Debit Cards Gain Popularity - with Members, Too
Arndorfer, James B., American Banker
United Airlines Credit Union huge, but traditional plans to start issuing debit cards in early 1995.
"This is a product that will be completely embraced," predicted Robert Bream, president of the country's third-largest credit union. "Ws accepted around the world, and we like that because we have a worldwide membership."
While Chicago-based United has $1.9 billion in assets, it does not offer basic products like checking accounts to members. But when the debit card debuts, so will checking.
According to a recent survey of 800 credit unions by the Credit Union National Association, debit cards ranked first among products a credit union is likely to add next year. Debit cards draw money directly from a deposit account.
Roughly 500 credit unions issue debit cards. said Elizabeth Taylor Quilliam, vice president of sales and electronic funds transfer services for CUNA Card Services Group.
About 200 of them issue cards through the services group, a subsidiary of the Madison, Wis.based trade association. That's up from 130 last year.
About 29% of credit union member households have a debit card.
"Credit unions are increasingly offering a wider range of products, much to the consternation of community bankers, their primary competition," said James Barth, an Auburn University economics professor who has studied the industry.
"I see a lot of participation in debit by credit unions," said Doug Miraglia, vice president of debit sales and business development for MasterCard International, New York.
For instance, of the 623 financial institutions involved in MasterCard's Maestro point-of-sale debit program, 168 are credit unions. And credit unions represent 'about 15% of the.463 financial institutions issuing offline debit cards.
Credit union officials say they like the product because it avoids the costs associated with paper check processing. Also, the cards generate interchange income fees assessed from merchants based on card transactions. Point-of-sale, 'or "on-line," cards reap a flat amount per transaction, while the off-line cards bring in a percentage of each transaction, Ms. Quilliam said.
Arizona Federal Credit Union, Phoenix, began offering off-line debit cards nine years ago through CUNA's Cards Service Group, making it one of the first credit unions to do so. …