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From the October-01, 2008 issue of Credit Union Times Magazine • Subscribe!
Emergency Preparedness Must Include Cards Programs, TNB Says
DALLAS -- With at least 25% of its processing credit unions suffering from the impact of Hurricane Ike, TNB Card Services has strengthened its call for credit unions to include card programs in the disaster preparedness plans.<p>TNB executives reiterated their message about including cards in disaster plans as the processor continued working with credit unions, particularly in the Houston area and coastal Texas, that are still without power and facing other problems after the storm.</p><p>"I think one of the most important and key things that a credit union can do before a storm or other disaster is to establish a hot site, either in a completely other location or in a fortified position," explained Darby McDermott, one of TNB's account executives whose area contains many credit unions affected by the storm.</p><p>A hot site is a location in another place where the credit union's core processing system can continue to function and run for members, processing transactions and keeping track of records, McDermott explained.</p><p>Sometimes the sites can be fortified structures in the same area as the credit union, preferably built to resist disaster and with access to power and other supplies or they can be as simple as a relationship with another credit union in another location, the executives explained.</p><p>Similar to shared branching relationship, these arrangements between credit unions that use the same core processing system involve each credit union agreeing to host the other's core system if necessary and even provide other back office support, McDermott explained.</p><p>Further, since these are essentially cooperative arrangements, they are usually cost free or nearly cost free and open to credit unions of all sizes, not just larger ones, he added.</p><p>Mark Fenner, senior vice president with TNB, said that credit unions need to understand that their members are liable to need different things from their credit and debit cards after a disaster such as hurricane.</p><p>One of the things having a hot site can allow a credit union to do is to avoid having to have their card processor act as a stand in for the credit union on debit transactions, Fenner explained. TNB is pleased to do that for its credit unions, he said, but it must follow policies on withdrawals that have been previously set up and remain static until or unless the CU changes them.</p><p>This could mean, for example, he explained, that credit union members who find a working ATM after a storm might only be able access $200 per day.</p><p>"Having a hot site up means that the credit union can more effectively meet their members needs and circumstances," he said.</p><p>One example of a situation where a credit union's stand in parameters were not as clear came in the wake of the 9/11 attacks when several credit unions, especially the now $1.4 billion Municipal Credit Union, faced a situation where a minority of members seriously overdrew their accounts from ATMs and didn't make arrangements to repay. Muncipal's example brought the importance of clearly prepared policies for debit cards after a disaster into sharp relief, but not all credit unions have applied the message yet.</p><p>When it comes to credit cards, a number of different portfolio decisions and policies should be reviewed as part of the CU's disaster preparedness policy, the executives said.</p><p>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, </p><p>what people really need is cash, the executives noted, since many places will not have power or be able to run card payments.</p><p>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.</p><p>"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.</p><p>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?</p><p>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.</p><p>Credit unions are moving steadily to a more card-based 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.</p><p>--firstname.lastname@example.org</p><p> </p><p> </p>
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