November 25, 2003
Immigrants' cash
clout - Remittances boost wire-transfer
services, Latin economies
By Louis Aguilar,
Denver Post Business Writer
Latino immigrants
will send $30 billion to their families
in Latin America this year, making entire
economies dependent on so-called
remittances, according to a study
released Monday.
The 20 percent
increase in remittances over last year
illustrates the dramatic expansion of
wire-transfer companies such as
Denver-based Western Union and dozens of U.S.
banks now catering to immigrants.
While the money
provides critical support for Latin
Americans, even one of the report's
authors says it is a troubling trend. The
report was released Monday by the Pew Hispanic
Center, a Washington research
organization, and Inter-American
Development Bank.
Most of the money
comes from the working-class wages of
such people as Arturo Rivera, 36, who
lives in Colorado Springs. For the past
10 years, he and his two brothers have
scraped together $500 every two weeks to
send to their parents in Mexico.
"I want my
parents to survive," Rivera said.
"Last year, we paid for my father's
(stomach) surgery."
Sending money back
is so common in Rivera's hometown, that
he and other expatriates are raising
$10,000 to build a high school there.
Rivera, a construction company owner,
also serves on a advisory committee to
the Mexican government that deals with
how such money is spent.
Immigrants make up
34 percent of Colorado's Hispanic
population. There were about 736,000
Hispanics in Colorado in 2000, according
to the U.S. Census Bureau.
Mexican immigrants
across the United States sent home more
than $1 billion every month this year,
according to the study.
That's double the
amount sent five years ago, and the total
exceeds the value of tourism or
agriculture as a source of foreign income
for Mexico, the study said.
As a whole,
remittances account for half of direct
foreign investment in Latin America, the
study said.
In El Salvador,
remittances account for about 15 percent
of the country's gross domestic product.
About 14 percent of Ecuador's adult
population gets money from relatives
living in the United States.
Remittances generate
millions in fees for wire-transfer
companies such as Western Union. And it
is causing dozens of other U.S. financial
institutions to embrace consular cards,
the sometimes controversial
identification card issued by Mexican
consulates.
"This is
nothing to celebrate," said Roberto
Suro, director of the Pew Hispanic Center.
"The study forcefully shows the
imbalance of cyclical market forces.
"It wasn't that
long ago that a way many sent money back
was (by) a guy coming around who
collected money from people here and then
carried it across the border," Suro
said. "What's different now is the
process is far more formalized."
Western Union began
that formalized campaign about 10 years
ago, although it has been offering
wire-transfer services to Mexico for more
than 100 years.
But in the past
decade, Western Union made a concerted
effort to become a global company and now
has some 18,000 stations throughout Latin
America, according to Wendy
Carver-Herbert, a Western Union
spokeswoman.
Last year, Western
Union's parent company, First Data,
reported net income of $1.27 billion.
Last quarter, Western Union's
money-transfer business increased 20
percent.
But U.S. banks
forging alliances with Latin American
counterparts are challenging Western
Union for business.
These agreements
allow Latino immigrants to open U.S. bank
accounts that their relatives abroad can
access through automated teller machines
and other agreements. About 11 percent of
Latin American remittances go through
banks, the Pew study said.
In Colorado, about a
dozen financial institutions allow
immigrants to use Mexican consular cards
as a proper form of identification to
open a bank account.
That has raised the
ire of some political figures.
"In this time
of terrorism, it's absolutely unpatriotic
to open accounts on an unsecure form of
identification," said Dick Lamm, the
former Colorado governor, who is active
in immigration issues. "The same
thing that a sympathetic hard-working
illegal alien can utilize can be utilized
by a terrorist."
Wells Fargo began
accepting Mexican consular cards as ID
two years ago. Since then, about 250,000
Mexican immigrants have opened Wells
Fargo accounts nationwide.
"We have not
experienced an unusual risk," said
Daniel Ayala, senior vice president of
cross-border payments for Wells Fargo.
"We monitor closely (immigrant)
accounts, just as we do all accounts.
There has been no significant difference
in risk."
Article URL:
http://www.denverpost.com/Stories/0,1413,36%7E33%7E1788857,00.html
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