While peaking in 2006, Polish emigration has been in the tens of thousands for many years. With historically lower wages than western, northern, and Central Europe, predominantly male Polish workers sought overseas jobs to increase their income.
As of 2019, remittance inflows into Poland represented over 1% of the nation’s GDP. Personal remittance has remained at a steady US$6-7 billion according to World Bank data. However, this data is denominated in USD, and the Polish Zloty has halved in value since 2008. When factoring this in, remittances received in Poland have been increasing over time.
Of the estimated ~2.5 million Polish citizens that live outside of Poland, around a million were living in the UK as of 2008. While this figure has come down gradually since Brexit, the emigration into the UK was a steady increase for a number of years, whereby small Polish subcommunities were formed inside British cities.
The UK-Poland corridor is of a major flow of money. Being a common route, market participants become familiar with the cheapest route, more educated on what a fair fee is for remittance, and thus competition is encouraged.
When looking at the costs of sending money from the UK to Poland in Q1 of 2009, the typical options were more limited. A 3% fee was at the lower range, meanwhile high street options such as Western Union and MoneyGram were charging almost 10%. Ultimately, a £105 transfer would result in a total cost (including the exchange rate margin) typically between £4.39 and £10.38.
These options meant that the recipient would either receive their funds via a bank account or in cash. Overtime, technology improved, as did efficiencies and remittance infrastructure. Today, the total cost of MoneyGram and Western Union when sending from the UK to Poland via bank account is between £1.43 and £1.97. This highlights that ultimately, the technology within these companies became more capable, despite Brexit and some instances of falling demand.
A recent study by TopMoneyCompare shows that, despite falling remittance from among specialist companies, UK banks remain to be very expensive. In an instance of sending £200 from the UK to Poland, up to £25 in wire fees can be incurred, along with a 2-2.5% markup.
This was also the case 15 years ago, which is why Western Union was still being used despite their high fees. It appears that banks have been left behind in a refusal to compete with the bright fintech alternatives that are now gaining market share.
For comparison, Wise (Formerly TransferWise) charges a £0.86 fee on a £200 transfer. Both the exchange rate and fee are shown to be more competitive than UK high street banks, while many customers will argue they prefer the service, too.
It’s not only Wise that charges a low rate, with Xe and Instarem charging zero fees, but an exchange rate margin of 0.82% and 0.84% respectively. Ultimately, there are several services on today’s market that can facilitate a GBP to zł transfer for under 1% when combining the exchange rate margin with the fee.
This is also the case with corridors such as the Eurozone to Poland, particularly as volume is high as it accounts for Polish emigrants in many European nations.
In summary, Brexit has put a halt on the historical growth of Polish emigration into the UK. Current reports show that the Polish economy is going from strength to strength, which may help the brain drain. Nevertheless, remittance back to Poland remains high, and this demand is the cause of innovation among remittance specialists to compete on price.