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TomG

Jun 6, 2004, 6:47 AM

Post #1 of 7 (695 views)

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The remissions trail attracts bigshot attention

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Next week, for the first time, heads of state of the world's wealthiest nations plan to discuss remittances, in a belated acknowledgment of their huge role in providing aid to the poor.
Those small bundles of money add up to one of the biggest transfers of wealth from rich countries to poor ones. The global remittance market may be as much as $150 billion annually, triple the development aid given by the wealthy nations to the poor and, in many countries, far more than direct foreign investment.

http://www.nytimes.com/...ourmoney/06view.html

President Bush and the other leaders from the Group of 8 industrialized nations intend to discuss ways to reduce the cost for legal & illegal immigrants to send money to their home countries (Mexico being the largest recipient). This could be an advance warning to sell your Western Union stock. It also might infringe on Gloria’s mom’s grassroots courier business between Zacatecas and Postville. I noticed recently she had her hair cut short and tinted, a sign of increasing prosperity among Mexican women up north. It means they can afford to dump a nice chunk of money into a hole on a regular basis. It is much more readable than a closet full of shoes.
What G-8 probably won’t be discussing are ways to keep their relatives back home from fleecing them with various construction schemes, imagined medical problems, fiestas, and the like.

The scale of the remissions is big enough to warrant a personal finance industry in the home country. In one case it is now kept in a wooden box under a relative’s bed. The relative supposedly puts handwritten notes in the box if they take any money out for personal use.

Jun 6, 2004, 10:59 PM

Post #2 of 7 (612 views)

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Re: [TomG] The remissions trail attracts bigshot attention

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TomG writes:
....President Bush and the other leaders from the Group of 8 industrialized nations intend to discuss ways to reduce the cost for legal & illegal immigrants to send money to their home countries (Mexico being the largest recipient).....

I suspect you're looking at things with too Mexico-centric of a viewpoint -- here's some data from a presentation made last year by Manuel Orozco, the consultant/researcher quoted in the NY Times article:

Cash-volume wise, Mexico is the largest recipient of remittances from the United States. However in the G-8 arena, it is in a three-way tie for second place, accounting for 8% of the total worldwide remittance flow in 2000, with the same volume of money flowing back to the Phillipines and China. India occupies position number 1 with a whopping 15% share.

Additionally, from the G-8 standpoint, cash-volume may be of secondary importance (the NYT article does make mention of the discussions including ways to reduce the costs of sending money), with the impact of the money on the recipient country being of more of a G-8-interest. In this sense Mexico would fall further in terms of interest/impacts of discussions and future actions as remittances equated 1.7% of the Mexican GDP in 2002, in contrast to Haiti, Nicaragua, and Jamaica where in the same year remittances equated 24.5%, 22%, and 15% of the country's GDPs, respectively. In such cases, the aggregate (v. individual) impact of changes such as the freeing up of additional money previously consumed in fees could be expected to be greater.

Finally, although anybody who's sent money to Mexico is still probably feeling a bit raw around the backside, the fees and exchange rate discounts levied on transfers to Mexico actually fall into the bottom half of the pack. Total costs in November 2002 ranged from $11.88 to $25 USD for a $200 USD transfer made to various Central and South American and Caribbean nations. Most expensive were Cuba and Venezuela at the $25 point, Ecuador came in the cheapest, and Mexico came in at $15.45.

alex .

Jun 7, 2004, 4:25 PM

Post #3 of 7 (549 views)

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Re: personal cash xfers to Mexico

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Yea, the money xfer houses get ya good. For years now I have used this system to send $ to my mother-in-law: I opened a US bank account, sent the ATM card via Estafeta to her home town, followed up the receipt of the card with a phone call to reveal the PIN number. She can withdrawl from any convenient ATM , say, 2000 pesos with a cost to me of 20 pesos, less than 2 bucks. I recharge the account in the US with dollars, she takes it out in pesos at a favorable exchange rate.
Alex

raferguson

Jun 7, 2004, 9:04 PM

Post #4 of 7 (504 views)

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Re: [alex .] personal cash xfers to Mexico

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Interesting thread. I did not realize that remittances were such a large part of the economy in some countries. Obviously the remittances are important in Mexico, especially in the rural areas where many of the residents have family up north. When I was in Spain, I noticed ads for money transfer in Arabic, for people sending money home to north Africa. This is a global phenomena.

Alex has the cheapest money transfer figured out, the ATM card, very low costs and favorable exchange rate. The tourists figured this out years ago. Mastercard charges 1% for foreign exchange, which is not bad, although some credit cards add additional charges.

Richard

http://www.fergusonsculpture.com

TomG

Jun 9, 2004, 8:06 PM

Post #5 of 7 (417 views)

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Re: [alex .] personal cash xfers to Mexico

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I've recommended this to a number of immigrants in th USA and their families in Mexico. Their fear of banks in the USA is subsiding rapidly. At the 5 Mayo fiesta after Mass here a local bank (that used to turn folks away) set up a stand where a few bank employees spent hours putting cute body painted butterflys and the like on everybody's kids (no SS requried).

sfmacaws

Jun 10, 2004, 12:38 AM

Post #6 of 7 (397 views)

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Re: [TomG] personal cash xfers to Mexico

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I think the ATM method is gaining ground in some areas of Mexico. Last fall when we were in El Fuerte, Sinaloa I was in the bank in line for the ATM behind 5 or 6 older indian women. They all had ATM cards but I don't think any of them could read. Interestingly, the woman who was mopping the lobby of the bank went over and took each womans card in turn, entered the pin and pushed all the buttons. They each got what looked like a couple hundred pesos and left. When I got to the front of the line she offered to help me as well but I declined. It didn't look to me like she was receiving any money from them but I couldn't really tell.

Jonna - Mérida, Yucatán

Georgia

Jun 11, 2004, 2:06 AM

Post #7 of 7 (322 views)

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Re: [sfmacaws] personal cash xfers to Mexico

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Some north american banks offer cards specifically intended to transfer cash from the US to relatives in Mexico.

Mexicans have discovered the ultimate benefit of the ATM machine: payroll problem solved. Since Mexico has a basically cash society, employers, large and small, pay their employees in cash. This presented a security problem: payrolls got robbed. So, ATM cards are issued to employees and a sufficient amount for their pay is available each week. The worker goes to his/her ATM machine and gets paid in this way. Security problem solved.

When I am in the US and my caretaker and maid need to be paid, this is how I deal with the problem: I have an account set up solely for that purpose. The caretaker withdraws his and the maid's (his daughter in law) pay each week at the local ATM. Very efficient. He has his own ATM card on my account - which has only sufficient cash to pay him and the maid, and, as needed, utility bills. He withdraws the needed amount, staples the bill and paid receipt to the ATM receipt after he pays the bill. Instant book keeping.