Magazine article American Banker

Who Needs Cash? Trial Tests Prepaid-Card Issuance at the ATM

Magazine article American Banker

Who Needs Cash? Trial Tests Prepaid-Card Issuance at the ATM

Article excerpt

Byline: Sean Sposito

Larger banks may feel threatened by the string of new, aggressively priced prepaid cards, but a group of credit unions is attempting to instead embrace this trend by modifying their ATMs to sell fee-free stored-value cards.

Credit Union West, MariSol Federal Credit Union and Pinal County Federal Credit Union are testing a system for offering their members cards loaded with $25. The cards are purchased at ATMs and do not carry any fees during the test period, which will run at least through the second quarter.

The credit unions are working with a Mesa, Ariz., technology vendor, Better ATM Services Inc., which announced the tests Tuesday. Better ATM Services funded the upgrades to the credit unions' ATMs. It provides the cards and collects the interchange when they are used.

"If I were a banker, I'd be concerned," says Todd Nuttall, chief executive of Better ATM Services. "[A customer] comes to me for loans and for checks, but if [that customer] needs a prepaid card, they go down the street to Wal-Mart."

The Visa-branded prepaid cards more closely resemble transit cards than credit cards a they are printed on thin plastic, which is more easily dispensed by a machine. The cards come on a perforated sheet, which is about the size of a dollar bill and includes a coupon and customer service information.

Better ATM Services has been developing this project for five years, says Nuttall. The vendor launched at the 2006 Card Forum & Expo, a SourceMedia Inc. conference. (SourceMedia publishes American Banker.)

Within the next several months members will be able to request cards for denominations other than $25, says Robert MacGregor, president and chief executive off Credit Union West. The credit union is testing this system "to better serve our members," he says. …

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