By Ray Birch
NEW YORK—A provision in the newly approved federal budget bill could significantly reshape how immigrants in the U.S. send money back to their families—and, in the process, open the door to new growth opportunities for credit unions, one expert is saying.
The remittance tax, part of the final budget bill, H.R. 1, imposes a 1% fee on international money transfers funded by cash, checks, or similar physical instruments. While the final rate is far lower than the 3.5% originally proposed—and down from 5% in early drafts—the shift in how the tax is applied is already prompting changes in consumer behavior.
Specifically, transfers made through U.S.-regulated bank accounts or using debit or credit cards are exempt from the tax.
That key detail is likely to accelerate a long-standing trend: the move from cash-based to digital remittances. And according to Pablo DeFilippi, executive vice president at Inclusiv, it could also help credit unions break through in a space that’s traditionally been hard to penetrate.
“This new bill provides a unique opportunity,” DeFilippi told CUToday.info. “Technology has evolved, and so has the immigrant population—they are much more digitally savvy than they were in the early 2000s. Now, we have the tools to reach people without needing a physical presence in every community.”
The tax takes effect Jan. 1, 2026.
Digital Shift Could Level The Playing Field
Pablo DeFilippi
Historically, credit unions have struggled to scale their remittance services due to limited branch networks in immigrant communities. DeFilippi, who in the early 2000s helped launch the International Remittance Network (IRNet) at the World Council of Credit Unions, recalled the challenges of that era.
“Back then, location was everything. If you weren’t in the right place, you couldn’t compete,” he said. “But that’s changed. Digital tools can now bridge that gap.”
Mobile-first platforms like WhatsApp, which many immigrants already use to communicate with family abroad, can now be used to open accounts, make payments, and send remittances—all without stepping into a branch.
“If we can enable remote account opening and build digital interfaces that speak to this community, we can bring more people into the financial mainstream—and help them avoid costly fees,” said DeFilippi.
Economic Incentive Driving Change
Beyond convenience, the new remittance tax is giving people a strong financial reason to move their money digitally. For a typical $200 remittance funded in cash, the new tax represents a 20% increase in cost, when combined with existing fees.
“A 1% tax doesn’t sound like much, but for families sending money every week, it adds up quickly,” DeFilippi explained. “Over the course of a year, it can easily total hundreds—if not thousands—of dollars. That’s money people can’t afford to lose.”
The clear incentive to avoid the tax could push more people to open accounts with U.S. financial institutions—precisely what many credit unions have long hoped to encourage.
“If someone opens a credit union account to avoid this tax, that’s not just a win for remittances,” said DeFilippi. “That’s the beginning of a broader financial relationship.”
A Market Waiting to Be Tapped
According to DeFilippi, many immigrants already trust digital tools—they’re just not seeing credit unions represented in the channels they use most.
“Immigrants are heavy mobile users. But as an industry, credit unions still have a small presence in digital channels, especially social media,” he said. “This is where the opportunity lies.”
To truly compete, DeFilippi argues, credit unions must go beyond offering digital remittance tools. They need coordinated outreach—campaigns that speak directly to immigrant communities through platforms they already use.
“We need to meet people where they are—digitally and culturally,” he said. “That may require industry-wide collaboration, but it’s worth the investment.”
A Time To Act
With the budget bill signed and the remittance tax set to take effect, credit unions now face a pivotal moment. For those ready to innovate and invest in digital outreach, the payoff could be both immediate and lasting: new members, deeper relationships, and a stronger foothold in a high-demand market, DeFilippi noted.
“This is more than just a response to a new tax,” DeFilippi emphasized. “It’s a chance for credit unions to show they’re here for immigrant communities—not just to help send money home, but to build a better financial future right here.”
America's Credit Unions holds a different perspective.
Greg Mesack
"Our take is that this new remittance tax is going to be a burden—both for credit unions and for their members,” ACU SVP of Advocacy Greg Mesack told CUToday.info. “Congress didn’t originally include this provision. We fought hard to make it better—and to everyone’s credit, it did improve.”
The original version proposed a 5% tax on all remittances sent by non-citizens.
“What we have now is a 1% tax on all remittances, regardless of immigration status, but with a key exemption: any transaction funded from a bank account, debit card, or credit card is not taxed. So essentially, the 1% only applies to cash remittances,” reminded Mesack.
Mesack said that still represents a burden for CUs.
“There’s regulatory risk and liability for credit unions, and a new paperwork requirement,” he explained. “If a member sends a cash remittance, the credit union is required to collect and remit that tax. And if for some reason they don’t collect it, they may still be held responsible—the obligation to pay doesn't go away.”
Mesack recognized that some groups are calling the tax an opportunity—a chance to encourage more people to open accounts, join credit unions, and enter the financial mainstream.
“We see that potential too. But there’s still a fundamental question: Is the juice worth the squeeze?” he said.
“We’re proud of how far we’ve come. The original proposal was significantly more burdensome—it didn’t include the carveout for account-based payments, and it would’ve required verification of citizenship status and tax collection on all transactions, not just cash. That version would have been extremely difficult to implement,” Mesack noted.
Also worth noting: While payments drawn from bank accounts are clearly exempt, there’s still some gray area when it comes to physical instruments like money orders and prepaid cards, analysts have stated.
WOCCU Partners With Visa
Separately, the World Council of Credit Unions (WOCCU) has launched a strategic collaboration with Visa aimed at addressing one of the most "persistent" barriers to financial inclusion: the high cost, access and complexity of cross-border payments and remittances, WOCCU said.
Announced at the 2025 World Credit Union Conference in Stockholm, Sweden, the initiative will bring together credit union leaders from across the Americas to identify and explore scalable solutions that ensure reliable cross-border money movement with the security, ease of use and clear guidance that credit union members seek, WOCCU said.