J. Paul Boushelle has done as much as anyone to advance the cause of electronic banking, but few people know it.
That's because Mr. Boushelle did what he did in New Mexico. He seems to personify that scenic state's preference to let others vie for national attention and permanent immigration, while the 1.6 million New Mexicans hopefully preserve their relaxed, relatively rural lifestyle.
There was nothing laid-back about the way Mr. Boushelle, executive vice president at First Security Bank of New Mexico, engineered what he argues is the nation's premier electronic benefits transfer system. In it, paper-based government payments like welfare checks and food stamps arc converted into automated, card-based delivery systems.
Look closely at the way New Mexico works, and you see not just a shining example for the other states running or planning such systems but also a widely accepted electronic payment network, serving all social strata, that would be the envy of many bigger, supposedly more sophisticated market areas.
Thanks in large part to the benefits transfer system, for which Mr. Boushelle's bank is the central processor, a full-fledged network for accepting card-based payments blankets Bernalillo County, which includes Albuquerque.
State authorities, after last year declaring their three-year benefits transfer pilot a success, expect to extend it statewide by late 1995.
"EBT [electronic benefits transfer] drove the commercial point of sale business," said Mr. Boushelle. "That was the intent from the beginning."
In other words, Mr. Boushelle and his partners at other banks, food retailers, and. government agencies found that their respective interests converged in an electronic payments infrastructure.
That proverbial win-win-win was supposed to have made EBT, an innovation first promoted during the Reagan administration, a national, taxpayer-relieving phenomenon by now.
But a lack of funding to support the vision, and bickering between bankers and retailers in states that tried to adopt it, made successes like Albuquerque's few and far between. Only a handful of states, and in most cases just small jurisdictions within those states, have converted significant numbers of aid recipients to EBT.
Momentum is building, however. The Clinton administration has gotten behind EBT as an opportunity to use technology to cut administrative costs and fraud while delivering a better "product." A task force that grew out of the National Performance Review, also known as the "reinventing government" study, is pushing all states to put EBT plans into operation by 1996 and to join in an interchangeable nationwide payment system by 1999.
In theory, a single card would offer access to myriad benefits programs -- ranging from Aid to Families with Dependent Children and Social Security to food assistance and child support -- through electronic terminals wherever the cardholder may be living or traveling.
The most celebrated current program, thanks in part to New Mexicans' staying out of the limelight, is the one in Maryland. It is the only statewide system, handling about 250,000 state-administered cases to the tune of $55 million a month.
According to a May 1994 report of the Federal EBT Task Force, New Mexico was delivering about $7.7 million of electronic benefits monthly to 36,000 people in Bernalillo County. The state's total food stamp population is about as large as the current number of electronic benefits recipients in Maryland.
The concept got an apparent boost early this year when Texas, with 2.7 million welfare and food stamp cases, awarded a $200 million, seven-year processing contract to an affiliate of Gtech Corp., better known as an operator of state lottery systems.
Deluxe Data Systems, the electronic funds transfer processor that handles EBT for Maryland and other states, protested alleged improprieties in the Texas bidding, but Gtech is moving ahead with plans to bring an initial 30,000 clients onto its system this year.
Mr. Boushelle and the New Mexico food retailers and government officials he works with have more than a passing interest in neighboring Texas. They expect to be in the vanguard facing "border state" issues that are sure to arise as EBT spreads within the new federal framework.
First Security Bank's system will have to be compatible with Gtech's to serve people crossing from one state to the other, and these are not companies with a history of working together.
"We won't want to have to reinvent the wheel," said Mr. Boushelle, who is understandably partial to the New Mexico approach.
As good as they may be in New Mexico, John Waller, the state Human Services Department's EBT project director, points out that Texas has more food stamp clients than the entire population of New Mexico.
Mr. Boushelle sees New Mexico as proof that a bank can
and should -- take charge and keep control of payment systems away from outsiders like Gtech and Deluxe Data.
Now that Furash & Co., in a recent report for the Bankers Roundtable in Washington, has identified EBT as an attractive payment-system business opportunity for banks, others may want to look more closely at the New Mexico-First Security model.
When New Mexico was preparing to launch its EBT "demonstration" in 1990, Mr. Boushelle's Albuquerque institution. then called First National Bank. won the processing business.
It was a natural fit. The bank, now with $1.5 billion of assets and No. 2 in New Mexico behind the Sunwest subsidiary of St. Louisbased Boatmen's Bancshares, was the state fiscal agent and processed most of the U.S. Department of Agriculture food coupons issued in New Mexico.
"It was a back-room nightmare, not just for us but for the merchants," said Mr. Boushelle, a 60-year-old, 15-year veteran of the bank, who heads its retail operation. First National changed its name after it was acquired last fall by Utah-based First Security Corp., which Mr. Boushelle said has raised its stature and may create more EBT opportunities.
"Last time, we were able to be successful bidding against Deluxe. But outside New Mexico, who knew First National Bank in Albuquerque?" he asked.
Although the bank made a name for itself by operating one of the early EBT programs and helping build the statewide point of sale network, he said: "Let's be realistic. Now, it requires a name to get bigger in this business. First Security has that reputation. We have a lot more resources to expand."
Mr. Boushelle said that, far from demoralizing the once proudly independent First National Bank, the First Security merger had reenergized it and his own career.
"It's a whole new deal," Mr. Boushelle said. "We historically had a good branch system but neglected the retail business, and that was especially frustrating to me. Retail is First Security's strength. It is very consumer-oriented, good at training. Everything we needed is what they gave us."
The merger wasn't just a one-way street. First Security Corp. decided the Albuquerque bank was so good at transaction processing that it lets it run the holding company's entire automated teller machine network.
Mr. Boushelle, who ran a bank-owned data processing center in Santa Fe, N.M., before rising through the operations and retail banking ranks at First of Albuquerque, said bankers have been slow to see the payoffs available from large-scale conversions to card-based payments.
While many bankers agonized over pricing issues -- what to charge both cardholders and retailers -- in vain attempts to cover the costs of debit card and point of sale terminal systems, Mr. Boushelle focused on the "backroom nightmare" and came to see that eliminating paper would be its own reward.
Mr. Boushelle contends that bank customers' debit cards -- Visa Check in his bank's case -- will have the same effect as the EBT systems that are sweeping away tons of food stamps and other paper documents.
He said he also realized early on that, for EBT and an eventual mass-market debit card payment system to succeed, bankers and retailers had to work together -- more easily said than done.
"If the retailers are opposed, it's dead," Mr. Boushelle said. "In the first half-dozen states picked for [EBT] pilots, most never got retailer support."
In New Mexico, First Security Bank was big and influential enough to bring other key banks, participants in the Lynx ATM network, to the table. The former First National, as central processor, promoted EBT, certified other banks for the program, and provides authorizations for electronic food stamp transactions.
"We needed all banks involved for commercial POS to succeed, so we don't monopolize it," Mr. Boushelle said.
To cross the cultural divide with retailers, who in other states categorically refused to bear any financial burden, Mr. Boushelle worked closely with Truett Gill, president of the New Mexico Grocers Association.
Mr. Boushelle said the association was a "wonderful intermediary," advocating from the start that there be only one terminal per checkout location.
Mr. Boushelle, Mr. Gill, and John Waller of the Human Services Department all said that the ensuing negotiations were tough but produced an economical, efficient system, with pertransaction costs under 12 cents.
Mr. Gill and Mr. Waller also said they doubted that New Mexico would have had its EBT success story if not for Mr. Boushelle's playing a central role.
"Other states had failures because of no compromises," Mr. Waller said. "We played a little poker and resolved the differences."
"We decided up front that there were a lot of good reasons for EBT and POS, and both First Security and the state recognized the grocers as equal partners," said Mr. Gill, whose group has 200 members with 800 stores. "We had differences that had to be worked out, and we got bogged down a little on the costs, but the bottom line was, we wanted the program."
The retailers were certainly aware that food stamps accounted for 20% or more of some supermarkets' sales. And higher on the economic ladder, New Mexicans, a relatively well-educated bunch, were early adopters of ATM and debit cards.
"The money to be made isn't so much in what you charge the retailer -- it's in the reduced costs of handling paper in the back room," Mr. Boushelle said. "POS, unlike an ATM transaction, truly replaces a check."
And he sees the benefits of electronics' replacing paper filtering through his bank and other participants in the New Mexico retail payment system, from big supermarket chains to convenience stores to mom-and-pop stores.
Mr. Boushelle is especially proud of a photograph on his office wall of a tumbledown bodega in an Albuquerque neighborhood, with a crude, hand-lettered sign on the door:
"We accept EBT." It symbolizes, to him, the appeal and potential universality of electronic payment. Electronic Benefits in New Mexico.Start-up 1990Location: Bernalillo CountyClients: 36,000Programs: Welfood Welfare food stampsProcessor: First Security Bank of New MexicoStatus: Statewide expansion in progress