PHILADELPHIA — Every year, Mexican immigrants in the United States send tens of billions of dollars to relatives still south of the border, and for their largesse are hit with billions more in fees.
Born in Mexico and now an American citizen living in South Philadelphia, Rosalba Meneses, 24, knows the bite of commissions and foreign-exchange charges when she sends money three times a year, totaling $1,000, to an aunt in Puebla state.
“She uses it for groceries, clothing and spending,” said Meneses, who pays commercial services — including Western Union, Sigue and the online Xoom — to make the transfers, known as remittances.
About half of Mexico’s 112 million people have family in the United States. Like Meneses, 20 percent of the Mexicans living here routinely send money back home. Depending on the amount and required speed of delivery, they are typically charged 10 to 16 percent.
Despite a weak U.S. job market and virtually zero net migration out of Mexico, remittances from “El Norte” have exploded, from $6.6 billion in 1999, to a peak of $26.8 billion in 2007 before falling back to $23 billion last year, according to the World Bank.
Against that backdrop, a Philadelphia start-up called Regalii — created by two young entrepreneurs, including a recent University of Pennsylvania Wharton School graduate — is testing its “social gifting platform” as a new, free-to-the-consumer way to send remittances throughout Latin America, with an emphasis on Mexico.
Using a secure website, payment gateway, and text messages, Regalii (a twist on “regalo,” the Spanish word for gift) will compete with the traditional services that take commissions.
In Regalii’s model, there are no commissions. An immigrant buys credits — similar to gift cards — to be redeemed at cooperating retail stores, supermarkets, pharmacies, and other merchandisers in Latin America. After money is deposited in the Regalii system, a code is texted to phone of the recipient, who presents it at the store selected by the sender.