Cash remittances sent from the U.S. to Mexico reached $1.12 billion in July, an increase of 33 percent over the same month last year, as sharply lowering prices continued to spur Mexican immigrants to send more money home.
The total sent in the first six months of this year, according to figures released by the Bank of Mexico, the nation’s central bank, was $6.13 billion, an increase of 29 percent over 2002 that put remittances on course to outstrip last year’s record volume of $9.81 billion.
After this sharp growth, immigrant remittances have so far exceeded foreign direct investment and tourism as sources of foreign funds. Mexico’s huge petroleum industry remains its biggest generator of foreign income.
In four central states with a strong tradition of immigration to the U.S. — Jalisco, Michoacan, Guanajuato and Zacatecas — the amount sent via remittances actually exceeded the amount they received from the federal government.
Several of the largest banks in the U.S. have started competing aggressively in the market in recent months, led by Citigroup, which owns Mexico’s largest bank Banamex, and Wells Fargo, which has an alliance with BBVA Bancomer of Mexico.
This has helped to drive down the price of remittances, and encourage migrants to send more money home. There has also been an effort by the U.S. and Mexican authorities to inform customers.
Condusef, a government-backed financial services watchdog, now publishes detailed comparisons of the amounts charged by different operators, while state governments are hoping to offer advisory services through migrant clubs in the main centres for Mexican immigrants, such as Chicago and Los Angeles. The U.S. Treasury claimed that in 2001, migrant workers spent more than $1 billion in commissions.
The Banco de Mexico figures suggest that money orders, which were traditionally the most popular means of sending money, until large banks entered the market, may now be recovering in popularity. However, this may be attributable to improvements in the bank’s collection of data.
Overall, 85.7 percent of remittances so far this year were sent electronically, compared with 43.7 percent a decade ago, while the proportion sent by money order declined from 46.6 to 12.6 percent over the same period, according to figures produced by Condusef. The proportion sending cash dropped from 8.2 to 1.6 percent.
Reduced commissions may have been behind a trend for immigrants to send smaller amounts of money in each remittance, but to send much more often.