On the Use of Differing Money Transmission Methods by Mexican Immigrants

Interest in the factors shaping migrants' use of a given money transmittal method has recently intensified following researchers' agreement on the often inadequate infrastructure surrounding remittances transfers. This concern has also captured the attention of government officials, who appear more eager to promote more efficient and safe transfers of emigrant's earnings given the potential that remittances hold for increasing resources at the disposal of receiving nations. This study uses data from Mexican immigrants who have resided in the United States to examine the various factors that shape migrants' use of the various methods to remit earnings to Mexico. We find, not surprisingly, that accessibility factors play a key role in explaining migrants' use of the various money-transfer mechanisms. Migrants are less likely to use banks and more likely to use nonbank money-transmitting services when they lack immigration documents. Additionally, migrants' awareness of alternative remitting methods, either through educational attainment, skill level, or networks of friends and family in the city to which they migrated, makes them more likely to use banks relative to the more expensive nonbank money-transmitting mechanisms. In contrast, the use of informal money transfer mechanisms (cash in the mail and hand-carried transfers) is more likely among workers with “less regular” employment – such as self-employed and specific-task workers, more newly arrived migrants, and migrants remitting to rural and poorer areas.