29 August 2006
U.S. Hardware Giant Pilots Remittance Product
Home Depot joins fray between money wire services and banks
Washington – In Tampa, Florida, and Washington, two cities with large immigrant populations, customers of the hardware giant Home Depot now can send money overseas at the same time they buy paint, light bulbs or topsoil.
Under a new pilot program, for $4.95, Home Depot customers can purchase two cards – one to give to a family member and one to keep. They can “load” the card at the cash register with up to $2,500 in cash for a $7.95 fee.
The cards, called “MiCash,” work with automated teller machine (ATM) networks – Cirrus, Maestro, Star or Pulse – and allow either cardholder to withdraw cash or to shop at retail locations that accept ATM cards.
MiCash is a small, 17-person company that has partnered with Home Depot to offer the service. While the use of the Spanish pronoun in the product name clearly is meant to appeal to Hispanic immigrants who want to send money home to Latin American countries, the cards, sold with the Home Depot logo, are also used by parents sending money to college students, military wives sending money to husbands in Iraq or Afghanistan, and people sending money to France, Indonesia, Italy and Africa, according to Javier Palomarez, a marketing executive at MiCash.
The U.S. Federal Reserve says 11 percent of U.S. families do not have checking accounts. Many immigrants use only cash, sometimes because they live in neighborhoods where there are no banks or because they work at jobs with inconvenient hours. But today, Palomarez said, these consumers are “being courted by every major financial services provider and every major retailer.” (See related article.)
Indeed, a spokesman for the American Banking Association, said banks are looking for ways to engage the immigrant community with similar products in a hope that such customers eventually will use other bank services. While banks have only a small percentage of the U.S. remittance market, they are competing – like MiCash – with traditional wire service companies, like Western Union or MoneyGram, on price.
A typical money transfer is under $400, according to Ezra Levine, who is counsel to the Money Services Roundtable, a group that represents money services businesses. But the wire transfer companies often charge 10 percent of what is sent.
According to James Ballentine of the American Banking Association, some banks will transfer money for as low as $10, without requiring the sender to open an account.
In a statement in 2004, the White House said money sent by migrants to their families totaled more than $32 billion annually in the Western Hemisphere and fees amounted to $4 billion, or 12.5 percent. President Bush supports efforts to lower remittance costs.
The largest group of recent immigrants to the United States is from Mexico, according to the U.S. Census Bureau. Home Depot has 1,839 stores in the United States and 57 in Mexico. While the hardware retailer requires government identification from purchasers of MiCash cards, the process may appeal to immigrants who dislike giving personal information to banks.
There are other retailers that offer remittance services, but they are “mom & pop stores,” Palomarez said, without the strong-brand reputation that Home Depot carries.
(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
