Next to the names of Saigon Central Post Inc., Dollar Delivery Inc. and Le Goi-Tien Le, big bank Wells Fargo & Co. wants to add its name to the list of money transmitters to Vietnam.
The business is brisk in Little Saigon, the Vietnamese enclave in Westminster, Garden Grove and neighboring cities.
Dennis Le, director of operations for St. Anselm’s Cross-Cultural Community Center in Garden Grove, said he sometimes sends a few hundred dollars to his three sons in Vietnam.
“The majority of Vietnamese send money to support family, not just to do business,” Le said.
He typically uses a money transfer agent in Little Saigon, a loosely defined area that’s home to some 200,000 Vietnamese-Americans.
Ground zero for money transfers: Bolsa Avenue, home to dozens of storefront centers.
Some are reputable. Others may escape the watchful eye of the state’s regulator, the Department of Financial Institutions.
Most operate the same way.
Money is sent overseas. Then couriers are used to run the money to rural village homes. The couriers, or stringers as they are sometimes called, deliver money via bikes or automobiles.
Vietnamese prefer getting their money this way as opposed to traveling to a bank because of distrust of the communist-run banking system.
Memories of the end of the war with America in 1975 also are fresh in the minds of many. The government skimmed off savings in the banks as its own spoils, leaving what was left for locals.
Many also like to get paid in dollars, a valuable commodity given that it’s the safest to use to buy land or a home.
In Little Saigon, a respected place to send money to Vietnam is from Le Goi-Tien Le, according to observers. There are a handful of these agents scattered throughout the area. Knocking on the door to speak to any of these operators arouses suspicions. None of them answer questions.
Le Goi-Tien Le was formed in 1998 in Westminster and later was bought by privately held Nexxar Group Inc. The Paramus, N.J.-based company, which pegs its 2006 revenue at $100 million, gears its operation to remittance operations in ethnic communities.
A spokesman for Nexxar declined to comment on its business, which keeps local offices in Lake Forest and Westminster.
Wells’ Move
San Francisco-based Wells Fargo wants in on the action. It recently announced plans to crack the remittance market for Vietnam, estimated at about $3.6 billion in 2006, according to figures provided by Dan Schatt, senior retail banking analyst in the San Francisco office of Boston-based Celent LLC.
The Wells Fargo move is a big deal because for the first time it establishes a benchmark price for people living in the U.S. to send money back to Vietnam families, according to Schatt.
Wells Fargo has forged a tie with the Industrial and Commercial Bank of Vietnam (known as Incombank) for its account-to-account remittance program. Customers in the U.S. can send up to $3,000 a day to Vietnam for $8.
As one of the largest banks in Vietnam, Incombank lets recipients claim their money at 700 branches and 400 ATMs throughout Vietnam.
They can do this by visiting a branch, signing on to an online account or by phone, according to Daniel Ayala, head of Wells Fargo’s global remittance services.
“Use of a courier hasn’t been ruled out,” he said.
“There are some challenges in the marketplace, and I can’t comment on those,” Ayala said, alluding to the sometimes shadowy nature of remittances. “If people want to operate under the radar, we are not interested. We want people with a legitimate interest in us. We want to make sure that the funds on the receiving side are safe and secure.”
Overseas, Vietnamese can pick up U.S. dollars at Incombank branches, but it’s unclear whether such is the case at ATMs. Vietnam’s local currency is the dong and isn’t worth as much as the dollar.
At the same time as the Vietnamese deal, other remittance arrangements were announced by Wells Fargo with the Agricultural Bank of China and expanded services with the Bank of Philippine Islands based on similar terms.
But the Vietnam agreement is catching everyone’s attention.
Le, who doesn’t have a Wells Fargo account, said he may stop going to his Dollar Delivery agent in Little Saigon and choose instead to open a Wells Fargo account in order to take advantage of the $8 fee.
“It’s up to Wells Fargo to prove that it is a trustworthy operator,” he said.
Little Saigon Market
How much remittance money is at stake in Little Saigon?
Estimates vary, but experts see a wide range of money flowing yearly from Little Saigon, from less than $100 million to $654 million.
“I think the Wells deal is significant,” Schatt said. “If you look at this from the 30,000-foot level, banks over the last 15 to 20 years have lost an incredible amount of market share in the remittance space. Roughly $60 billion goes to other countries, and banks have about 5% of that market.”
Wells Fargo has nailed “the price point,” Schatt said.
“If they can get a decent reputation in the Vietnamese community, and staff branches with this product, then they’ve got a chance to change the game or reclaim a lot of lost market share,” he said.
