Why Sending Money Home Still Costs Too Much, and What Will Change It

Sending money home should be simple. For millions of families it is the most important payment of the month: school fees, medical bills, rent and food. Yet it remains surprisingly expensive. World Bank data has shown for years that Sub-Saharan Africa is the costliest region in the world to send money to, with the average cost of sending $200 close to 8 percent, well above the global average and far from the 3 percent target in the UN Sustainable Development Goals. Nigeria alone receives around $20 billion a year in remittances.

Having spent years in international payments, I have seen this problem from the inside. Here is where the cost really comes from, and what is finally changing it.

The cost is in the plumbing

Most of the price of a remittance is not the fee on the screen. It is the foreign exchange spread, correspondent banking charges, money pre-positioned in payout accounts and the cost of moving liquidity between markets. A cheaper transfer needs fewer intermediaries, faster settlement and careful treasury management.

Why Africa pays more

• Fewer direct corridors: many payments still route through other currencies and banks before reaching an African account.
• Currency volatility: providers price in the risk of exchange rate swings.
• Last-mile cost: paying out to banks, wallets and agents across large countries is expensive.
• Limited competition: in some corridors, a few providers set prices.

What is bringing costs down

• Digital transfers: app-based transfers are consistently cheaper than cash-based services.
• Instant payment systems: fast domestic rails make the payout leg quicker and cheaper.
• Regulated stablecoins: new settlement rails could cut correspondent costs and idle balances.
• Mobile money: wallets reach families without bank accounts.
• Transparency: comparison tools let senders see the total cost, not just the fee.

Tips for families sending money

• Compare the total amount received, not just the transfer fee; the exchange rate often matters more.
• Send larger amounts less often when possible, since fixed fees fall as a share of the transfer.
• Use regulated, reputable providers and keep receipts.

A worked example: where the money goes

Take a transfer of 200 dollars from Dallas to Lagos. A typical traditional route might charge a fixed fee of 5 to 10 dollars, then convert at an exchange rate 2 to 4 percent worse than the mid-market rate. On 200 dollars, a 3 percent margin is another 6 dollars. The recipient may then pay a cash pickup fee or travel to an agent. Together, the family can lose 15 dollars or more, close to 8 percent of the amount sent.

A digital provider that sends directly to a bank account or mobile wallet, with a small fee and a narrow margin, can bring that total below 3 percent. Over a year of monthly transfers, the difference can be worth more than a month of school fees.

Why compliance adds cost, and why it matters

Every licensed money transmitter must verify customers, screen transactions against sanctions lists and monitor for money laundering. These checks protect families and the financial system, but they require people, data and technology. When banks see a corridor as high risk, some withdraw entirely, which reduces competition and keeps prices high. The answer is not weaker compliance. It is better, cheaper compliance through shared identity infrastructure, digital verification and real-time monitoring, so trusted providers can serve more customers at lower cost.

What policymakers can do

• Connect payment systems so money can move between instant payment networks without multiple intermediaries.
• Require clear disclosure of the total cost, including exchange rate margins, before a customer pays.
• Support digital identity so customers can be verified quickly and safely.
• Encourage competition by licensing qualified providers on predictable timelines.

The prize

Every percentage point saved on remittances to Africa puts billions of dollars more into household budgets, school fees and small businesses. Bringing the cost of sending money home down to the global target is one of the most direct ways technology can improve lives across the continent.

Common questions

Why is it expensive to send money to Africa?

Transfers often pass through several correspondent banks, carry exchange rate margins, require costly compliance checks and end in cash payout networks. Fewer competitors in some corridors also keep prices high.

What is the cheapest way to send money to Nigeria?

Compare licensed digital providers by the total amount the recipient receives, including the exchange rate. Transfers to a bank account or mobile wallet are usually cheaper than cash pickup.

What is the global target for remittance costs?

The United Nations Sustainable Development Goals target an average cost below 3 percent by 2030.