Fox Focuses on Migrants’ Role Sending Funds Home

For decades, money transfers from Mexican immigrants living in the United States have flowed to relatives south of the border typically at high cost and with little involvement from the Mexican government. But the role of the migrant is being dramatically altered as President Vicente Fox moves to capitalize on the close links between Mexicans on both sides of the border.

At an unprecedented conference here that concluded Saturday, Fox and Juan Hernandez, who heads Mexico’s first Office for Migrants Living Abroad, used the money-transfer phenomenon to hone binational policy on an issue that has long been ignored by the Mexican government but that puts more than $7 billion into the hands of Mexican residents annually.

Joined by Mexican banking officials and dozens of private companies from the U.S. and Mexico, government officials vowed to push for a reduction in the cost of money transfers, announcing the first of a series of promised steps in that direction.

Even more noteworthy was Fox’s plea to migrant organizations and the private sector to help direct some of the remittances that flow southward each year into job-generating projects that could stem the flow of bodies northward.

“We must ensure that our young people have the opportunities they need to remain with their families, in their own country,” Fox said in closing remarks at the conference. “Where before we saw migration as a problem, today we see it as an opportunity.”

For U.S.-based companies, the unprecedented attention from the Fox administration could lead to easier access to the Mexican market. The event drew not only money-transfer businesses, but major corporations such as 7-Eleven Inc., which announced a $10-million contribution for scholarship funds and high-tech money-transfer equipment.

For Fox, strengthened ties with U.S. migrants represent a more direct pipeline to remittances--which some analysts believe have surpassed tourism to become Mexico’s second-largest source of revenue. The warming relationship also enhances Fox’s political clout with an increasingly powerful Latino community north of the border.

Without regulating the industry directly, the Fox administration hopes to encourage the creation of better financial services--such as accessible bank accounts and safe swipe-card technology--for Mexicans in Mexico and the United States.

“This is historic,” said Juan Carlos Monroy Suarez, an assistant director of Chicago-based OrderExpress, a money-transfer company that has donated funds to social causes in Mexico and Central America, among them earthquake assistance in El Salvador. “The Mexican government has never before been interested in uniting us to help us solve our problems and give Mexicans in the United States and here a common focal point.”

The weekend event drew financial and other commitments from Latino entrepreneurs and migrant hometown associations. The Los Angeles-based Frente Civico Zacatecano, for example, pledged to raise $5 million this year, to be matched three times over by Mexican government officials in an existing program that Fox hopes to replicate across the country. Several states, including Guanajuato, have matching fund programs.

And La Mirada-based Mexico Express, a money-order courier that sent about 4.5 million packages to Mexico last year, offered Fox access to its network of migrants of customers.

In a clear sign of what Fox stands to gain politically from the warmer ties, Mexico Express also promised to convert its more than 1,600 U.S. agent locations into voting centers if Mexicans living in the U.S. are eventually granted voting rights.

“Fox’s credibility is extremely high with us right now,” said Mexico Express Chief Executive Guillermo Reynoso, a Guanajuato native. “He could say ‘Go left,’ and all the Mexicans in the United States will go left.”

The event also tapped major corporations that do business with Mexicans and Mexican Americans to help fund scholarships, business assistance programs and the implementation of new cost-effective money-transfer technologies. Key among them is Dallas-based 7-Eleven, whose CEO, James W. Keyes, attended the meeting and pledged $10 million to new binational efforts. The bulk of the money will fund educational initiatives on both sides of the border.

7-Eleven also has launched a new service with First Data Corp.’s Western Union called V.com, consisting of financial-services kiosks in the U.S. and Mexico that make transferring money easier. American Airlines Inc., Mary Kay Corp. and Western Union were among other companies that pledged commitments during the meeting.

“What President Fox is doing is embracing social capitalism,” said Keyes, who said he believes that the educational investment will cultivate potential future employees.

Mexican officials stopped short of calls to regulate the industry, dominated for years by Western Union and Viad Corp’s MoneyGram Payment Systems Inc. Heightened competition already has brought prices down by as much as 29% since Fox took office, Hernandez said.

The government hopes to stimulate more competition by encouraging technological innovation and requiring better consumer protections and disclosure of fees and exchange rates. Representatives of Mexican banks--heavily criticized for charging steep commissions--also pledged to explore lower fees.

Most significantly, Telecommunicaciones de Mexico , the government-run telegraph company that reaches the most remote pueblos, announced that it slashed the price of its key money-transfer service by 30% as of March 1 and will open its network of 1,800 offices to other money-transfer companies.

For more than a century, the Mexican telegraph offices have worked exclusively with Western Union, an arrangement that kept costs highest for the country’s poorest and least bank-savvy residents. About 1,000 Telecomm offices are in tiny towns with no banks and therefore have served as the only reliable outlet to pick up wired funds.

Already, technological advances are making money transfers cheaper. The World Council of Credit Unions has launched a low-cost transfer program in association with Mexican credit unions and last week won approval to introduce an account that does not require Social Security numbers--a key barrier for undocumented workers.

And Newport Beach-based La Mision Financial Services Inc.--launched by Mexican businessmen on both sides of the border--showcased its Latin Trust Card at the event. The card combines direct deposit, ATM and point-of-sale technologies, allowing Mexican workers in the U.S. to automatically deposit paychecks into an account that can be accessed here with a partner card.