TMCnet Feature
September 28, 2022

Transferring Money to the Philippines: Ways and Challenges

A company based in the United Arab Emirates that must augment its staff can hire employees and freelancers overseas and let them work remotely.

The Philippines can be a particularly good outsourcing destination. Filipinos have a good command of the English language, and the lower cost of living means organizations can take advantage of geographic pay differentials. Also, around 1.5 million Filipinos are already working on international freelancing platforms, so remote work is nothing new.

Naturally, there are operational challenges that need to be resolved in remote work arrangements, such as how to transfer money to the Philippines so companies can pay their remote workforce their wages.

This write-up discusses the ways and challenges of transferring money from the UAE to the Philippines for the benefit of UAE companies looking to hire remote employees in or outsource to the Philippines.

The Challenges of Transferring Money to Remote Workers in the Philippines

Remote employees from the Philippines (and elsewhere) want to be paid exactly as agreed, on time, and in readily usable currency.

If their employment agreement says they're to receive their salary every first and sixteenth of the month, they expect their pay to be available on these dates. These are not supposed to be pay disbursement dates, after which their wages must undergo a few days' processing and clearing before they eventually become available to the employees.

Even though they're working for a UAE employer, remote employees probably prefer it if they receive their salary in the local currency. Thus, it’s best if a company that pays in Emirati dirhams or U.S. dollars uses a remittance service that automatically converts these currencies into Philippine pesos. This lets employees bypass foreign currency exchange fees, which can significantly diminish their pay.

Remote employees naturally want to receive the amount stated in their employment or outsourcing contract. They don't want their pay reduced by transfer fees, and they don't want to lose a significant portion of their hard-earned money to remittance companies' foreign exchange margins.

If their contract says their salary is PHP 60,000 per month, they assume they will receive that amount, not two hundred, one hundred, or even one peso less than what’s stated in the employment agreement.

Circumventing Logistical Challenges

It is evident that there’s room for improvement in the default online payment methods that organizations typically use when transferring payments to remote employees and freelancers.

First, employers must absorb the remittance service and foreign transaction costs involved in money transfers from the UAE to the Philippines. This will ensure employees can receive their full pay, undiminished by fees.

This is contrary to what usually happens when companies use the popular online digital wallet payment options. While employees can see their salary reflected in their digital wallet account immediately upon transfer, they are usually unable to use the money as it is unless they shop in international sites that accept this wallet as a funding source. Thus, they have to perform an additional step: withdraw their money from their digital account to their linked bank account.

Herein lies the problem, for such a process typically involves a delay of a few banking days plus (what can be) punitive transaction and service fees. These are a significant deduction in a country where three UAE dirhams can buy a kilogram of rice.

Second, UAE employers must pay their remote employees in a way that is convenient. This can be done through cash-to-cash or cash-to-bank payments. In either case, the transfer recipients do not need to transfer money from their digital account to a linked bank account.

Third, money transfers should be as fast as possible to ensure timely receipt. Employees expect their salaries on the day they're supposed to get them. Seeing their money in their bank account balance or digital wallet account wouldn't do much good if they cannot use it on the day they're supposed to have it on hand.

Finally, the needs of employers must also be considered. If employers are going to bear the cost of transfers, then transfer and service fees must be reasonable and as low as possible to minimize costs. Additionally, the remittance partner must offer various transfer and funding mechanisms.

For instance, a mobile remittance app lets an employer create a virtual wallet that they can link to various funding sources, particularly the company payroll account. With a few taps, employers can fund their accounts and transfer money to their remote workforce.

Options for Remitting Pay to Remote Employees in the Philippines

Remittance service providers provide multiple ways for UAE individuals and organizations to transfer money to the Philippines. The following are examples of such options.

Instant Money Transfer

Using this transfer mode, a UAE employer can disburse payments on the day employees expect their pay. Employees can receive the money within minutes, with virtually no delay.

Instant cash remittances can be cash-to-cash or cash-to-bank.

In the former case, the recipient can pick up the remittance from a bank or a cash pick-up tie-up agent.

For instance, money sent by someone from the UAE through Al Ansari Exchange’s instant money transfer service can be picked up or claimed from one of the over 10,000 Western Union (News - Alert) sub-agents in the Philippines. In the latter case, the remittance is automatically credited to the recipient's bank account.

Telegraphic Transfer

Telegraphic transfer, also known as bank transfer, remains an option. It is a safe and secure money transfer method because it transmits money directly into the employees' bank accounts. The money transferred is in the local currency and readily usable through a debit card attached to the account or withdrawal from an automated teller machine (ATM).

Of course, the telegraphic money transfer process typically takes a few to several days. However, by minding processing timeframes, employers can ensure timely transfers.

Door to Door

There's also a door-to-door cash delivery option. A last-mile logistics company delivers the remittance, in person, to the recipients' addresses. This can take a few days, but it's a convenient option for remote employees who'd rather receive their cash at home than pick it up from a sub-agent.

Money Transfer Options: Enablers of Remote Staffing

A company can grow quickly and cost efficiently by hiring remote employees in the Philippines.

Money transfer options help by providing employers with a way to pay their remote workforce, thereby cementing their crucial role in enabling remote staffing and outsourcing arrangements.

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