Getting Segmented Markets Right: Money Transfer Kiosks and Latino Customers

As the fastest growing ethnic group in the United States, Latinos are consumers to watch, as even Wal-Mart actively courts its Spanish-speaking customers. Market research firms are cuing up to explain this diverse population. But the terms “Latino” and “Hispanic” are catch-all categories, covering a wide range of peoples from more than fifteen countries with different generational, geographic, and cultural stories about how they shape the landscape of consumption in the United States. Many market firms use the rather crude metric of “acculturated “ to talk about the extent to which Latinos are absorbed into the general American culture rather than retaining practices from their countries of origin. Social scientists have been debating the nature of assimilation since the turn of the century, so it’s no surprise that market research still isn’t quite certain how to explain and explore the cultural dynamics of immigrant ethnic and racial groups.

However, from both the academic and marketing research, we can conclude that newer immigrant groups have unique issues with assimilation. Being bilingual and having familial ties to another country create interesting dual ties in a time when travel and communication between places is instantaneous and more accessible (at least for those with legal status).

The census demonstrates that at least 40% of US Latinos were born in another country. But hold your presumptions about what that means: the more affluent older Latinos embrace assimilation in language use, eschewing Hispanic media, yet retain traditions related to their cultural heritage. On the other hand, Spanish language and media are important to moderately acculturated young families who speak Spanish at home. Their kids, career, and conservative values are all important.

The global connection has also meant that companies outside of the US are often more adept at speaking to Latino consumers and that those consumers know how to find what they want via the internet. The top ten indexing sites for Hispanics are all outside the US. According to an interview with Mediapost:

Maria Lopez-Knowles, senior vice president at MRM/McCann Worldgroup, says "I would think that Hispanics do leave our borders to visit foreign sites. It's an opportunity for them to stay in touch with the activities of their homeland, catch up on national and local events and, in short, stay connected...The flattening of the world has made what was inaccessible, accessible. And it really speaks to the fact that it's not about 'either/or' anymore; it's about AND. You can be bilingual and bicultural, and straddle two worlds -- you don't have to pick one or the other."

The duality of that experience translates into use of technology. One area of growth in these complicated economic times are self-service money transfer kiosks. Positioned in cities with large Latino populations, the kiosks (pictured above) allow immigrants to send money to relatives at home via automated teller-type machines to bank branches and pickup centers in Latin America. Instead of filling out forms to transfer cash, consumers deposit their money into a machine. Fees start at $9.95 to send up to $1,000. That's comparable to rates at most transfer companies (which have not gone up significantly in the last few years despite news in 2007 that focused on complaints about fees at Western Union).

According to the Houston Chronicle, last year, immigrants, using banks and wire transfer services, sent $67.5 billion to countries in Latin America and the Caribbean. A year earlier, remittances amounted to $66.5 billion, according to Inter-American Development Bank estimates.

Kiosk success will hinge upon the ability of companies to attract and maintain a segment of the Latino population who, so far for this service, tend to be middle to lower income, speak primarily Spanish, and are sometimes wary of technology. Local wire transfer services (like the one pictured above) tend to be neighborhood stores and offer a version of trust that's based on familiarity and cultural connection. Kiosks will have to demonstrate security and trust without that human connection.

One answer is good customer service. The parent company of the kiosks in question, Nexx, recently sweetened the deal: customers who utilize money transfer services through the self-service kiosks receive a five minute long-distance call for free, so they can call the recipient and notify them that the funds are on their way. Calif.-based Nexxo now has more than 180 kiosk sites across Texas (San Antonio, Austin, Dallas-Fort Worth, El Paso, and Houston). In total, Nexxo currently boasts 650 kiosks handling 50,000 transactions a month in the heavily Latino states of California, Texas, and Arizona.

It’s hard to speculate on the future growth of wire transfers, given their dependence on a strong American dollar, a less hostile climate for immigrant workers, and the availability of work. Still, by emphasizing the security and trustworthiness of its technology, it seems likely that the kiosk will prevail as the best approach (even as wire transfer services continue to serve some segment of the population), just as ATMs dominate but bank tellers remain necessary. The kiosk allows greater consumer access, convenience, and autonomy, which, combined with a well aimed marketing campaign in multiple languages, may make the money transfer kiosk a vital new approach.

kiosk image: Nexxo.