Returning the love:
Many Immigrants Send Money Back Home Rather Than Keep It In Local Banks
Traditional banks are beginning to offer more services to the growing immigrant population of Queens. Tribune Photo by Ira Cohen
By Andrew Moesel
Blanca Azucena, an Ecuadorian immigrant who now lives near Roosevelt Avenue, stood in line at a local check cashing establishment months ago waiting to turn her white and blue paycheck into cool green. She says it’s expensive, and sometimes there are charges she doesn’t understand, but there are no banks near her that offer an alternative.
But that could soon change. Banks and other businesses that handle financial services are scrambling to develop services that will appeal to the growing population of immigrants in New York and around the country, a rapidly growing segment of the population that already generates billions of dollars in revenue each year.
Who Needs A Bank?
Recent studies have shown that as much as 13 percent of American fall in a category that has been termed, “underbanked,” people who do not have adequate access to traditional financial services.
Immigrants, especially the Hispanic community, make up a large portion of the underbanked category, experts say. Most either lack the proper documentation to acquire a bank account or simply are unfamiliar or distrustful of the banking system.
Teresa Garcia, development director for Teteyac, an organization that supports the Mexican community in New York City, said that some new immigrants literally store thousands of dollars under their mattresses or elsewhere hidden in their homes, leading to extraordinary risk of theft. Handing money over to another institution is at first uncomfortable for them, Garcia said, though they slowly realize their money will be available when they need it.
“We have to educate people. The most frequent question we get is, ‘will the bank be the owner of my money.’ We tell them this is America, you have the chance to go to the bank and get their money back,” Garcia said. “In Mexico, banking is just for rich people. Most people don’t have checking or savings accounts.”
Without accounts, immigrants are forced to visit check-cashing establishments that charge much higher fees for their services, said Mark Ritta, executive vice president of New York Community Bank. Moreover, by essentially advertising that customers are leaving with their wallets full of cash, the underbanked become potential targets for crime, he said.
Help Is Out There
To cater to this growing group of new working class Americans, NYCB is developing a program that will allow companies to pay employees through a special Visa card in lieu of a paycheck. Workers’ salaries will be directly deposited into accounts that function much like a debit card. Participants can then either charge purchases on the card or withdraw money from any ATM.
While not an official checking account, nor a free service, the “Safe Pay,” card will open opportunities for people who have been shut out of the banking community for bad credit history or insufficient documentation, Ritta said.
“Working class immigrants will have a big pull on this, but it’s also for all employees, and employers whose employees don’t have checking accounts,” he said.
Additional cards can also be sent to family members back home, allowing money to be wired directly to them, Ritta said.
The remittance business has become a new focus of many banks as an increasing number of immigrants continue to support their families after coming to America. Last year, workers in the United States sent $32 billion home to Latin America, according to the Inter-American Development Bank, the Atlanta Journal-Constitution reported.
Check cashing shops offer quick access to cash and enable immigrants to send money from the same location. Tribune Photo by Ira Cohen
The U.S. Post Office has offered wire services to Mexico since 1996, but just announced it would extend those services to countries such as the Dominican Republic, Columbia, El Salvador and Ecuador, among others, according to Toy Gaynor, a spokesperson there.
Citibank, Federal Reserve, and Wachovia have all initiated programs in recent years to make it easier to transfer money overseas. These industry giants are trying to undercut the price of conventional wire stores such as Western Union, which sometimes take considerable percentages of cash transactions and offer poor exchange rates.
Still Not Perfect
Although banks are reaching out on this side of the border, sending money remains difficult when banks in other countries are still scarce in rural areas, Garcia said. Many families are hundreds of miles from a post office or bank branch, meaning expenses services are still needed to deliver the money directly to the recipient, she said.
Most immigrants are happy to pay for such services, as long as they know their families are safely receiving the financial help they need.
“I don’t know what the commission is, and I don’t care,” said Giovanni Morales, as he stood in line at the check-cashing store. “I have a bank account, but I need to send this quickly.”