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Western Union fees — buy a cow or have a cow?

21 October 2007

UPDATE: Within about ten minutes of posting, TWO commentators sent alternatives to Western Union. There are probably some more that I haven’t heard about yet, and which may work better for people sending/receiving remittances.

Does anyone have a good alternative for people who receive “irregular” remittances — say, senders who are helping out in an emergency, or when Tia Chuleta finds a good buy on a one-owner cow? It seems to me (though my much smarter readers may know better) that WU is about the only alternative in those situation.


I’ve got to hand it to Western Union. Their original business (telegrams) having become obsolete, they nicely transitioned to the new economy, and – as the number one cash transfer service – have a fairly decent reputation.



Their prices are high, but they have built a reputation for reliability and honesty that justifies them in the minds of most customers. And – through projects like their “3 for 1” project (WU kicks in three dollars for every one dollar raised by Zacatecans working abroad for small-scale rural development projects) even comes across as that rarity, a socially responsible corporation.



Remittances are not new. Italy, Poland and Ireland all depended on them in the 19th and 20th centuries (Ireland into the 1960s), just as the Philippines, along with top recipient India, Russia, China and Mexico do today. The Money Order was invented by the British Postal Service to handle Irish remittances in the mid-19th century, and they have their place, but in the U.S., with its insistence on privately owned banking/cash system – and the country’s worries about informal cash transfers abroad – Western Union is the only choice.



While some U.S. banks have arrangements with some Mexican banks to handle transfers, banks really aren’t set up for these kinds of transfers. If you’re transferring a few hundred thousand dollars to your drug dealer its not much of a problem, but if you’re sending a few hundred dollars to your Tia Chuleta to buy a cow, it’s a problem. Tia Chuleta may not have access to THE bank with ties to the U.S. bank; Tia Chuleta may not have a bank account at all; and the banks don’t want to deal with Tia Chuleta in the first place. And, it’s the same amount of work for the banks to transfer the few hundred thou as it is to transfer the few hundred, so they really don’t want Tia Chuleta’s business in the first place.



Whatever system is used, the overhead on Tia Chuleta’s cow fund is going to be higher than it should be. I don’t have a good solution, but thought the article in today’s Chicago Tribune nicely covered the problem:


By Oscar Avila and Antonio Olivo | Tribune staff reporters

NOCHISTLAN, Mexico – The resentment some Mexicans feel toward the money service that has become their lifeline is apparent in a flier making the rounds on both sides of the border. “Western Union, your fees are a rip-off,” it says, showing the image of a masked bandit.

The familiar black-and-gold sign of Western Union is a fixture in Mexican towns like Nochistlan and immigrant enclaves in the U.S., a symbol of the popular yet polarizing mechanism through which workers send remittances to their families south of the border, a flow that totaled $23billion last year.

Now, the complex relationship between Western Union and its Mexican clients has taken another turn as a bloc of Mexican community leaders urges countrymen to boycott the company. Another faction, meanwhile, has teamed with Western Union to launch innovative job-creating ventures in needy towns, including Nochistlan, arguing that the company should be cultivated as an ally.

On one hand, residents in places like Nochistlan are grateful to wire-transfer companies such as Western Union for offering a financial lifeline to isolated places typically underserved by banks. But family members in the U.S. often grouse that the companies charge too much. For a same-day $100 transfer to Mexico, for example, Western Union charges nearly 15 percent.

The growing debate over the role of Western Union has split key organizers of the huge immigration marches held in Chicago over the past two years.

Liberal Mexican activists, including some labor leaders wary of corporate influence, joined the national boycott of Western Union last month. Those critics say the company has a social responsibility to help poor communities where it makes so much money and that its philanthropy lags behind the efforts of other corporations.




14 Comments leave one →
  1. 21 October 2007 12:03 pm

    I live in a small town in Mexico.
    Most people here have relatives sending them money from the U.S.
    The people up there with U.S. bank accounts send their relatives an ATM card for their account.
    The person here in Mexico withdraws the cash from most any ATM.
    There are many Mexican owned banks in CA.
    Seems to work okay if you are in the position to open a bank account. Cost is about 50 cents US and a tiny % of the amount. Usually it’s like 36cents for two or three hundred dollara. At least from my U.S. credit union.

  2. Luisa permalink
    21 October 2007 12:14 pm

    I’ve been using Obopay, which is a service I got for free through my Citibank account. It lets you send money to anyone with a cell phone for 10 cents, which really makes Western Union irrelevant. I can’t understand why anyone would pay money transfer fees or Western Union fees when something like this exists. Besides the money is accessible through any ATM machine.

  3. mexijo permalink
    22 October 2007 3:19 am

    An other option to look into is XeTrade (
    But it is slower and it takes a looong time to sign up.

  4. 73N5H1 permalink
    22 December 2008 8:26 am

    Paypal is always great as well… no fees at all… just have the person make a paypal account and its easy to send money to that account They even have Paypal Debit cards so you can use the money straight from your account.

  5. 20 April 2011 9:28 am

    Western Union Company is providing financial services and Communication Company based in the United States.

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