BofA Dumps Its SafeSend Cards

  Bank of America is ending one of the first large-scale experiments in which debit cards and ATMs were the backbone of a global funds-transfer service designed to attract Hispanic depositors. But other financial institutions still view debit card-based funds-transfer systems as a viable means to reach out to Hispanic consumers.
  As the fastest-growing minority population in the United States, Hispanics have banks vying for their business. Approximately 8 million Hispanics send funds to Mexico, according to Gwenn B?zard, research director at Aite Group, a Boston-based financial service consulting company.
  Consequently, financial institutions have been trying to use those tight financial ties to draw Hispanics in as long-term customers. And getting into the cash-remittance business is seen as central to that effort.
  Since 2002, Charlotte, N.C.-based BofA had used prepaid debit cards and access to Mexican ATMs as the centerpiece of its SafeSend remittance service. The goal was to attract Hispanic depositors here.
  However, BofA abandoned the Debit card/ATM approach in September in favor of a more traditional funds-transfer method. Mexican recipients now go to a bank location and pick up funds in cold hard cash.
  During SourceMedia's recent ATM & Debit Forum in Miami, Kebbie Sebastian, BofA vice president of international remittances, noted that BofA, through internal surveys, concluded that recipients of SafeSend funds in Mexico preferred to get cash from local agents instead indirectly using debit cards and ATMs. "Our customer research showed a vast majority wanted cash," he said.
  In the card-based SafeSend program, BofA issued a Visa-branded prepaid debit card by mail to Mexican residents who were to receive the cash. BofA customers in the U.S. initiated the card with a deposit into a BofA account. Recipients could then access the funds at any of the more than 20,000 Visa Plus ATMs in Mexico
  SafeSend now offers cash pick-ups at 4,500 locations throughout Mexico. BofA has cash-pickup agreements with Banco Santander, of which BofA owns a significant stake, and Bansefi/LRed de la Gente, Telecomm Telegrafos and Banorte.
  As under the old SafeSend program, only BofA customers in the United States can send funds using SafeSend. Unlike remittance giant Western Union, BofA does not impose a charge for a remittance.
  Fees have been a key element in the SafeSend offering. The bank last year eliminated a charge of 3% of the value transferred, and in January it cut to $8 from $10 the fee to load value onto the cards. The $8 fee was dropped when BofA discontinued offering SafeSend cards.
  SafeSend transfers still are free to BofA customers, although some BofA account holders pay a monthly fee to maintain a checking account with the bank.
  BofA always has viewed SafeSend as a tool to attract Hispanic depositors and not as a standalone, profitable product. "We are doing this to acquire relationships and give people one more reason to bank with us," says Eduardo Vergara, BofA international remittance executive. The bank wants to make the program as attractive a possible, he says.
  SafeSend debit cards did not make a big impact in the multibillion-dollar Mexican remittance business. In 2004, only 0.2% of all U.S. outbound remittances were made using prepaid MasterCard or Visa cards, according to an Aite Group study. B?zard cites convenient access to cash as the most important factor in using money-transfer products.
  B?zard estimates SafeSend had about 100,000 debit card users in 2004. He expects about 200,000 SafeSend users by the end of this year.
  Another potential drawback of SafeSend is its exclusive reliance on the telephone and BofA's online banking service to set up funds transfers. BofA does not allow SafeSend customers to initiate transfers at branch locations. B?zard says that limitation makes SafeSend less attractive.
  But Vergara views SafeSend as a success. It has attracted thousands of new depositors to BofA, and its use has grown by about 500% since 2002 in both the number of users and the dollar amounts transmitted, he says.
  However, B?zard says the program needs more users to be profitable. SafeSend accounted for about 7% of new Hispanic banking customers for BofA in 2004, he says.
  Despite BofA's move, other financial institutions still believe a remittance program that relies on debit cards offers greater security than cash. "It's safer than receiving $1,000 and then carrying it around with you," says a spokesperson for Charlotte, N.C.-based Wachovia Bank. "With a card, you can receive your money in increments."
  Wachovia's Dinero Directo remittance program, launched in April, uses an ATM card that can access any Visa Plus ATM. The card carries a $10 loading fee after one free load, and the program is available only to Wachovia depositors.
  B?zard says all banks except BofA and New York-based HSBC charge for money transfers. HSBC's ATM card remittance program, EasySend, is similar to BofA's SafeSend. But HSBC requires a minimum balance of $1,500 for free money transfers.
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