Sending Cash to Mexico Made Easier

Moving aggressively into the billion-dollar market for cash transfers to Mexico, U.S. postal authorities Thursday kicked off a new service allowing residents to send money orders south of the border with expedited delivery and guarantees of payment or reimbursement.

The Postal Service, in collaboration with Mexican officials, unveiled the initiative--known as Giro Express, after the Spanish word widely used for such transfers--at the Mexican Consulate in Los Angeles.

“The Mexican customer is a good customer,” said Jesse Durazo, Los Angeles-area postmaster.

The move underscores the profitability of the booming and extremely competitive giro business, an immigrant-driven, cross-border commerce that has expanded exponentially in an era of near-record immigration. Signs advertising “giro” (pronounced “hero”) money transfers proliferate at thousands of storefronts in Southern California, particularly in heavily Latino communities such as Huntington Park.

The Postal Service’s initiative also illustrates how U.S.-based enterprises, from food producers to telephone companies, have sought to tailor products to expanding immigrant markets.

Each year, according to Mexican government estimates, U.S. residents ship a staggering $3.6 billion back to family and friends in Mexico, generating that nation’s third-largest source of much-needed foreign revenue, after petroleum and manufacturing exports. Almost half of all remittances originate in Southern California.

With cash transfers playing such a key economic role, Mexican officials are understandably keen to ensure the ease of such payments.

“It has always been a priority for us to find the best way for people to do this,” said Jose Angel Pescador Osuna, Mexican consul general in Los Angeles, who urged compatriots to make use of the Giro Express.

While Thursday’s announcement involves the combination of two existing services--international money orders and Express Mail--Postal Service authorities plan to launch an electronic money-transfer business to Mexico later this summer.

The Postal Service, a massive government agency facing stiff challenges from new technologies and private delivery services, has embarked on ambitious plans to compete more effectively and bolster profits.

Sending money to Mexico has long been a problematic endeavor despite the frequency of international cash transfers. Clients complain that giros are regularly lost, stolen or disappear. People making electronic transfers bemoan high fees on the U.S. side and the below-market exchange rate often provided at the Mexican banks and agencies where the cash is claimed.

According to the Postal Service, mailers lose millions of dollars each year trying to send cash to Mexico. One major problem: Clients often incorrectly purchase and mail domestic money orders, which are only valid within the United States.

With Giro Express, customers go to a post office and purchase, for a $3 fee, an international money order (good for amounts up to $500). The money order, along with mail weighing up to 8 ounces, is shipped in a sealed, red-white-and blue International Express Mail package. The total cost: $18.

Delivery throughout Mexico is pledged within two to five days. Purchasers are guaranteed reimbursement if the money order is lost or stolen, postal authorities said. Those wishing to send more than $500 can purchase additional money orders and include them in the same package.

A spokesman for Western Union, the leader in the worldwide money-transfer business, said it was monitoring the Post Office move, but expressed confidence in the superiority of its service.

Electronic transfers may be more expensive--it costs between $34 to $40 to wire $500 to Mexico via Western Union--but delivery can be made within minutes, said Peter Ziverts, a Western Union spokesman in Colorado.

Outside the Mexican Consulate, Mexican citizens apprised of the new postal alternative viewed it positively. Though Giro Express costs almost double the price of regular registered mail, several residents said that the guarantees of delivery and reimbursement would be worth it.

“Sometimes it’s smart to pay a little more for security,” said Cipriano Rodriguez, 40, who regularly sends money back to his parents in central Mexico. “It’s the security that counts.”