WASHINGTON – If a report from a major international lending organization proves true, immigrants to the U.S. will send home over $30 billion in 2004, representing both an opportunity and strong need for a credit union presence. The forecast came from U.S Census data and a survey commissioned by the Multilateral Investment Fund of the Inter-American Development Bank. The IDB is the leading multinational financial institution for 26 nations in Latin America and the Caribbean. The report has served to put into hard numbers a trend that many people had discussed previously but had not quantified. "We are very confident of our survey," said Peter Bate, media liaison for the bank. "The firm we used has conducted other surveys for us and is trusted by the communities where they are surveying." Aside from the surprising remittance volume, the report also revealed some new things about the states from which the remittances come. For example, the states which will send more than $1 billion include some expected names – California, Texas, and Florida. But the report forecast that immigrants in Illinois, New Jersey and New York will also send more than $1 billion home, and another tier of states including Georgia, Virginia, Colorado and Washington have immigrant residents who will send another more than $350 million per state back to their home countries. "It's really difficult to overstate how important this flow of money really is," explained Bate. "The amount of money sent in remittances represents more money than is directly invested in these countries and more than is given in foreign aid combined. And because it's coming from one person to one person, we can be assured that it is making its way to the people poor people who need it the most." The countries that receive the funds are from all over Latin and Central America, ranging from the relatively small Uruguay which received $42 million from remittances in 2003 to Mexico which received over $13 billion. The study found that 10 million immigrants from Latin America send money home. On average 61% send money at least once a month or more, and another 21% send money every two or three months. The survey also found that the greatest percentage of immigrants that send money home have been doing so for at least five years, representing, Bate speculated, that it was the immigrants who had managed to get themselves somewhat more established in the U.S. and made enough money to send some home. Significantly, the survey also found that only 1% of immigrants that send money home will do so using a credit union. Credit union remittances trail those sent through money transfer companies (78%), those carried by travelers (11%), those sent through a U.S. bank (7%), and those sent by mail (2%). John Herrera, vice president with the $15 million Latino Community Credit Union, headquartered in Durham, North Carolina, said that he was not surprised by the figure and explained that even his credit union, which is the credit union leader in remittances around the country, will send only 1% of the $833 million that North Carolina immigrants will likely send this year. Herrera attributed the gap to the relatively small number of credit unions that offer remittances and to a lack of understanding of the Hispanic market, for remittances and for other products as well. "For example, remittances," Herrera said. "Most remittances are sent on weekends and when are credit unions open? Usually not on weekends. Also, credit unions need to provide some bi-lingual tellers or have bi-lingual personnel on hand to answer questions and help reassure the people coming in to send the money." Herrera said that LCCU doesn't have weekend hours, but it does have late hours on Fridays and Mondays to try to capture the heavy payday remittance demand – and other demand as well. "So many credit unions need to understand that sure, some money is sent in remittances, but the bulk of the immigrants' money stays right here, in this country. We will do two or three transactions with a member on a Friday. Maybe they need to wire money but they also need to pay some on a loan and to put some into savings," he said. Currently 225 credit unions are members of the World Council of Credit Unions' IRnet, the network which enables credit unions to send remittances to 35 nations around the world, most in Central and Latin America. According to David Grace, senior manager of association services for WOCCU, credit unions sent $190 million through IRnet in 2003 and expect to do more this year, but even if the number of credit unions participating in IRnet grew by ten times it's not necessarily a given that money sent would increase dramatically. That's because in many countries the basic infrastructure to receive the remittances at credit unions and other locations simply doesn't exist, according to Herrera, or if it does exist it needs to be relieved of regulatory problems or simply enhanced. "For example in Mexico it was not until just two years ago that credit unions could even accept remittances," Herrera said. "And in Mexico, 75% of the people are still unbanked. Nobody can match Western Union for the network they have of places you can wire money and that's why they can charge and arm and a leg to do it." But as discouraging as the current situation might appear, the Western Union dominance is part of the reason the costs of remittances have been hard to cut and why credit unions should persevere, Herrera explained. "There are many steps along the way and each can charge a fee," he said. "But credit unions are not like that. We seek to simplify the process and remove as many steps as possible where a fee needs to be charged. By partnering with Vigo [the firm which provides network support for IRnet] we can offer a better price and build a relationship as well." The key, Herrera said, is for U.S. credit unions to get over their fear and get involved with the effort. This most recent report should bring home to every credit union that, no matter where they are in the U.S., they probably have immigrants nearby who need remittances and credit union services, he said. "Until we do that, Western Union is just going to keep having a fiesta at people's expense," he said. -

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