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From the October-01, 2008 issue of Credit Union Times Magazine • Subscribe!
The Members Group Rolls Out Reloadable Prepaid Card Offering
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.<p>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.</p><p>"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.</p><p>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.</p><p>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.</p><p>"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."</p><p>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.</p><p>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.</p><p>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.</p><p>"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.</p><p>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.</p><p>"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.</p><p>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.</p><p>"The ATIRA reload card helps CUs deliver a value-added product to markets hungry for alternatives, creating an opportunity for growth," said Falk.</p><p>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.</p><p>"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."</p><p>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.</p><p>"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."</p><p>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.</p><p>"There is simply more education that needs to be done when offering the cards to underserved populations," he said. "But as the cards become more well known, those needs diminish," he added.</p><p>--firstname.lastname@example.org</p><p> </p><p> </p>
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