I’ve been looking into sending money from the states to Nicaragua, and I can’t figure out how Western Union determines their fees. Sending $700 to Nicaragua, I’ve found through searching:
$9.99 cash in person in Illinois for Next Day
$11.99 cash/debit card in person in Illinois for money in minutes
$21.00 cash in person in Florida for Next Day
$28.00 cash/debit card in person in Florida for Next Day
$58 online credit/debit payment in Florida/Illinois for money in minutes
$25 online bank account payment in Florida/Illinois for 3 day
It’s just so bizarre. Why in the world is it nearly 5 times as much to pay online than to pay in person? Why is it twice as much to send money from Florida as it is from Illinois?
Pay in person vs. pay via internet is because people are lazy and they can charge more. There is a cost people are willing to accept to not have to walk to the nearest Western Union office. Basically they are figuring what the maximum amount of money is they can charge to keep you at home. They max profits by finding the sweet point where people will sit on their ass as opposed to walk to the nearest store.
Robbery because it is almost certainly cheaper for the company to not pay someone to process your transfer and let a computer do it.
Yeah I know…it sucks. I saw someone post a TicketBastard (err…TicketMaster) receipt where they charged the person to print their own ticket as opposed to mailing it to them.
As for Illinois vs. Florida I can only guess (repeat…guess) it is taxes/fees imposed by the state. Florida had (has?) a huge immigrant population. Florida probably found it was a good money maker to tax people sending money back home.
This is part of it, I’m sure. But also, paying online for money in minutes could be a good scam, since nobody every physically sees you in the United States. Naturally, they would see the Nicaraguan recipient, but that is a little less reassuring, considering the relative skills of U.S. and Nicaraguan law enforcement.
So, a large part of the high cost of the online transaction is due to its greatly amplified risk of fraud.
Maybe. I’ve thought about this a little more. Obviously WU needs branches open for people to get their money. So in fact, if you consider that the branch needs to be open and someone needs to be there, maybe it is actually cheaper for them to process it that way.
Here’s an even simpler explanation, leaving the government out of the picture: My guess (repeat: guess) is that it is simply market forces. They charge whatever they find people are willing to pay. Maybe they charge a lot in Florida because those suckers are willing to pay through the nose, but Illinoisans are cheap bastards who need low prices before they’ll fork over their money. (No offense meant to Florida and Illinois. It’s just an illustration.)
It’s basically the same as what you wrote about internet vs storefront. In some situations, sending over the internet is an impulse purchase, and it is easy to rip off the customer, but if they have to go downtown to a storefront, you have to compete with the other storefronts, besides the risk of the customer changing his mind entirely.
I’m sure it’s mostly market forces (whatever the market will bear), but when comparing online to in-person prices remember that there is a much larger risk for processing the transaction online.
Sure, in-person transactions are not riskless, but compare: In-person the customer has to bring in cash or a credit/debit card. Online, the customer has to type in a bank account number or a debit card number. Western Union has the expense of completing a bank account transfer and runs the risk that it will be charged back in a month or more after the real owner of the account sees an unauthorized transfer from his bank account on his monthly statement. In the case of a credit/debit card, the merchant has more responsibility for fraudulent transfers in a “card not present” transaction and pays higher transaction fees.
Anyone who would undertake these risks who only do so if adequately compensated.