Pressured by Ukraine, Western Union to lower money transfer fees (04/17/05)

Pressured by Ukraine, Western Union to lower money transfer fees

by Zenon Zawada
Kyiv Press Bureau

KYIV- Western Union said it will begin offering a cheaper option for people in the United States sending money to Ukraine.

The Colorado-based company issued the statement on April 5 after the Ukrainian government's Anti-Monopoly Committee threatened millions of dollars in fines, alleging the money-transfer giant charges unreasonable rates resulting from monopolistic practices in Ukraine.

Either this year or next year, people in the U.S. will be able to send money over a 24-hour period, a less expensive alternative to the 15-minute money transfer currently offered, said Mykhailo Kharenko, a lawyer representing Western Union.

Western Union currently charges a fee of either 11 or 13.5 percent for $200 money transfers from the U.S. to Ukraine, varying by state, according to the company's website.

The fee is no different than those charged for money transfers to any other country, said Bohdan Yakymiuk, spokesman for the Anti-Monopoly Committee.

Western Union handles more than 80 percent of the money transfers into Ukraine, Mr. Yakymiuk said. Colorado-based MoneyGram accounts for more than 7 percent and several companies make up the remaining market share, he said.

Western Union also decided to significantly lower rates for money transfers from Portugal, Italy and Spain after Anti-Monopoly Committee Chair Oleksii Kostusiev held a press conference on March 22 in which he blasted the company for charging exorbitant rates for transfers between those countries and Ukraine.

"To feed their families, help their children get an education, support indigent parents, our fellow citizens travel to foreign countries for hard work," Mr. Kostusiev said.

"And when these people send their earned money back to their 'batkivschyna' (homeland) to their dear and close ones, in our opinion they again become a means of profit. We believe that hard-working Ukrainians emigrants submit themselves to humiliating discrimination," he added.

To establish its market, Western Union has agreements with Ukrainian banks in which they are forbidden to deal with other similar money transfer companies, the committee reported.

The limitation not only applies to an agreement's term, but extends a year after the agreement terminates, the committee said.

A committee analysis of the money transfer market determined that Western Union can thrive at a 3 percent profit margin.

Prior to the change, money transfers from Spain to Ukraine of 200 euros ($258) carried a 9 percent fee, transfers from Portugal cost 11.25 percent and transfers from Italy cost 11.25 percent.

Western Union has agreed to lower those rates as of April 1, to 3.5 percent from Spain, 5 percent from Italy and 4 percent from Portugal, the committee said April 5 in a press release.

"Now about $100 million every year will remain in Ukrainian families, and not swim off into the ocean as a payment for an American company's service," Mr. Kostusiev said.

The Anti-Monopoly Committee said at least 20 million Ukrainians depend on money earned by relatives abroad - about 42 percent of the nation's population.

Both Western Union and the committee declined to disclose how much money was transferred between the U.S. and Ukraine in any recent year.

They also did not have any information available for Canada.

Western Union charges a 27 percent fee to send money from Canada to Ukraine, according to the company's website.

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