|Topic:||Postal money transfers: a tool for economic and social development|
|Organisation:||Universal Postal Union (UPU)|
Edouard Dayan was elected Director General of the Universal Postal Union (UPU) at the UPU’s 2004 Congress in Bucharest. The UPU is an agency of the United Nations. Over more than 30 years, Edouard Dayan held various positions of a strategic, regulatory, commercial and operational nature in the French Post and at the European Commission prior to taking up his position as Director General of the UPU, on 1st January 2005. As an expert at the European Commission (1992-1993), he was involved in the establishment of the regulatory framework for the postal sector in Europe, and in particular the definition of the universal postal service and its content. Mr Dayan served as Deputy Director of European and International Affairs, from 1993 to 1997, and was appointed Director of European and International Affairs, in April 1998. He was also Chairman of the Board for two of La Poste’s investment companies. Edouard Dayan has been Chairman of the European Social Dialogue Committee for the postal sector since 1994, and is a former member of the Management Board of PostEurop, an association of 43 European public postal operators.
The United Nations says remittances sent home by migrant workers represent 5 per cent of developing country imports and 8 per cent of domestic investment. It has a direct impact on the living standards of people in the developing countries. These transfers can cost senders up to 20 per cent of the amount sent draining funds needed to support their families. The Universal Postal Union’s International Financial System (IFS) replaces paper money orders with electronic transfers and gives postal customers easy access to affordable financial services.
Thanks to the new technologies adopted by the postal sector, communicating with remote areas abroad is no longer a question of sending messages in bottles. Through its integrated physical, electronic and financial network, the postal sector is helping not only to reduce the digital divide, but also to bridge the economic gap by enabling developing countries to acquire these technologies and this know-how, and giving them access to the markets of industrialised countries. The paper money order, which is slowly disappearing, is a case in point. By replacing this standard financial instrument with a modern electronic version based on the Universal Postal Union’s International Financial System (IFS), many countries are helping to build a powerful worldwide network giving postal customers easy access to affordable financial services. The financial component of the world postal network is an integral part of the global effort to develop economies and reduce poverty. Postal financial services, in particular postal savings and third-party agency services offered by Post Offices on behalf of private and public enterprises, provide isolated communities with access to vital services and thereby contribute greatly to their economic and social development. The Russian example By adopting IFS (International Financial System) in 2003, the Russian Post was able to optimise its domestic electronic money transfer network, and at the same time computerize its international payments. In the first year of IFS operations, Russia saw the number of international electronic fund transfers grow from 400 to 80,000 a month. The country aims to reach two million international transactions per year by 2006. The introduction of IFS and the computerisation of domestic and international money transfer services have made it possible to improve the quality of services, cutting transfer times for international payments from 20 days to three. Russia has also increased its overall volume of exchanges, which rose from four to seven million electronic transactions a month, mostly at the domestic level. What is more, the Russian Post has made substantial savings on its production costs and reduced its rates as, at the same time, the installation of IFS gave it an opportunity to update its own technology and expand its range of financial services. Domestically, the Russian Post launched an electronic money order service called CyberDengi (dengi meaning money in Russian), which completely superseded the old paper money order service. Of the country’s 40,000 post offices, 3,500, in 84 regions, are equipped with terminals. The others send a paper form to the nearest office linked to the CyberDengi network for processing. All money transfers take place in a secure environment that makes use of advanced cryptology. Thanks to this new service, the cost of sending a money order in Russia has fallen by 35 per cent, with citizens paying between 1 per cent and 5 per cent of the amount of the transfer. Today, the Russian Post dominates the domestic money order market. According to experts, the Russian market is growing by 20 to 25 per cent a year. Postal money transfers and migration Post Offices worldwide perform some ten billion financial transactions a year, of which more than 1.5 billion involve money orders, amounting to more than US$130 billion per year. It is in this area, with money orders, that the postal network can make a difference. This is especially so at this time when the World Bank and G8 countries are addressing issues raised by international migration. According to the United Nations, migrant workers represent 3 per cent of the world population, and the statistics show that the number of money transfers by these workers continues to grow each year. According to a World Bank report, money transfers by migrant workers reached US$110 billion in 2004, an increase of 52 per cent from 2001. This transfer of funds represented 5 per cent of developing country imports and 8 per cent of domestic investment, making it the second largest source of investment in these countries after direct foreign investment. The World Bank also determined that international migration is one of the most important factors affecting economic relations between industrialised and developing countries in the new century. One study has shown that this phenomenon, combined with the resultant transfer of money, has had a statistically significant impact on poverty reduction in developing countries. The authors of this study, Richard H Adams Jr and John Page, maintain that “the remittances sent back home by these migrant workers have a profound impact on the living standards of people in the developing countries of Asia, Africa, Latin America and the Middle East”. Certain drawbacks remain, however, most notably the costs associated with money transfers. These costs are generally high, with charges on even the smallest transactions consuming as much as 20 per cent of the amount sent. With US$200 as the average amount transferred, persons sending these funds back home to help support their families need to be able to do so in the best, least costly, possible conditions. The postal solution The world postal network presents a solution to this problem and efforts continue to expand the postal financial network through IFS, a suite of applications that facilitates the electronic fund transfers between postal operators and even with certain banks. Easy access to money transfers at affordable rates addresses a key need for millions of people, especially migrant workers, and the postal sector has the capacity to respond to this need with its vast network and the new technologies being developed by the UPU for Post Offices in a spirit of cooperation and development. Some seven of the 30 countries that currently use IFS are from Eastern Europe. Money transfers generally take place within two days, in less than 12 hours if need be, reliably and securely. This suits most customers, especially those who do not need to send money immediately and wish to avoid the hefty charges for more rapid service. A connected future The postal financial network will continue to develop over the next few years. To this end, the UPU and Eurogiro, a network designed for low-cost funds transfers and money orders, have set up a gateway between their respective networks to facilitate the transmission of electronic money orders. This connection will significantly increase the number of countries that can receive money transfers between Post Post Offices and even with banks. At the end of 2005, the Ukrainian Post, which uses the IFS network, and the Portuguese Post, which is connected to Eurogiro, became the first postal administrations to exchange the Telemoney Order, the common product developed by the UPU and Eurogiro. One of the Universal Postal Union’s main goals is to help its member countries to develop their postal networks so that these may contribute, regionally, nationally and internationally, to the social development of citizens worldwide. New technologies have enabled national postal services to progress by leaps and bounds in recent years, and others are following suit. In the area of fund transfers, the UPU will continue to work with member countries and appropriate organisations to facilitate affordable money transfers.