 COMPETITION LOWERS COST OF SENDING MONEY TO MEXICO
For years, Western Union was almost the only way for Mexican nationals living in the US to send money to family in Mexico, and was able to charge steep rates for its services. However, the growing number of Mexicans working in the US, especially in California, where there are 3.5 million Mexicans, has led to an increased number of money transfer services and a corresponding decrease in fees as competition increases.
According to officials at the Mexican consulate in Los Angeles, over the past three years, the average fee for a $ 300 wire transfer was about $ 11, down from a previous average of almost $ 15. Growing trends leading to this result are the entry of credit unions and Mexican based banks into the wire transfer business.
Recently, the high fees charged for money transfers has led to the institution of lawsuits against the companies. One suit, involving customers in California, Texas and Illinois, was recently settled, and could result in as much as $ 300 million in compensation for those who had used the services. Another requirement of the settlement would be that the money transfer companies clearly state their fees, including costs of converting the money from US dollars to Mexican pesos.
Money sent to Mexico from Mexicans working in the US totals almost $ 6 billion annually, the third largest source of income in the country, behind oil exports and tourism. Most money is sent by wire transfer because mail containing cash is often opened and cashing a check drawn in US dollars can take weeks.
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