The deal includes the credit union opening and renting the space for a branch in a new student union building and contributing $1.75 million to the new building's construction. The CU will also pay the university $286,000 per year to support the card changes and coordination needed for the ATM functionality.
The credit union will gain all the interchange from the cards, according to Lisa Girdharry, UW's director of marketing.
The new ID-debit cards will allow students to access university buildings, pay for their meals in their dorm cafeterias, get cash from the ATM and make purchases at point-of-sale terminals with their PIN, Girdharry explained.
"More than 50% of incoming UW-Madison students choose us as their financial partner because we are committed to doing the right thing and looking out for their best interest," said UW Credit Union President/CEO Paul Kundert.
Girdharry acknowledged that UW CU faces a marketing challenge since the students will have to become members of the credit union to use the ATM feature, but she hoped that enough students would be drawn to the convenience of having one card to use all over campus to make it popular.
"This is a win-win for all involved," said Wisconsin Union Director Mark Guthier. "Students get what they said they want: easy access to multiple fee-free ATMs, a bank on campus and the debit card function at a substantial savings over what they could achieve on their own in the marketplace, while simultaneously generating significant revenues for the campus."
Through this partnership the credit union gets access to the student, faculty and staff market, but Guthier noted that people are free to choose any financial institution they want to do business with.
"The committee of students, faculty and staff that reviewed the proposals deemed it essential that the university not link enrollment in the program to a financial incentive, that there should be a little distance between the university and the banking institution," Guthier added. "Also there are no credit card provisions granted as part of this ID-debit card program."
A majority of Big 10 schools and many of the UW system schools already offer debit card functionality through the campus ID program, according to UW CU.
The credit union surveyed 9,000 UW-Madison students and found that there is substantial interest in an optional debit card program offered via the UW ID program for off-campus purchases as well. While surveys show that students value these options, university officials were interested in an agreement that did not penalize students who chose another provider.