Bank of America Corp. is abandoning its automated teller machine-based remittance program in Mexico in favor of the more traditional approach of having recipients pick up money in person.
B of A announced Wednesday that SafeSend recipients now can retrieve funds at more than 4,500 over-the-counter locations throughout Mexico - at the banks Bansefi and Grupo Financiero Santander Serfin (and at Banorte starting in November) and at offices of Telecomm-Telegrafos.
B of A has been sending recipients a card to access the funds at any ATM; it plans to phase out the cards by yearend.
Bank of America introduced SafeSend in 2002. Eduardo Vergara, the Charlotte company's senior vice president for international remittances, said Wednesday that demand for the service has exceeded initial expectations. But he said customer research found that while a segment of the Mexican population liked "card-based products and was comfortable going to the ATM, the vast majority of the market says they want cash."
One problem with the program, Mr. Vergara said, is that recipients must sometimes pay ATM surcharge fees to get the money. (Using Santander ATMs is free because Bank of America owns a 25% stake in the banking company, but many Mexican recipients live in areas where Santander has no ATMs.)
B of A has tinkered with SafeSend before. In January it eliminated a 3% foreign exchange fee and a $10 transfer fee for senders, but only in the Chicago area, in a test designed to attract more deposit accounts.
The card-based version of SafeSend required senders to have some kind of account, but now they must have a checking account. Senders can open the accounts using identification cards issued by Mexican consulates, and can initiate transactions over the phone.
Mr. Vergara said the goal of the SafeSend service has always been to gain new customers. "We don't see ourselves in the remittance market, but of building banking relationships and particularly we're targeting the unbanked," he said.
Gwenn Bezard, a research director at the Boston market research firm Aite Group LLC, said the revised SafeSend would be "a loss-leader for B of A to attract customers. They believe they will get more traction with a service that disburses cash in hand."
Mr. Bezard said the SafeSend card service was doing well compared with other card-based money transfer programs. He estimated that Bank of America had 100,000 SafeSend users at the start of the year and is on track to have 200,000 by yearend.
Dan Schatt, a senior analyst for the Boston market research firm Celent Communications LLC, called the shift "a step in the right direction."
"The current card money transfer product does not appeal to the majority of remitters, who find it inconvenient and risky to withdraw large sums of money from an ATM machine," he said.
Many people with bank accounts continue to use money transmitters to send money abroad, and banks have largely "missed the boat" in the remittance market, Mr. Schatt said. The revamped SafeSend "makes sense" for B of A, he said. "It fits into their strategy of cross-selling."
Card-based money transfer products have a place in the remittance market but are products prepaid card distributors and walk-in bill-payment companies, rather than banks, should focus on, he said. "The people that the card would most appeal to are the people that would be least likely to go to a bank."
