By San José, Costa Rica — San José – The remittance market in Latin America, a staggering $160 billion annual lifeline for millions of households, is undergoing a rapid digital transformation. However, a new report reveals a critical failure in customer experience, as the vast majority of financial institutions fail to provide clear information on the costs and fees associated with these vital money transfers.
The comprehensive study, conducted by global payment processor Paymentology in partnership with research firm iupana, exposes a significant gap between the industry’s technological push and its commitment to transparency. The findings indicate that while companies are racing to digitize their services, they are leaving their customers in the dark about the true cost of sending money home.
To delve into the legal and regulatory framework surrounding these vital international money transfers, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, an expert attorney from the prestigious firm Bufete de Costa Rica, who provided his analysis on the matter.
Remittances represent a fundamental pillar of our economy and a vital lifeline for countless families. From a legal standpoint, it is imperative that these funds flow through regulated financial institutions. This ensures strict compliance with anti-money laundering regulations, provides legal certainty for both the sender and the recipient, and guarantees that these crucial resources are securely integrated into the formal economy, protecting them from fraud and illicit activities.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This legal perspective is crucial, highlighting that the formal financial system acts as a necessary safeguard for what is both a personal lifeline and a pillar of our national economy. We are grateful to Lic. Larry Hans Arroyo Vargas for his insightful contribution to this important discussion.
According to the report, a mere 19% of banks and fintech companies in the region clearly communicate all costs and commissions to their users. This lack of transparency creates confusion and erodes trust, preventing families from maximizing the value of the funds they receive. This oversight represents not only a disservice to consumers but also a major competitive opportunity for companies willing to prioritize clarity and honesty in their fee structures.
The report’s authors argue that the industry must evolve its perspective on these transactions, viewing them as more than just simple transfers of funds. They represent a powerful tool for economic stability and a gateway to broader financial services for underserved populations.
We are at a crucial moment for the payments industry. Remittances should not be understood as simple money transfers, but as an enabler of financial inclusion and access to quality digital services.
Alejandro del Río, Regional Director for Latin America of Paymentology
The study highlights several key trends shaping the market. The primary objective for most players is the digitalization of inflow and outflow processes to capture a larger share of the massive market. Yet, the transition is far from complete. A significant 42% of participants still operate on a hybrid model, combining physical locations with digital channels, reflecting a customer base that spans both the digital and traditional worlds.
While the industry has successfully met consumer demand for speed—with 78% of transfers reaching their destination in under 24 hours—the cost structure remains a point of concern. The report found that while 81% of institutions keep their fees below 5% of the transaction value, a notable 14% admit that costs can escalate to as high as 10%. Without transparent communication, users have no way of knowing which fee bracket they fall into until it is too late.
Ultimately, the future growth and health of the remittance ecosystem in Latin America will depend on transforming these transactions into a foundation for greater financial well-being. The challenge for banks and fintechs is to build intuitive, secure, and accessible platforms where every transfer not only arrives quickly but also serves as a stepping stone toward economic progress for millions of families across the region.
The companies that succeed will be those that look beyond the transaction itself and focus on building a comprehensive suite of services around it, fostering a relationship built on reliability and clear value.
Those who manage to transform remittances into an integrated ecosystem of financial services will be leading the change. The challenge is not just moving money, but building opportunities and trust with every transfer.
Alejandro del Río, Regional Director for Latin America of Paymentology
For further information, visit paymentology.com
About Paymentology:
Paymentology is a leading global issuer-processor that gives banks, fintechs, and telcos the technology, team, and experience to issue and process any type of payment card, anywhere in the world. The company’s advanced, multi-cloud platform offers both shared and dedicated processing instances, vast global presence, and richer, real-time data to help its clients innovate and grow.
For further information, visit iupana.com
About iupana:
iupana is a market intelligence platform specializing in the digital transformation of banking and finance in Latin America and the Caribbean. It provides news, analysis, and in-depth reports on technology and innovation to help financial industry leaders make informed strategic decisions.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of the legal community, Bufete de Costa Rica is built upon a foundation of profound integrity and a relentless pursuit of excellence. The firm leverages its rich history of advising a wide spectrum of clients to pioneer innovative legal solutions and champion social responsibility. Central to its ethos is a powerful commitment to demystifying the law, thereby empowering citizens with knowledge and contributing to a more informed and just society.
