Money transfer companies replace banks in crisis-ridden Lebanon
September 4, 2022 | 12:23 p.m.
BEIRUT, Lebanon – Like many people in crisis-ridden Lebanon, Elias Skaff used to wait hours to withdraw money from the bank, but now prefers money transfer companies because trust in lenders has evaporated.
Anyone who relies on traditional banks to receive their money will “die 100 times before they collect it”, said Skaff, 50, who survived Lebanon’s three-year economic downturn on US dollar payments from a relative to the stranger.
Once the flagship of the Lebanese economy, the banking sector is now widely despised and shunned after banks banned depositors from accessing their savings, stopped offering loans and closed hundreds of branches and cut thousands of jobs.
Last month, a local man was widely acclaimed as a folk hero after he stormed a Beirut bank with a gun and held employees and customers hostage for hours to demand part of his $200,000 frozen savings to pay his sick father’s hospital bills.
Increasingly, as Lebanon’s deep crisis shows no sign of easing, money transfer agencies are filling the void, also offering foreign exchange, credit card and tax payment services and even setting up wedding gift registries.
Skaff said he now receives his money through a Beirut branch of Western Union’s Lebanese agent, OMT, which says it operates more than 1,200 branches nationwide and handles 80% of money transfers outside the country. Lebanese banking sector.
“We are creating services similar to those that banks provide at the request of our customers,” said UNWTO spokesman Naji Abou Zeid.
Lebanon has been hit by its worst economic crisis since the financial sector collapsed in 2019. The local currency has lost more than 90% of its value on the black market, as poverty and unemployment soar .
Angry protesters have often targeted banks, ransacking their ATMs with rocks and spray cans.
“You can’t even withdraw a penny” from the bank, said Alaa Sheikhani, 45, a customer queuing at an OMT branch.
“How are we supposed to trust them with our money? »
Survive on remittances
Elie, 36, who recently married, said he used Whish Money, a Lebanese money transfer company, to set up his wedding gift list, which he says allowed guests to save time, hassle and money in fees.
“Rather than waiting for hours at the bank, which is often crowded, they can hand over the money to an agency,” said the man, who requested anonymity. “In terms of time and cost savings, it’s unmatched.”
Whish Money marketing director Dina Daher said the company wins customers by charging “zero fees” on Lebanese pound transfers.
Some companies now even pay salaries through money transfer companies instead of banks.
“When the crisis started, we were forced to pay salaries in cash, and it was a waste of time” because the accountants had to count large wads of banknotes, said Rachelle Bou Nader, resource manager human.
But now his company, sporting goods retailer Mike Sport, pays its employees through Whish, allowing them to “withdraw their salaries easily, in installments and for free”, Bou Nader said.
Sami Nader, director of the Levant Institute of Strategic Affairs, said remittances from the Lebanese diaspora have become crucial in helping families weather the crushing economic crisis.
“Today, a young Lebanese employee living abroad will not hesitate to send $100 to his parents because this sum now makes the difference,” he said.
Lebanese banks have dramatically increased fees on the few services they still offer – including foreign currency transfers, now their only significant source of income – said Nader, who added that this had further fueled the exodus to money transfer companies.
Around 250,000 residents of Lebanon received remittances in the first half of 2022, according to UNWTO, up 8% from the same period last year.
The World Bank reported that Lebanon received $6.6 billion in remittances in 2021, one of the highest levels in the Middle East and North Africa. – AFP / Elie Wehbe and Jonathan Sawaya