Slowing Economy, Uncertainty Not Slowing CU Remittances
WASHINGTON -- Credit unions that offer remittances have not experienced the slower pace reported in a recent survey.
The Inter-American Development Bank commissioned the survey of 5,000 Latin American adults living in all 50 states and the District of Columbia about their use of the international service to send money back to their countries of origin. The polling took place during February of this year, the bank said.
The polling found that only 50% of those surveyed reported sending money through remittances on a regular basis, down from 73% in a 2006 poll.
Those surveyed cited the slowing economy, increasing unemployment and a harsher attitude toward undocumented migrants as the reasons for their shift.
But the survey also found that while fewer migrants might use remittances, the ones who still do so are sending more money, more frequently, which would likely prevent a drop in the overall monetary flow.
"Starting in 2000, remittances from the United States to Latin America grew steadily, as more immigrants sent more money more often to their relatives back home. During the past several months, however, this pattern has changed dramatically," said Donald F. Terry, a manager for the bank in a press statement.
Most immigrants (81%) said it was more difficult to find better-paying jobs now than one year ago, while 40% said they were making less money than in 2007, the bank reported.
In contrast with the results of the first state-by-state poll on remittances conducted in 2001, when only 37% of respondents said they considered undocumented migrants a major problem, in the latest survey 68% said it was a great concern, according to pollster Sergio Bendixen.
"The survey clearly indicates that millions of Latin American immigrants are now fearful about their futures in the United States and no longer feel that they can afford to send remittances to their families," said Bendixen, who has been conducting polls for the Bank since the year 2000.
But a leading credit union remittance provider and IRnet, the World Council of Credit Unions' CU-to-CU remittance network reported that they were not seeing any noticeable change in the use of their services.
"If we have seen any dip at all, it has been part of the regular month-to-month pattern," explained Luis Pastor, CEO of the $56 million Latino Community Credit Union, headquartered in Raleigh, N.C. "It's always some months more, some months less," he added.
Pastor noted that his credit union likely had a different pattern of remittance user than the overall remittance industry and that might insulate LCCU somewhat from the broader trend. Because LCCU uses the remittance service as an occasion for member education, LCCU members tend to be more financially sophisticated and to understand that that remittance services the CU offers are a better deal than the competition's.
But he also said some of the CU's members may have refrained from sending dollar-based remittances until the dollar rises in value. "Lately has not been a very good time to send dollar remittances overseas," he said. "My members figure out very quickly how to check the exchange rate daily and that does have an impact."
The part of the credit union's remittance-based services that is showing real growth is the international ACH transactions that transfer money from CU accounts to accounts in Mexican CUs. This service is facilitated through the Federal Reserve and the Mexican central bank and costs $3 per transaction, Pastor explained. "We have seen steady growth in these transactions and no sign of them stopping."
Meanwhile, WOCCU's IRnet reported that it also had not seen any severe drop off in remittances although the services had stopped growing as quickly as it had been. Greg Moser, vice president for the WOCCU Services Group, reported that IRnet did 344,000 remittance transactions in the first quarter of 2007 and only 340,000 in the first quarter of 2008. He reported that previously IRnet transactions increased between 8% and 10%.