BofA to Vie for a Piece of Immigrant Market

Rivals rushed to follow Wells Fargo & Co.’s lead when the bank last November began opening accounts for Mexicans who have consular identification cards. But even more intense competition is now at hand.

Bank of America Corp. today will roll out a service allowing customers to use telephones, the Internet and ATMs to transfer funds to Mexico. It also will phase in acceptance of the matricula consular IDs until they can be used to open accounts at all of its 4,200 branches nationwide.

The Mexican government has advised its 48 U.S. consulates to promote the IDs for the estimated 3 million undocumented Mexicans living in the United States.

Bank of America this year quadrupled its budget for advertising to minority consumers to $40 million. A major ad campaign built around the slogan “Creemos en ti,” Spanish for “We believe in you,” also is being launched.

Many banks, including some BofA branches, already open accounts for Mexicans with consular cards, who must show a second ID--a utility bill, for example--but not immigration papers. “We don’t ask any of our customers to demonstrate their legal status,” said Wells spokeswoman Mary Trigg.

BofA’s new programs, however, represent the clearest commitment yet by the country’s largest retail bank to serve Mexican immigrants, who wire more than $9 billion a year home to relatives--and typically have paid 10% of the wired amount in fees to do so.

BofA’s new SafeSend program will allow holders of checking accounts or credit cards to set up separate accounts for transferring funds, with personal codes to allow access by ATM, phone or online.

Account holders can “load” the new accounts with up to $500 per transfer, up to a $1,000 maximum every 30 days. Recipients in Mexico will use cards and the account password to withdraw cash from 20,000 ATMs carrying the Star symbol--”just about every ATM in Mexico,” said BofA spokeswoman Leticia Aguilar.

Users will pay a flat fee of $10 per transfer for BofA customers, $15 for customers of other banks. An additional $2 is added for currency exchange, so a BofA customer would pay $12 per transaction--4% of a $300 transfer, 2.4% of a $500 transaction.

Like Wells Fargo and U.S. Bancorp, Bank of America already sends representatives to some Mexican consulates to sign up customers who have new high-security versions of the consular cards.

The consulate in Santa Ana, where BofA set up shop Monday, is issuing 5,000 of the new cards per month, up from 1,800 a month of the old cards.

One reason for the cards’ popularity is the growing number of police agencies and governments that accept them as identification. The Los Angeles City Council will consider doing so next month.

But the biggest reason for the demand is U.S. banks’ willingness to accept the new cards, said Miguel Angel Isidro-Rodriguez, the Mexican consul in Santa Ana.

Not only are banks usually cheaper than money-wiring services, which Isidro-Rodriguez said can charge up to 25% in transfer and foreign-exchange fees, but “it’s really needed for people to be able to establish credit,” he said.

About 25,000 Wells Fargo accounts have been opened with consular cards since November. Wells, which sent funds to branches of the Mexican bank Banamex until Citigroup Inc. bought Banamex recently, will soon announce another partner, probably Bancomer.

Even as BofA positions itself more aggressively against U.S. competitors, however, a potentially more formidable rival is getting ready to compete for the same customers: Banco del Ahorro Nacional Servicios Financieros, or Bansefi, a government-backed Mexican bank with a mission to serve the nation’s poorest residents, is installing an Internet-based money transfer system of its own.

Bansefi plans to operate in partnership with North American credit unions and small Mexican banks serving the huge rural populations most likely to have family members working in the United States. It and other new government-sponsored financial institutions designed to serve the poor are part of Mexican President Vicente Fox’s campaign to push economic advantages down to the lower levels of Mexican society.

These banks currently serve about 3.5 million customers who previously had no access to financial services. The goal is to increase that number to 12 million by 2010, said Raul Medina-Mora, managing director of Vision Consulting in Mexico City, which is installing the Internet system.

Funds transferred from the United States to Mexico via Bansefi’s system will be automatically routed into savings accounts at Bansefi or the small banks that will use its system.

Medina-Mora said the process is a way for the owners of the accounts to save money on transfer fees. Most important, they will begin building savings and establish credit records for the first time--all goals of the Fox administration.