Not-for-Profit Tests SiGo Card For Use Among Immigrants

  A reloadable prepaid card has become a not-for-profit group's way of helping unbanked immigrants feel safer by not having to carry as much cash.
  New Labor, a New Brunswick, N.J.-based not-for-profit organization that works with immigrants, since September has been offering the SiGo Money MasterCard Worldwide to area residents from other countries as part of a pilot, says Lauren E. Leimbach, former senior vice president of online marketing operations at Providian Financial Corp., who played a key role in putting the program together. Leimbach left Providian, now owned by Washington Mutual, in 2002. She is now executive director of Community Financial Resources, a Berkeley, Calif.-based nonprofit organization.
  New Labor charges immigrants $4.95 to open a SiGo card account online. In addition, it charges cardholders $2.95 per month, and it shares the funds with IDT Corp., which markets SiGo through IDT Stored Value Services.
  Leimbach declined to disclose how the money is divided, but she says New Labor's share provides the organization with a revenue stream. So far, New Labor has distributed 200 SiGo cards, says Rich Cunningham, New Labor's director.
  "People are generally enthusiastic about the cards because they are more tangible than a bank account," Cunningham says.
  MetaBank issues SiGo, a name that combines the Spanish word for yes, "si," and the English word "go."
  If New Labor's model is successful, Leimbach and Janice Fine, an assistant professor of labor relations at Rutgers University who originated the idea for the product, plan to use it as a template to help other nonprofits. For starters, they are targeting 155 immigrant-worker centers nationwide that operate under various names.
  Leimbach's extensive financial background and her familiarity with prepaid cards enabled her to turn Fine's concept into a product. Fine says she conceptualized the program after conducting in-depth studies of individuals who patronize labor centers to enroll in classes that teach English as a second-language or to seek legal advice concerning their immigration status.
  "One of the major problems faced by immigrants is finances," Fine says. "Some do not trust banks, or they do not have the proper identification to open a bank account."
  Leimbach says New Labor employees conduct outreach services in their communities, and they promote SiGo to help create interest in the organization's other programs. She negotiated the agreement with IDT Corp. after listening to requests for proposals from 30 vendors.
  "We wanted a card with a low initial fee and no hidden fees, and IDT agreed to provide it," Leimbach says. Leimbach explains she was in the right place at the right time because IDT was in the throes of developing a Hispanic marketing strategy. "They were building a bilingual Web site," she says.
  Cardholders can have funds from their paychecks loaded onto the card for free at New Labor's office. New Labor also has an agreement with Green Dot Corp., which allows SiGo cardholders to reload their cards at a number of retailers, including locations operated by Walgreen's, RadioShack, Rite Aid, Eckerd and Coinstar. New Labor also has a reloading agreement with Western Union and IPP, a company that reloads cards.
  "There are over 110,000 locations where the cards can be reloaded," Leimbach says.
  SiGo cardholders also can tell their employer that they want their paycheck deposited directly onto their cards through the company's bank.
  Although direct deposit is widely available, unbanked immigrants use it very little, says Arjan Schutte, associate director of The Center for Financial Services Innovation, which provided $150,000 in seed capital for New Labor's project.
  This has provided an opportunity for check-cashing services, which charge relatively high fees to cash checks. "We can't totally crack the check-cashing nut," Leimbach admits. But she says as a Providian executive she learned that everything is negotiable.
  "We visited check-cashing businesses [near] where immigrants live," she says. "We told them if they don't charge SiGo cardholders additional fees, we would recommend [cardholders] patronize their firms."
  Check-cashing services usually charge 1.5% to 3% of the check's face value.
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