Along a stretch of Sebastopol Road in west Santa Rosa, there are at least seven businesses that serve as crucial hubs for financial transactions in the neighborhood.
None of them is a bank. Instead, they range from grocery markets to a jewelry store, spread out along the strip of restaurants, stores and other businesses that serve Latino residents in the Roseland area.
They provide a crucial service by allowing customers to send money back home, primarily to Mexico, in a business model that has changed little through the decades.
The sector, however, faces tremendous changes as immigrants re-evaluate the way they handle money and new technologies threaten to make such storefront visits a thing of the past.
Every day, customers take American dollars to these stores and send them to family members in other countries using Western Union, MoneyGram and other international networks that facilitate such transactions, known as remittances. The recipient receives the money in their own national currency, often at a location in their neighborhood.
Gervacio Peña, president of the Graton Day Labor Center, uses such services to send money to his family in the state of Oaxaca in Mexico. It goes for various purposes: providing a supplement to his parents; help upgrading his house there; or help paying for books and clothing for his cousin’s children.
“Families always depend on us,” Peña said. “Down there, the money is like double the amount (in value).”
The role that remittances play in both the U.S. and Mexican economies is tremendous. In 2015, U.S. residents sent $56.3 billion to family and friends in foreign countries, according to the World Bank. Close to half — $24.3 billion — went to Mexico.
In California, remittance firms sent $11.9 billion out of the state during the first nine months of 2016, with $6.2 billion going to Mexico, according to the state Department of Business Oversight. The Philippines, India and Guatemala were other major recipients.
“The impact varies (among countries),” said Manuel Orozco, director of migration, remittances and development at Inter-American Dialogue, a Washington think tank. “But it is quite significant.”
The money goes to some of the most struggling communities in Mexico, said Gemi José González López, consul general of the Mexican consulate in San Francisco.
“That money is not going to big cities. It’s going to very rural places,” López said.
The Mexican government is concerned about any changes in U.S. policy on remittances. Money transfers jumped after the November election amid speculation that the incoming Trump administration could tax such services to help pay for its proposed border wall.
“The position of Mexican government is that this is a very sensitive issue for us,” López said. “The money goes to some of the poorest places in Mexico.”
Efforts by some conservatives to change U.S. policy on remittances have not fared well in Congress. In 2015, former Sen. David Vitter, R-Louisiana, never got traction with his bill that would have required senders in the United States to prove their legal status and imposed fines for violations.
Orozco said any changes would be significant for the approximately 43 million immigrants in the United States, a quarter of them undocumented. More than two-thirds of immigrants are employed in sectors as agriculture, hospitality, domestic work or other service industries such as construction, Orozco said. They earn around $25,000 annually, on average, he said. Those who send money back home transfer about 15 percent of their pay, he added.