MICROCAPITAL BRIEF: Colombian Government Seeks to Reduce Cost of Remittances

The Colombian government reportedly has announced that it is seeking to reduce the cost of remittance services under its Financial Inclusion Law by encouraging the creation of new financial institutions called Specialized Partnerships in Electronic Deposits and Payments. These institutions would provide services such as utility payments, remittance services and internet payments. Customers often are charged between COP 7,500 (USD 3.8) and COP 9,900 (USD 5.1) for transferring COP 100,000 (USD 51); according to a statement attributed to Mauricio Cardenas, the Minister of Treasury and Public Credit, it is hoped that the partnerships would offer pricing as low as COP 1,000 (USD 0.51) for transfers under COP 1.8 million (USD 930). Banks, remittances companies and individuals are being encouraged to set up the Specialized Partnerships in Electronic Deposits and Payments, which must hold capital of at least COP 5.8 billion (USD 2.9 million). This is approximately 10 percent of the capital required for banks.

In addition to the Ministry of Treasury and Public Credit, the coordinator of macroeconomic and fiscal policies in the country, this initiative is supported by the Ministry of Information Technologies and Communications, the entity in charge of telecommunications regulation in the country.

By Juan Blanco, Research Associate

Sources and Additional Resources

[1] La Republica, “Inclusión financiera a bajo costo para 20 millones de colombianos,” April 2014, http://www.larepublica.co/inclusión-financiera-bajo-costo-para-20-millones-de-colombianos_112246

MicroCapital Story, September 5, 2013, “YellowPepper Launches Mobile Payments System in Colombia,” https://www.microcapital.org/microcapital-brief-yellowpepper-launches-mobile-payments-system-in-colombia/

MicroCapital Story, March 23, 2011, “Multilateral Investment Fund (MIF) Forecasts Remittances Will Rise in Latin America, Caribbean,” https://www.microcapital.org/microcapital-brief-multilateral-investment-fund-mif-forecasts-remittances-will-rise-in-latin-america-caribbean/

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