Western Union closes shop in Greece: Foreigners look for options
Global money-transfer giant Western Union has closed shop in Greece. This announcement came last week, and it says its services won't be available in the country for the near future.
"Due to restrictions imposed across the financial sector by the government, our services are not available at this time," Western Union's statement said.
Still, alternative money-transfer companies are permitting transfers into Greece. But there's a catch: some require astronomical fees that can be as much as 50 percent of the amount of money being transferred from abroad, according to a review by CNBC.com. Some fees are still as low as one percent, though, so it's importantto review what your fee will be before transferring.
A key differentiation between companies like Western Union and other global money-transfer services is the nature of how the transfers operate. Usually, higher speed transfers like wire or credit and debit transfers bear higher fees.
In the meantime, people seeking to transfer funds to their families and friends in Greece face an odd situation: Greek capital controls restrict the liquidity of funds coming in through international transfers. Some money-transfer disruptors and online services are providing relief, though, as they act as alternatives to the traditional money-transferring bureaus.
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TransferWise, a peer-to-peer money-transfer service comparable to MoneyCorp, fulfills transfers much like Western Union, but they seek to lower the fees that big banks and transfer bureaus charge.
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According to a spokeswoman for TransferWise, "the controls mean that all and any payments from Greece are on hold and subject to further notice." She followed up by saying they're monitoring the situation very closely.
TransferWise says that unlike Western Union, they will continue to process payments for people who are trying to send money to families and friends in Greece. Fees typically are 1 percent for transactions below $5,000 and 0.7 percent for amounts over that.
The company is able to keep costs low because it uses peer-to-peer technology to match customers with their counterpart abroad. It then uses free or extremely low-cost local bank account transfers so that money never crosses borders, avoiding the currency conversion fees banks charge. "Our priority is to keep our customers informed about the situation as it develops," said the spokeswoman.
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A spokesman for money-transfer company WorldFirst said it wouldn't matter if you transferred 60 euros or 60,000 euros to a family member.The money's liquidity would remain restricted for all Greek bank account holders because of a 60 euro-per-day withdrawal cap. These restrictions were designed to prevent a run on Greek banks that would be expected in a crisis like this. Since the weekend, some banks like the National Bank of Greece and Alpha Bank have opened up some of their branches to allow people to get their pension payments if they are without an ATM card, the Embassy of Greece said.
For weeks prior to the Greek cutoff, WorldFirst reported seeing billions of euros being transferred out of Greece. Western Union, however, said in its statement that it hadn't seen such a significant increase in funds being moved out of Greece in the two months prior to June 27.
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MoneyCorp, one of the alternative global money-transfer services that typically charges a fixed fee of either $8 or $15, says they're still sending funds to Greek banks if a client requests for them to do so. They do not, however, transfer funds with hard cash collection in a way that would be useful for sending money to family and friends. A spokesman for the company pointed out that unlike Western Union, they only send funds via wire transfer. Western Union offers a wire transfer with hard cash collection.
MoneyCorp also warns that ATMs in Greece could soon be running out of cash. The company encourages travelers to bring all of their euros from abroad rather than rely on withdrawing them from ATMs in Greece once they arrive.
Still other services have followed in Western Union's footsteps and cut off all money-transfer services in Greece. MoneyGram International is one such company that has suspended their services in accordance with the government bank holiday. A company spokesman for MoneyGram International said the company looks forward to reinstating services in Greece as soon as possible.
"We are working alongside our agents to assist our customers in Greece and around the world who are affected by this situation," MoneyGram International's spokesman said.
According to the Embassy of Greece, money transfers from abroad to accounts in Greek banks are still available. Transfers can be made through an American bank, and they will take the usual time to be credited to the account, which is around one to four days.
The embassy warned, however, that the recipient in Greece cannot withdraw the money all together. Given the current situation, Greek account holders cannot withdraw any amount greater than 60 euros in one day.
All transactions from Greece have been stopped by Greek government controls. This restriction applies equally for all payment service providers.
The Embassy of Greece said that holders of foreign debit cards in Greece still have no limit on their withdrawals. Holders of foreign credit cards in Greece can use their credit cards as well.
Western Union declined further comment on why they decided to close for the week in Greece.
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—By Andrew Wood, special to CNBC.com