This article originally published in Self-Service World magazine's special section, FOCUS: C-store Self-Service, Oct 2007.
For immigrants who may work two or three jobs to make ends meet and send money back home, going to the bank may be a mission impossible. Paying bills with cash is a necessity; they simply can't write a check, stick a stamp and send in the bill.
For members of the 22 million U.S. households that, according to the Center for Financial Services Innovation, do not have a relationship with a financial institution, participating in the economy can be a daunting task.
Setting aside the very real obstacle of the language barrier, having a free moment to drive to a bank branch on a regular basis may not happen. Also, many traditional financial institutions require stringent identification requirements to open an account.
Most of the households that do not have relationships with traditional banking institutions are minority homes; the rest include households that earn less than $25,000 a year. While 58 percent of Hispanic immigrants do not have a relationship with a traditional financial institution, they represent millions of dollars in wages that buy food, drinks, snacks, cigarettes and other convenience-store staples.
C-store operators and financial services kiosk operators must take into account some of the cultural issues facing minority populations. For instance, Hispanic families are convenience oriented — meaning they want to conduct transactions on their own time, not during banker's hours, Miriam De Dios said. De Dios is emerging markets director for Coopera Consulting, a cultural consulting firm based in Des Moines, Iowa.
Immigrants also might bring with them from their homelands a distrust of financial institutions. They may have experienced bank failures, hyperinflation and other catastrophes that make them wary of depositing money into someone else's hands.
"Immigrants usually lack familiarity with the U.S. financial system to begin with, and that might translate into suspicion and distrust of mainstream financial institutions," De Dios said.
Being culturally respectful and relevant not only is the right thing to do, it's good business. Utility companies, stored payment cards, money transfers and other financial services reap the benefits of communicating with their core audience in the c-store environment. For instance, the TIO Network launched a prepaid MasterCard available at Exxon and Mobil convenience stores in the United States. The product was prepared with the Hispanic marketplace in mind.
"We provide materials that are in the Spanish language and have Spanish-language customer service," said Rick Savard, CEO of NetSpend, a provider of prepaid reloadable debit cards that partnered with TIO for the Exxon and Mobile program.
C-stores are a natural environment for reaching cash-preferred Hispanic customers. Their shopping patterns are very different from suburban families who may make a trip to a big-box discount store once a month to stock up. Hispanic families tend to shop more frequently and closer to home. "Our research shows Hispanics like to work and shop within a few blocks of their home, so if they can also pay their bills within that radius, they are much happier," said Dennis Borsoi, director of retail distribution for TIO. "Convenience stores serve that market very well."
The convenience factor is a huge part of the success of cash-payment networks. It also disproves a common myth that immigrants are not technologically savvy. De Dios notes that Hispanic immigrants embrace technology such as cell phone and Internet commerce, especially children and teenagers. The products have to be in tune with the population, though. "If a company markets transactional-based products, technology is not a barrier," she said.
Being upfront about transaction fees and other costs hidden in the fine print is critical. Many immigrants have been taken advantage of by unscrupulous business people, such as car dealers who charge 300 percent interest. They may be wary of anything that seems complicated or unclear.
"They want messages that are simple and direct, and products that are going to offer what they need," De Dios said.
