Why is It So Hard to Send Money to the Philippines?
While the United States and the Philippines have had a lucrative trade relationship for over one hundred years, trade between the two countries has radically expanded over the past decade. But it can still be very difficult to send money to the Philippines.
Veem is here to help small businesses get over the obstacles, headaches and endless fees they incur when sending global business payments. Here are several key things small businesses should consider when sending, or are considering sending money to the Philippines on a frequent basis.
US trade with the Philippines is booming, but challenging
Since 2008, trade between the US and the Philippines has grown by 25 percent. Since the 2008 global recession, Filipino trade has risen 45%, to 53.6 billion USD in 2016. Led by the computer, medical apparatus and machine industries, the Philippines exports over $6 billion worth of goods to the United States alone. The country’s status as an expanding–yet stable–economy makes it a prime location to develop partnerships and create lucrative business connections.
Doing business with Filipino companies is not without its challenges, however. There are many antiquated procedural aspects to enforcing contracts or resolving solvency. Additionally, the Philippines’ status as an island nation means that, while it’s relatively inexpensive to import goods from the country, the time to move goods is well above the OECD average.
Sending money to the Philippines takes attention to detail
Similar to other smaller economies, there are also challenges to transferring money to the Philippines. On the one hand, there has been a lot of money transferred to the Philippines (the Philippines is the world’s number three destination for receiving money, after China and India), and sheer volume simplifies the process somewhat. On the other hand, this means that there is a culture of extra fees, baggy transactions, and obscure practices.
The Philippines has also been the site of some large bank heists and money laundering schemes, including an $81 million Bangladesh Bank fund heist in 2016. Because the Philippine AMLA (Philippine Anti-Money Laundering Act) didn’t at that point include casinos, the laundered money could be transferred out of the country without being followed.
The AMLA has subsequently moved to close any loopholes and keep money tracked flowing in and out of the Philippines. The Updated Anti-Money Laundering Rules and Regulations stipulate that all wire transfers include:
- Name of the originator/remitter
- Originator’s address, national identity number, date of birth
- Account number/unique reference number
If companies use a bank or a traditional wire transfer to send money to the Philippines, there are often hidden currency conversion fees and explicitly poor exchange rates. Businesses using their bank to make a direct international transfer will often see high fees. In addition, companies can lose money due to the high margin that banks take on the exchange rate when converting dollars to Philippine pesos. Additionally, before your international wire gets to the Philippines, it may have gone through a number of intermediate banks, adding extra fees every time the money changes (virtual) locations.
The best way to send money to the Philippines
Trade with suppliers in the Philippines continues to be a profitable proposition for American small businesses, and Veem is here to help you make that happen more easily. Through a combination of traditional and blockchain banking technology, we keep your international business payments simple, keep the exchange rates accurate, and keep the costs down.
Here are several resources for conducting business in and sending money to the Philippines: