CINCINNATI -- A handful of credit unions are prepping to pilot a new prepaid card program through Shared Resource Technology Group, a CUSO founded by three Ohio credit unions.
The credit unions will test the card beginning in late August or early September, according to Brad Keiser, executive vice president of electronic services at SRTG. By the end of the year, the 60-page business plan calls for an additional dozen credit unions to have the card in place.
"Between 10% and 20% of checking account applicants are being turned down," Keiser said. "The first piece of the puzzle is [for credit unions] to have the ability not to say 'no.'"
Keiser said SRTG, which was formed in 2004 by AurGroup Financial Credit Union, CINCO Family Credit Union and River Valley Credit Union to provide technology solutions, is looking to have between 10-12 credit unions provide one-third of the capital to start a CUSO for alternative financial services such as prepaid cards. Keiser recently gave a presentation on the venture in Boston to Member Gateways, LLC, a strategic alliance among 24 credit unions, their CUSOs and Callahan & Associates to identify and integrate existing and future financial services and products with credit union delivery systems. He is also seeking another third of capital funding from entities like Member Gateways and MEMBERS Development Corp. and the final one-third from vendors.
"As we implement and roll out the card, we will identify hitches such as in delivery, processing and technology," Keiser said.
SRTG plans to go full scale in 2008, Keiser said. Plans are also in place for the CUSO to target community banks with the prepaid cards.
"They are in the same boat when it comes to competing with regional banks," Keiser said.
While still relatively new to credit unions, some CUSOs and vendors are marketing prepaid cards to the industry. In 2005, The Members Group introduced its Atira prepaid card program. The program provides plastics, marketing materials and sales strategies for introducing credit union members to the idea of prepaid cards. Credit unions can also instantly issue gift cards at all their branches with a secure, Web-based interface, according to the company. TMG said it partnered with WildCard Systems Inc. to ensure the card program can grow beyond gift cards with its prepaid platform.
According a survey from Mercator Advisory Group's Prepaid Market Forecasts 2006 to 2009 report released in November 2006, the prepaid industry will grow from $165 billion in 2005 to $236 billion by 2009.