WASHINGTON January 10, 2004 (United Press International) - It's never easy even for the U.S-born working poor to make ends meet, but migrant workers often struggle with another problem: finding businesses that won't take advantage their often illegal immigrant status, as well as their lack of education.

Respect for migrants falls particularly short in the financial sector, as about half of all Hispanic wage earners living in the United States don't earn enough to be able to open a bank account. So whatever financial services they are able to access all too often exploit the fact that they have few other alternatives, and charge exorbitant fees for basic transactions.

Yet precisely because the number of those who are shut out from the current financial system continues to expand rapidly, it could well be a vast market that is waiting to be tapped. Moreover, the business does not have to be predatory or exploitive to be profitable.

That's certainly what Microfinance International believes. A Washington-based company specializing in providing financial services to some of the lowest wage earners in the Washington area, MFI's clientele is comprised of Hispanic workers who want to send money back to their home countries.

"These are hard-working people who immigrated because they want to support their families," said MFI's founder and president, Atsumasa Tochisako. "And yet they're some of the most badly treated...and the most vulnerable."

But Tochisako is pegging his business on the belief that immigrant workers who work hard for a better future could be one of the most loyal, and ultimately profitable, demographic groups, especially if they are treated right. And the former Bank of Tokyo-Mitsubishi executive is convinced that providing financial services to Hispanic workers can not only be financially rewarding for his company, but also improve his clients' lives too.

Certainly, the business outlook for catering to some of the poorest people in Washington appears promising enough.

Since it started operating in July 2004, MFI has competed head-on with rival money transfer giants such as Western Union and it has already attracted a few hundred clients in the nation's capital, thanks to its low fees.

While the dozen or so major money wiring companies charge around 15 to 18 percent of the total money to be transferred, MFI charges only $6 to wire money for sums below $150, and $9 for sums between $151 and $3,000. With the average amount of money wired by a Hispanic worker back to his homeland around $200, that means he or she can cut the transfer fee by about half and send more money back home.

Small change can add up to big savings for the person wiring money, but for money transfer companies too, getting into the remittance business can lead to big profits.

The Inter-American Development Bank reported last year that over $30 billion in remittances was sent from the United States to Latin America last year alone, with more than 60 percent of the 16.5 million Latin American-born U.S. residents sending money back home on a regular basis.

These remittances result in over 100 million separate transactions sent every year from the United States to Latin America, and the bulk of the money sent home is through money transfer companies or through other means, rather than going through a major Main Street bank. In short, there is no doubt that remittances make up a sizeable amount of the GDP in many Latin American nations, and indeed, money sent from relatives in the United States can make up anywhere between 50 to 80 percent of household income.

So tapping into the remittance market has considerable business potential. But with only about half of Latin American immigrants having bank accounts in the United States, providing other financial services to the group could be profitable too, argued Tochisako.

Indeed, MFI's deeply discounted transaction fees would make it difficult for the company to make money on the remittance wiring service alone, especially as it hopes to lower its transaction fees still further when it has more customers.

So MFI is expanding its operations to include banking services, namely to provide loans to those customers it deems reliable and credit-worthy.

"Once a client uses us to wire money back home several times, they have a credit history with us, and they can qualify for loans," Tochisako said, adding that the money transfer business is largely a means to attract clients to the money-lending operations of the company where profit can be more easily made.

For now, MFI can only offer lending up to $3,000 as an emergency loan for those who need the money to deal with unforeseen circumstances. The interest rate is high, at 25 percent, but Tochisako pointed out that most migrant workers would otherwise only qualify for predatory loans which could charge many times more than the actual loan in interest.

"Loan sharks can charge 700 percent or more for loans...and people have no choice but to accept," especially at a time of an emergency such as an accident or death, Tochisako said. "That shouldn't be the case."

So far, the company has about 20 people who have applied for the emergency loans, and MFI hopes to expand into the mortgage market soon as well.

The company also expects to be profitable by 2007 as it makes use of the cash deposits made by its clients. MFI anticipates about 10,000 transactions a day, with an average wire transfer of $200, giving them access to $2 million flowing continuously within their system.

But that can only happen while MFI increases the number of clients it has, and the company expects to have about 19 branches by the end of this year. It also plans to expand the number of countries clients can wire to. Currently, MFI customers can only send money to El Salvador, but they should be able to wire to Honduras, Guatemala, Bolivia and Mexico by the end of the year.

Meanwhile, the 50 investors in the company are prepared to wait until they see returns on their collective investment of $3.2 million. Moreover, MFI expects to raise another $2 million in private funds this year, while it anticipates a capital increase of $8 million before the year-end as well.

"Our investors aren't just out for profits...they share the vision we have about how to provide a much-needed business to a neglected group," Tochisako said. "This is much more than just a business."