Wiring for Dollars : Peso Woes Create Boom in Electronic Money Transfers

Socrates Galindo hadn’t been in the habit of wiring money to Mexico. He preferred to simply buy gifts when he visited his family there.

But the 32-year-old Galindo, who works at an antique store in Laguna Beach, has changed his custom of late. Because U.S. dollars go such a long way in Mexico these days, he has been taking advantage of it--wiring a few dollars for the birthday party of his younger brother, Alejandro, for example.

The recent devaluation of the Mexican peso has triggered a boom in the wiring of money from California to Mexico, which was already the No. 1 destination for dollars sent from the state to other countries. Expatriates are scrambling to exploit the currency exchange rate before the peso recovers.

Also fueling the growth of the industry is new technology that makes wiring money cheaper, faster and more secure. First Data Corp., an Omaha data-processing company that offers a money-wiring service called MoneyGram, estimates that the industry has been growing by 15% a year in the 1990s as an alternative to sending money orders by mail.

Arnoldo Davalos, president of Fiesta X-Change Inc. in Santa Ana, said orders for wire transfers to Mexico have been pouring in since the peso tumbled in late December.

“Everybody realizes this is a good time to send money,” Davalos said, “because, although they devalued the peso, prices have remained stable. So their families can buy more food, clothes or whatever.”

The amount of money sent by wire out of California had already more than doubled from $504.4 million in 1990 to $1.3 billion in 1993, according to the California State Banking Department. Money transfer agents, too, say that the trend has definitely caught on.

For years, it has been a custom among Mexicans living in the United States to share their dollars with relatives in their native land. Some families have come to rely on the supplements to get by.

Beyond that, some Mexican municipalities have offered incentives for expatriates to contribute to the economic development of the communities they left behind. The states of Zacatecas, Jalisco, Michoacan and Oaxaca, for example, match every dollar contributed by Mexicans living abroad for community projects.

Guillermo Jordan, manager of Supermail International’s Santa Ana office, said he has been flooded with orders for wire transfers to Mexico in recent weeks.

“We are receiving calls every day from people asking how much we were paying for the peso in Mexico,” Jordan said.

Wiring money to Mexico is much easier than it used to be, said Jaime Nogami, 29, a licensed nurse’s assistant from Santa Ana who has lived in the United States since the mid-1980s.

Because mail may be delayed or lost, wiring money has always been preferable. But even that was unreliable because it was handled through Mexico’s telegraph service, said Nogami, who sends money every month to his parents and grandparents.

In the past, he said, “they would go to the telegraph office near their house, and (the money) wouldn’t be there. So they would send them to another telegraph office. It took them days just to figure out where to go.”

Now, however, the two big names in money wiring--First Data and Western Union--have their agents in the United States and abroad connected directly by a personal computer network to banks in Mexico. Cutting out telegraph service has made transmission cheaper. And computers and satellites have made it more reliable.

When Nogami sends his relatives money now, he said, “all they do is go to any branch of their bank in any city in Mexico, and they can pick it up right away.”

Computers have revolutionized the business for small-money transmitters as well. Even a mom-and-pop service needs only a personal computer, a modem and the approval of the bank to make direct deposits into a consumer account in a foreign country in a matter of minutes.

Fiesta X-Change, for example, has agreements with both Banamex and Bancomer, two of Mexico’s largest financial institutions. The arrangement has proven a profitable one. The company has expanded the number of its offices from one to seven in the past two years.

Manager Jordan at Supermail, which is a MoneyGram agent, said 98% of transmissions from his company’s Santa Ana office go to Mexico. But the improved technology is resulting in more money being sent to other Latin American countries too.

Julio Alvarez, a native of El Salvador, said wiring money to his homeland historically has been only a little more reliable than mail. But now, said the 30-year-old mechanic, the money he sends to his relatives arrives at their San Salvador bank the next day.

“I like the security of it,” said Alvarez, who lives in Santa Ana. “It costs a little more, but it is safer than the mail.”

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Cash Exodus

Amount of money wired out of California annually, in millions of dollars:

1990: $504

1991: $752

1992: $974

1993: $1,276

Researched by VALERIE WILLIAMS-SANCHEZ / Los Angeles Times

Sources: California State Banking Department, Times reports

Long-Distance Money

Money-wiring companies are seeing increased business as a result of the devaluation of the peso. Here is a comparison of prices to send $300 from Southern California to Mexico:

First Data MoneyGram: $10

Continental Currency Transfers: $10

Fiesta X-Change: $15

Western Union: $27 Researched by VALERIE WILLIAMS-SANCHEZ / Los Angeles Times

Sources: Individual companies, Times reports