a bank-to-bank transfer and then compare it with the same scenario of sending $500 but receiving in cash:

comparison-of-providers-usa-to-philippines-usd-php-500-bank-to-cash-dec-5-2016

Comparison of Providers: USA to Philippines, USD-to-PHP, $500 transfer, sending from bank-linked account to receiving in cash, December 5, 2016

As you can see, most providers charge about the same for either option, so pick the option most convenient for you

7. Finding the best way to send money

As we discussed in another post on the overall strategy for sending money, “better” and “best” money transmitter is different for each of us based on our unique preferences among cost, speed, convenience, and customer service. No one provider clearly leads among all these factors.

Compare the top row in a table below (best option for sending money from USA to Philippines in pesos) with other rows. Do you notice that rows when money transferred from cash-to-cash are 3-5X more expensive than when it is sent from bank-to-bank? In other words, if you or someone you know is sending money to Philippines by using a cash agent, you or they could save 60-80% by sending money online. Despite such difference, many Filipinos still prefer to send money via a cash agent.

Money Transfer to Philippines: sending $500, receiving pesos, cash-to-cash, April 4, 2015

Money Transfer to Philippines: sending $500, receiving pesos, cash-to-cash, April 4, 2015

One provider is worth specific mentioning:

TransferWise – this money transmitter began servicing USA-to-Philippines corridor in January 2015 and competes very aggressively on price. As we mentioned earlier in this post, TransferWise has a unique business model of making money only on fees (no FX markup). For now, TransferWise is only available for bank-to-bank transfers and only for transfers received in pesos. If it works for you, we recommend you to try them because of their low margins BUT ONLY when sending larger amounts. For smaller transfers, they are not cheapest:

Comparison of Providers - USA-to-Philippines, $100, bank-to-bank, July 15, 2017

Comparison of Providers: money transfer USA-to-Philippines, sending $100, bank-to-bank, July 15, 2017

After each transfer, please describe your experience on SaveOnSend so others could learn from you.

To summarize, here are the leaders among providers that send money from USA to Philippines:

Fastest: Xoom, TransFast, PNB

Cheapest: 1a) pesos for larger amounts – TransferWise, 1b) pesos for small amounts – Western Union, 2) dollars – MoneyGram, Western Union, Ria Money Transfer

– Availability of cash pick-up locations: Western Union, MoneyGram

Money Transfer to Philippines: festival in Philippines

There is another consideration: consistency of experience with a particular provider. As consumers, we like to pick a particular brand or local business and use them for years. That experience includes not just service but also prices. Imagine if your favorite restaurant or grocery store keeps changing prices every time you go there plus they also have different prices based on how much you purchase. Western Union and MoneyGram are by far the worst offenders in this regard. Not only their fee structure has more tiers, they are also frequently changing their prices.

On this dimension our favorites: TransferWise, Remitly, and Ria Money Transfer, all with the extremely simple, easy to remember fee structure that doesn’t change every couple months.

In Summary…

Hopefully, you found this overview helpful and feel more confident in how to find the best approach for YOU when sending money from USA to Philippines. If we missed anything, please leave a comment. We will be keeping this post regularly updated, so come back soon!

Advertising Disclosure: SaveOnSend.com is an independent, advertising-supported comparison service. SaveOnSend may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.