Why is this Allowed? – #78

It has been years during which I have seen a 24/7 currency exchange being opened at every other corner of a major road like Irving Park Rd., in Chicago with special focus on areas that have both legal and illegal immigrants (we are a sanctuary city). With technology creating electronic banking, it kept baffling me as to why Western Union would be opening Currency exchanges in neighborhoods with changing and growing immigration populations? (we are a sanctuary city – but we haven’t been one until recently).

I finally decided to observe the activity at the exchange located at the corner of Irving Park and Kedzie Ave. What I saw, was a steady stream of people entering the exchange, who were there to cash their paychecks and many were sending a share of the money from their respective check to designated international locations. Western Union was happy, and I kept asking the question, that if these people had nothing to hide, why wouldn’t they deposit the check at the bank, and then go over to Western Union to send the electronic international money order from there? Avoiding the costs for cashing the total check amount and paying a high service fee for the total could add-up to quite a large amount of money over a period of time – let alone the charges associated with the international transfer charges.

What an opportunity to add a city tax to the transfer amount which the city could apply to specific payments towards lowering the pension liabilities that are currently! Mayor Lightfoot, Western Union, and other key City  personnel. Here’s a money generating idea! No sooner had I made the observations stated above, the competition saw the same opportunity in that Fintech start-ups are making it easier to send money across borders. TransferWise and World Remit in the U.K., and Remitly out of Seattle have identified the opportunity and are a few examples of companies that are changing the game on remittances. They generally allow customers to send money abroad within minutes via an app. They generally charge lower fees than traditional money transfer fees such as Western Union. The key in this approach is that apps require specific data such as addresses etc. that neither legal or illegal residents are willing to provide, based on evidence of recent activities by the immigration folks. TransferWise offers a borderless account that can hold deposits in multiple currencies. The German start-up N-26 is preparing to offer U.S. Customers a debit card that doesn’t charge any foreign exchange fees.

Management lesson: Know your competition to the most in-depth ability that you can legally accomplish. N-26, TransferWise, and Remitly could do more work in this area. If they are counting on illegal or legal residents providing specific info on-themselves might be surprised – meanwhile I did get my answer!