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Westpac targets transfer business after closing remitter accounts

Published 06/05/2016, 12:34 pm
© Reuters.  Westpac targets transfer business after closing remitter accounts
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By Swati Pandey

SYDNEY, May 6 (Reuters) - Westpac Banking Corp WBC.AX , Australia's No.3 lender, will launch a new money transfer service in June, according to a letter seen by Reuters, more than a year after it forced several remitters out of business by closing their bank accounts.

Westpac became the last lender to stop banking with money transfer operators, or remitters, in 2015 citing growing compliance costs and concerns the money could be used for laundering or terrorism financing.

Aside from competing with money wiring giants such as Western Union WU.N and Moneygram MGI.O , Westpac is now positioning itself to rival digital money transfer companies including PayPal Holdings PYPL.O that are rushing to grab a share of Australia's $35 billion remittance market. an email sent to customers, Westpac said it was introducing a new service for international payments called LitePay International, allowing payments of under A$3,000 ($2,239) from transaction and savings accounts to some eligible countries within two banking days.

The service will initially be available to the Philippines with a A$5 payment fee and additional countries will be available in "due course," according to the email.

The fee is much lower than usual bank fees of up to A$30. Even so, digital remitters able to transfer money in real-time will still have an edge.

A Westpac spokeswoman declined to comment.

There are 236,400 Filipinos living in Australia - one of the largest migrant populations in the country, according to government data. One in four Australians was born overseas.

The major banks' decision to close remittance agencies' accounts - affecting the majority of Australia's roughly 500 money-transfer operators - raised fears the business would drift underground. September last year, MP Craig Kelly told the parliament the move by banks was a way to thwart competition so they could get the business left by remitters that were forced shut.

($1 = 1.3398 Australian dollars)

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