CrediCash Remittance Business Plan
I submitted a thesis to the University of Costa Rica College of Business as part of a Master of Business Administration in international marketing. An overview of the thesis is presented below and a link is also provided to the full document in Spanish.
Briefing Document: CrediCash DC – An International Remittance System
Source: MMaxey_-MBA_Thesis-_CrediCash_06_14_2003 Final.pdf
Author: Andrew Michael Maxey
Date: March 2003
Main Theme: This MBA thesis outlines a detailed business plan for “CrediCash DC,” a remittance service targeting the Hispanic population in Washington D.C. The plan aims to leverage the existing infrastructure of the District Government Employees Federal Credit Union (DGEFCU) to offer a low-cost, convenient, and secure way for Hispanics to send money to Latin America.
Key Ideas & Facts:
- The Untapped Potential of the Remittance Market:
- The Hispanic population in the U.S. is growing rapidly, with significant economic power.
“In the last U.S. Census, the Hispanic population increased by almost 58 percent, from 22.4 million in 1990 to 35.3 million in 2000.”
- Hispanics send billions of dollars in remittances annually, representing a lucrative market for money transfer companies.
“The periodic cash transfers, also known as ‘remittances,’ totaled more than US$29,000 million in 2002.”
- However, existing remittance services like Western Union and MoneyGram charge high fees, leaving room for a more affordable competitor.
- CrediCash DC’s Competitive Advantage:
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Low cost: CrediCash DC will offer a 5% commission on remittances, significantly lower than competitors.
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Convenience: It will establish a network of “Remittance Clubs” run by local leaders in Hispanic neighborhoods, making the service easily accessible.
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Community focus: The plan emphasizes partnering with Hispanic NGOs to build trust and reach the target market effectively.
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Secondary benefits: CrediCash DC aims to increase access to banking services and promote savings among its clients, differentiating itself from competitors.
- Target Market & Segmentation:
- The primary target market is the 21,561 Hispanics residing in the Adams Morgan, Mount Pleasant, and Columbia Heights areas of Washington D.C.
“The target market for CrediCash DC is the 21,561 Hispanics living in the Adams Morgan, Mount Pleasant, and Columbia Heights areas of Washington, D.C.”
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Market segmentation will be based on country of origin using Census 2000 data and maps to identify high-density Hispanic neighborhoods.
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Salvadorans are the largest segment (56%) and are estimated to remit approximately US$21 million annually.
- Implementation & Marketing Strategy:
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Community outreach: CrediCash DC will work closely with Hispanic NGOs to recruit and train local leaders to run Remittance Clubs.
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Targeted marketing: Marketing efforts will focus on high-potential areas using census tract maps to tailor messaging and outreach.
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Grassroots approach: The sales strategy relies heavily on word-of-mouth marketing and leveraging trusted community leaders as agents.
- Financial Projections:
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The business plan projects profitability in Year 3 with a net profit of US$30,700.
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CrediCash DC expects to capture 50% of the target market share (US$13,750,000) by Year 3.
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DGEFCU will provide an initial investment of US$150,000 and an additional US$25,000 in Year 2.
- Potential Impact:
- Economic impact: The plan aims to reduce the cost of remittances, potentially leading to a significant positive impact on the economies of Latin American countries.
“A study carried out by El Colegio del la Frontera Norte in Mexico indicates that each additional dollar of remittances that reaches a family has a multiplier effect of 1.8 on the local economy.”
- Social impact: Increased access to banking services and savings could facilitate the integration of Hispanic communities into mainstream American society.
- Scalability & Replication:
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The CrediCash DC model has the potential to be replicated in other urban areas with high Hispanic populations across the U.S.
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The World Council of Credit Unions (WOCCU) could utilize the plan to expand its International Remittance Network (IRNet) nationwide.
Quotes of Interest:
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“This study could serve as a business model for: 1) identifying communities in the U.S. that have Hispanic residents more likely to remit funds to Latin America; 2) segmenting the Hispanic populations in these communities by their country of origin using information and maps from the 2000 Census; and 3) executing a grassroots marketing campaign, door-to-door in Hispanic neighborhoods, to increase access for this group to banking services, reduce transaction costs for immigrants sending money internationally, and generate income for community development activities.”
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“The business plan for CrediCash DC—a remittance transaction business focused on a key market in the Washington D.C. area—could be a model for the development of similar initiatives throughout the Americas to promote greater access by Hispanics to the formal financial sector, obtain significantly cheaper remittance services, and economically support community development initiatives in the U.S. and Latin America.”
Conclusion: The CrediCash DC business plan presents a compelling strategy for capturing a significant share of the Hispanic remittance market in Washington D.C. By combining a low-cost service with a community-focused approach and valuable secondary benefits, CrediCash DC is positioned to gain a competitive advantage and achieve significant economic and social impact. The plan’s scalability also suggests its potential to be a successful model for expanding affordable remittance services and financial inclusion across the United States.