Peragram, an international money transfer company with 2,000 agents natonwide is the country representative of US-based MoneyGram Payment Systems. Moneygram has over 70,000 outlets-agents worldwide.
There are over 750 rural banks nationwide of which an estimated 300 have the potential to develop an infrastructure for international and foreign currency transactions.
"We want to expand in a huge way in areas outside Metro Manila, and that includes key tie-ups with more than 300 rural banks," PeraGram chairman Jacob Asaad Jr. said.
Rural banks are the final link in the nationwide distribution system within the country’s banking system. It is the critical domestic connection between the overseas Filipinos sending money to their beneficiaries located in areas within the reach of rural banks but distant to thrift and commercial banks.
"Rural banks have the reach, they are located in places where the beneficiaries reside, and they make it cheaper and more convenient for the beneficiaries," the Peragram chairman added.
Aside from strategic alliances with rural banks, Peragram is holding talks with establishments with a wide distribution network like convenience stores and pawnshops.
Presently, it has tie-ups with commercial banks including Banco de Oro Universal Bank (BdO), Rizal Commercial Banking Corp. (RCBC), and Bank of Commerce (BanCommerce), as well as the Philippine Postal Office and travel agencies.
Meanwhile, PeraGram president Spencer Chua said that their remittance transactions grew by 100 percent in 2005 compared to the year before.
Transaction fees are charged money transfers or remittances. The amount of transaction fees depends on the amount being sent, the location of the sender and the beneficiairies, and the foreign currency involved.
Sharing in the transaction fees are roughly broken down as follows: about 20 to 25 percent goes to the international agent, 50 to 60 percent goes to the principal ( such as MoneyGram), and 10 to 15 percent goes to local distributor or agent (such as Peragram). The local distributor or agent must however share in earnings with its local agent (such as banks), the rate ranging from 10 to 20 percent of the local agents share.
Industry sources said that Western Union and Moneygram are among the leading international money transfer companies today.
Commenting at the remittance business, PeraGram believes it will continue to grow by at least 20 percent similar to estimated by the Bangko Sentral ng Pilipinas (BSP).
But they pointed out that the remittance business is bigger than what passes through the banking system also known as the formal sector. The BSP reported that remittances passing through the formal sector reached $8.6 billion in 2004, and $10.6 billion last year.
The so-called informal sector, which includes international money transfer companies and their local counterparts as well as the door-to-door, accounted for remittances amounting to almost the same amount as the formal or banking sector.
IBON Foundation said remittances hit $12 billion in 2003. In 2004, the informal sector is believed to have handled almost the same amount as the formal sector. The Asian Development Bank (ADB) said actual remittances of over eight million Filipinos overseas could have reached $22 billion last year.
"Remittances will easily amount to $14 billion through the formal sector, and another $8 to $10 billion through the informal sector," the two Peragram executives forecast.
MoneyGram International is a leading global payment services company. Its major products and services include global money transfers, money orders and payment processing solutions for financial institutions and retail customers. It is a New York Stock Exchange (NYSE) listed company, with over $970 million in revenue in 2005.