April 9, 1999
Sacramento Individuals can now feel safe that more of their hard earned dollars will end up in their families pockets when they send money home to Mexico.
Using a new pilot link with Mexico opened by Assembly Speaker Antonio R. Villaraigosa and officials from the California Credit Union League, the World Council of Credit Unions, Caja Popular Mexicana and the Heritage Community Credit Union, credit union members can wire money from their own branch in California to credit unions in Mexico for just $6.50.
The new link is part of the credit unions' International Remittance Network (IRNet). It is building on a practice with a long history among immigrants to the United States using wire transfers or courier services to send earnings to family members in another country.
"People come to the United States to work hard to support their families here as well as back home," said Assembly Speaker Villaraigosa. "Families are forced to depend on the reliability and affordability of the various money transfer systems available. When it costs anywhere from 10-30% of a paycheck to send it across the border, something is clearly wrong with the system.
"This program will provide an important electronic link to ensure that the dollars sent are actually received at the other end of the transaction."
The first transmission of this pilot program from Sacramento was from Heritage Community Credit Union to the Caja Popular Mexicana in Purandiro, Michoacan, Mexico. The flat transmission fee was $6.50.
"We've taken advantage of improvements in technology and security to put together a secure and fairly priced alternative to the high fees charged by wire transfer outlets," said Bob Arnould, Vice President of the California Credit Union League. "This service can save valuable dollar for families who depend on each of those dollars to provide for their families' food, housing and medical care."
A pilot program for IRNet began in February with a transaction between Los Angeles and El Salvador.
IRNet uses secure transactions between U.S. and foreign credit unions as an alternative to wire transfers and mail or courier services. Money will usually be available to recipients the day after transmission.
Wire transfer services often charge 10 percent per transfer, plus up to 4 percent to convert dollars to local currency, meaning that only $86 out of every $100 transferred actually goes to family members, sometimes with delays in payment. One UCLA study cites a fee of up to $83.90 for sending $300 via a wire transfer service using a credit card. This is an effective charge of nearly 28%. Courier services, while more widely used and less expensive are unreliable in many parts of the world.
Assemblymember Tom Calderon (D-Los Angeles) also participated in the press conference today to promote his legislation, AB 143, which will curb abuses by wire transfer companies.
"The time of ripping off hard working families is over," said Villaraigosa. "No longer will people be penalized or victimized for seeking to support their families in other countries.
"For the grandfather in Mexico who can't refill his medicine prescriptions, the mother in El Salvador who can't pay her phone bills, and the sister in the Philippines who needs help putting food on the table for her kids, this program will put more money in the pockets of the family members and friends for whom it is intended."