Credit Union Times - October 1, 2008 - (Page 20) Special Report: Credit / Debit / ATM Emergency Preparedness Must Include Cards Programs, TNB Says By DAVID MORRISON McDermott explained. CU Times Senior Staff Reporter Further, since these are essentially cooperative DALLAS — With at least 25% of its processing arrangements, they are usually cost free or nearly cost credit unions suffering from the impact of Hurricane free and open to credit unions of all sizes, not just larger Ike, TNB Card Services has strengthened its call for ones, he added. credit unions to include card programs in the disaster Mark Fenner, senior vice president with TNB, said preparedness plans. that credit unions need to understand that their memTNB executives reiterated their bers are liable to need different things message about including cards in from their credit and debit cards after a disaster plans as the processor contindisaster such as hurricane. ued working with credit unions, parOne of the things having a hot site can ticularly in the Houston area and allow a credit union to do is to avoid havcoastal Texas, that are still without ing to have their card processor act as a power and facing other problems after stand in for the credit union on debit the storm. transactions, Fenner explained. TNB is “I think one of the most important pleased to do that for its credit unions, he and key things that a credit union can said, but it must follow policies on withdo before a storm or other disaster is drawals that have been previously set up to establish a hot site, either in a comand remain static until or unless the CU pletely other location or in a fortified changes them. FENNER position,” explained Darby McDerThis could mean, for example, he mott, one of TNB’s account executives explained, that credit union members who whose area contains many credit unions affected by the find a working ATM after a storm might only be able storm. access $200 per day. A hot site is a location in another place where the “Having a hot site up means that the credit union credit union’s core processing system can continue to can more effectively meet their members needs and cirfunction and run for members, processing transactions cumstances,” he said. and keeping track of records, McDermott explained. One example of a situation where a credit union’s Sometimes the sites can be fortified structures in the stand in parameters were not as clear came in the wake same area as the credit union, preferably built to resist of the 9/11 attacks when several credit unions, espedisaster and with access to power and other supplies or cially the now $1.4 billion Municipal Credit Union, faced they can be as simple as a relationship with another a situation where a minority of members seriously overcredit union in another location, the executives drew their accounts from ATMs and didn’t make explained. arrangements to repay. Muncipal’s example brought the Similar to shared branching relationship, these importance of clearly prepared policies for debit cards arrangements between credit unions that use the same after a disaster into sharp relief, but not all credit core processing system involve each credit union unions have applied the message yet. agreeing to host the other’s core system if necessary When it comes to credit cards, a number of different and even provide other back office support, portfolio decisions and policies should be reviewed as part of the CU’s disaster preparedness policy, the executives said. For example, a policy on fees for late payments could be waived for a given area that has been heavily affected as could a policy on fees for taking cash advances from the credit card. In many post disaster situations, what people really need is cash, the executives noted, since many places will not have power or be able to run card payments. One thing several TNB credit unions facing Ike found helpful was to use the processor’s parameters for credit line increase promotion in advance of the storm, even though no such promotion was planned. “This was a parameter which was already on our system and that we could activate fairly easily,” explained Tina Jones, another TNB account executive. “The increases enabled the credit unions to put more needed cash and buying power in their members’ hands when they needed it,” she said. Another important but often overlooked detail is to make sure that all credit union executives have access to the phone numbers of key personnel in their processor’s operation or any other vital third-party provider. There shouldn’t be the case where only one decision maker can reach vital people at the processor, the executives pointed out, because what do you do if that person is out of contact for an extended period? In addition to communication details, early details can include running tests to make sure the processor is able to work with the hot site, setting up the policy parameters for what to do if a stand in becomes necessary and deciding which cardholders would be part of a credit line increase should one become necessary. Credit unions are moving steadily to a more cardbased payments system, and they need to have plans in place for how their cards programs are going to keep meeting member needs when so many other things might have stopped working temporarily, Fenner said. —dmorrison@cutimes.com The Members Group Rolls Out Reloadable Prepaid Card Offering By DAVID MORRISON CU Times Senior Staff Reporter DES MOINES, Iowa — The Members Group, a card processing CUSO affiliated with the Iowa Credit Union League that offers several lines of prepaid cards, has rolled out a reloadable general purpose prepaid card. The new card will be the latest in the CUSO’s ATIRA card line and will be one that credit unions can tailor to their own marketing needs, according to Jeff Falk, director of card development for TMG. He added that the card processor has already identified several possible markets for the cards. “We view the ATIRA reload card product as a mechanism for credit unions to gain new members, especially from the teen, travel and underserved markets,” said Falk. Falk explained that experience shows that reloadable cards are popular with parents and teens. Teens like them because they are already used to using cards to pay for goods and services, and parents like them because of the increased budgetary and safety benefits the cards carry. A prepaid card forces teens to make budgetary and money planning decisions and does not carry as many risks of overdrawing accounts and the resulting fees, Falk explained. “With these reloadable cards, parents will be able to both help their children have the freedom of cards along with the ability to set how much money is loaded onto the cards,” Falk said. “In addition, as cards they carry the same sorts of purchase and loss safety measures that all cards with Visa or MasterCard logos carry.” Using the cards allows cardholders (and other authorized users) to load money onto the credit union-branded card, which can be used for purchases almost anywhere Visa debit cards are accepted. The cards also function as ATM cards, giving cardholders instant access to cash. Cardholders can load cash onto their reloadable cards in their CU branch, online or via direct deposit. They may also transfer funds from existing checking, savings or credit accounts. The direct deposit feature also allows cardholders to create a self-directed payroll card, which means the cardholder initiates the direct deposit at the employer just like any other debit card. The travel market would consist of people who both wanted the ability to have a reloadable card while they travel and avoid the inconvenience of using prepaid gift cards, which can carry no more than $750 dollars. “That’s not our limit but is a limit imposed as a safeguard on gift cards that does not apply to reloadable prepaid cards,” Falk said. In addition, the cards are used more easily while traveling and carry more protections against loss and theft than cash or travelers checks. Falk also noted that TMG is most enthusiastic about the way that the reloadable cards can impact credit unions’ ability to work with underserved individuals who might not yet qualify for checking accounts because of problems with check reporting black marks. “There are two sorts of payroll cards, those which flow from an employer relationship with the credit union and then those that can be treated as direct deposit accounts no matter if the employer has a relationship with the CU or not,” Falk explained. Falk pointed out that using the cards allows underserved cardholders to avoid the fees from check cashers as well as the risk of carrying large sums of cash. It also allows the cardholders to make payments online, an option which does not usually exist for people without relationships with financial institutions. “The ATIRA reload card helps CUs deliver a valueadded product to markets hungry for alternatives, creating an opportunity for growth,” said Falk. But he also noted that credit unions considering marketing the card to underserved populations sometimes have to change some of their traditional mindsets about cards. “We have found that credit unions offering these cards cannot assume that the possible cardholders know about cards, understand what the can do or understand their advantages right away,” Falk said. “Or that they necessarily trust them.” Falk explained, for example, that credit unions offering the cards to underserved populations have often found that, initially, the cardholders will use a lot of ATMs–that they still have a cash mentality and economy. “They use them less at the point of sale and more as a safer source of cash that they will then use at a point of sale,” Falk said, “much as they would have done with a check casher.” But gradually, he said, as the cardholders became more educated about the cards and more comfortable with them, they began using them more often and easily at points of sale. “There is simply http://www.cutimes.com
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