UAE exchange houses outside malls to remain open
Osama Al Rahma of the Foreign Exchange and Remittance Group said such services are important for salaries and remittances
Branches of UAE exchange houses outside malls will remain open, unless the government directs otherwise, the vice chairman of the Foreign Exchange and Remittance Group (FERG) said.
On Monday, the UAE government urged all residents to stay in their homes unless "absolutely necessary" to contain the spread of Covid-19. It also said all shopping malls and markets, with the exception of supermarkets and pharmacies, would be closed within 48 hours.
Mall branches of banks and exchange houses are included in the closures, but ATM services remain operational.
“We understand that this precautionary measure is needed,” Mr Al Rahma, who is also chief executive of Al Fardan Exchange, told The National.
FERG represents more than 70 exchange houses in the UAE. Mr Al Rahma said outlets outside of malls would remain open “as of now” to continue offering remittance services and salary distribution.
“In my understanding we should be treated like other important outlets which remain open like pharmacies or supermarkets, so we can continue serving this large community,” he said.
The UAE had the second-highest amount of outward remittances in the world after the US in 2017, according to World Bank data. Total outward remittances in 2018 from the Emirates totalled Dh169.2 billion ($46bn), according to the Central Bank of the UAE. The vast majority is transferred through exchange houses, rather than banks.
Countries around the world have been taking strict measures to contain the coronavirus outbreak, including imposing travel bans and home quarantines, and closing schools, businesses, restaurants and public places.
Worldwide there are more than 420,000 confirmed cases of Covid-19 with deaths exceeding 18,900, according to Johns Hopkins University as of Wednesday. About 108,000 have recovered. In the UAE, there are 248 cases with two deaths and 45 recoveries.
Mr Al Rahma said exchange houses, like many other businesses, have been hit hard due to social distancing measures and travel restrictions. UAE exchange houses rely heavily on tourists and so far have “seen a reduction of business of more than 50 to 60 per cent”, he said.
Some of the exchange houses have 20 to 40 per cent of their branches in shopping malls. Mr Al Rahma said Al Fardan employees who work in mall branches will be sent home with two weeks temporary paid leave.
Prior to the challenges posed by the coronavirus outbreak, money transfer companies in the Emirates were making efforts to expand digital services. For example, Western Union, which has more than 900 retail agent locations in the UAE, rolled out its mobile app and updated its online platform in association with local partner Al Fardan Exchange last April.
UAE FinTech start-ups have also entered the market in recent years to fill the gap for low-cost, digital money transfer services.
The main challenge for us in the remittance industry more widely is going to be when the effects of the crisis start to come through to companies not paying salaries.
Ian Dillon, founder of Now Money
Denarii Cash, a remittance app focused on Filipino expatriates sending money home from the Gulf, has had a huge spike in users in the past couple of weeks. Founder Jon Santillan said the number has shot up from 20,000 users in December to 527,000 users currently. The first money transfer is free, while subsequent fees are between Dh13 and Dh15.
Mr Santillan said he attributes the sudden growth to “hesitation to go out due to rising panic brought up by the pandemic”, the mandate by the government to stay at home and the suspension of UAE Exchange’s operations.
The Central Bank stepped in to oversee the operations of UAE Exchange last week after parent company Finablr appointed an accountancy consultancy to undertake “rapid contingency” planning for an insolvency process. UAE Exchange issued a statement on March 16 saying "due to certain operational challenges, we are temporarily not accepting any new transactions at UAE Exchange branches and via our online channels".
Low-income and modest-income employees, in particular, are in need of online options. Almost 70 per cent of the UAE’s working population earns below Dh5,000, said Milind Singh, co-founder of Rise, a FinTech platform that offers financial products and services for modest-income migrants. Most do not have a bank account and are paid using Wage Payroll System (WPS) cards, which usually involves withdrawing funds in person and physically remitting cash.
Payment services app Now Money allows employers to deposit salaries into the digital accounts of employees, who can then send money back to their families. Founder Ian Dillon said the app, which has a few thousand customers, has seen “big growth in remittances in the last few months”.
Now Money saw month-on-month remittances grow 31 per cent in January and 46 per cent in February. There has been 20 per cent growth so far this month.
However, Mr Dillon said the real issues will come later. “The main challenge for us in the remittance industry more widely is going to be when the effects of the crisis start to come through to companies not paying salaries because obviously employees are only remitting whatever they get paid in salaries,” he said.
Updated: March 25, 2020 09:28 AM