Western Confusion

With the help of foreign consulates, Western Union poses as a quasi-governmental banking service and rakes in millions from immigrants

On the first weekend in November functionaries from the Guatemalan Consulate on Market Street will head to Renton, Wash., set up folding tables in a borrowed salon, and thus create a temporary government outpost in that immigrant worker stronghold.

Consulate officials will provide such bureaucratic staffs of life such as fulfilling migrant requests for passport extensions, birth and death certificates, and consular IDs, a type of bank-recognized identification that got its nationwide launch in San Francisco four years ago. The ID card program's aim was in part to help immigrants, some of them in the U.S. illegally, to obtain financial and other services from mainstream providers such as banks, without having to produce U.S. driver's licenses, and without paying the high fees charged by storefront money-wiring chains.

"We tell them there are many services for sending money, and emphasize that they use their ID cards to open bank accounts," says the articulate, patient, and diplomatic Guatemalan Consul General Patricia de Calderon, in her native Spanish.

Guatemalan migrants couldn't be blamed for being confused by de Calderon's advice, however.

At a table nearby a representative of Western Union will hand out promotional literature seeking to convince these Guatemalans not to follow de Calderon's counsel to seek cost-efficient ways to send money home. If recent history is any guide, the Western Union official may have the only information table in the room not placed there by the Guatemalan government, de Calderon acknowledged.

If events at this and other hinterland trips by consulate officials favor Western Union, a good portion of the 200 or so immigrants visiting with consulate officials that weekend will forgo bank accounts and ATM cards — which typically charge a relatively low price of around $2.50 per international transaction — and instead use the company's proprietary, storefront-operated money-wiring service.

The Western Union money transfer service is one of the most expensive available, charging around $13, including exchange rate charges, to transfer $120 from California to Guatemala.

In what would appear to be a conflict of interest on the part of the Guatemalan government — caught between its role of helping immigrants, and abetting a company's efforts to gouge them — Western Union has become the official sponsor of the San Francisco consulate's "mobile consulate" program, where S.F.-based Guatemalan government officials travel to outlying states where immigrants reside away from the home country. This year Western Union will foot the bill for officials' travels to Idaho, Alaska, Washington, and elsewhere in the consulate's service area.

The sponsorship is a logical extension of the company's nationwide "helping hands" initiative marketing to Central American and other immigrants, in which Western Union "creates partnerships with credible third-party sources" so that immigrants become "willing to pay premium prices" according to a marketing strategy outline produced by the public relations firm Bromley/MS&L.

The difference between $2.50 and $13 for a single $120 transfer to Guatemala may not seem like a huge problem. But when assessed as part of the $250 billion international so-called remittance money-transfer business, these high fees can spell the difference between prosperity and continued poverty for developing-world families, villages, and countries.

Happily, when compared to other vexing problems faced by the world's poor, this one has some simple, obvious solutions.

Counteracting Western Union's immigrant-focused PR campaign could mean helping the following message to arrive unfiltered to ears: Believe it or not, when it comes to sending money home to impoverished developing world communities, San Francisco banking behemoths such as Wells Fargo are a working stiff's friend.

That message, it turns out, could possibly be helped along by a San Francisco importer of canned fish.


The stakes behind Western Union's "helping hands" marketing initiative — and countervailing efforts by activists and nonprofits to convince migrants to use cheaper alternatives to wire transfers — are huge.

Surveys show that for every 300 U.S. migrant laborers, around $1 million per year goes back to their home countries. In Oakland, some 30 percent of immigrants use Western Union, as opposed to other methods of transferring money, to wire portions of their paychecks home. While Western Union fees to places like Guatemala and Mexico are high, charges to other countries are exorbitant. When a Philippine immigrant gives $136 to a Western Union agent in San Francisco, a relative will receive only $117 in Manilla, thanks to a whopping transfer and money exchange fee of $19.

Players such as Wal-Mart, the U.S. Postal Service, and scores of independent firms have recognized the profit in the $250 billion international remittance business, and have launched services of their own. And banks such as Wells Fargo have stepped up efforts to cater to immigrants with relatively small bank accounts. Among such steps was a move by banks four years ago to support legislation by San Francisco Supervisor Gerardo Sandoval to require city agencies to accept ID cards issued by foreign consulates. With undocumented aliens unable to obtain U.S. IDs, these cards now double as bank-accepted identification cards around the country, part of a hoped-for market-driven revolution in which immigrants would vote with their pocketbooks for the most cost-effective way to send money home.

Wire transfer services such as Western Union have held up surprisingly well, however. They've lowered their fees somewhat — Western Union, for one, was recently forced by a class-action lawsuit to correct exploitative exchange rates charged consumers. (First Data Corp./Western Union spokesman Colin Wheeler did not return calls requesting comment for this story.)

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