<p>HARRISBURG, Pa. -Even the executives of Pennsylvania State Employees CU admitted initially that the CU's Internet banking/mail-in deposit solution was something of a great experiment, given that no one had ever tried it before. Well the preliminary results are in and there are passing grades all around so far. About five months ago PSECU launched a revolutionary new product, known as UPost@Home, that allows members to log into Internet banking and enter a deposit amount, and have that deposit instantly credited to their accounts, with the understanding that the member would then mail in the deposit. For PSECU, the quintessential remote credit union, this would help solve a major problem. The STAR Network increased its interchange fees over 100% in 2002. This is a big hit for PSECU which relies on some 3,300 deposit taking ATMs throughout Pennsylvania to give its 270,000-plus plus members a way to get money to the CU which only has two branches. STAR's increase means that if PSECU takes in the same number of deposits through ATMs in 2002 as it did in 2001, it would cost the CU an extra $2.3 million. Getting more members to use UPost@Home would cut into that bill. The $1.20 cost per transaction for UPost@Home is close to what ATM deposits cost the CU last year, but with the STAR increase that cost is going up over $2 per transaction in 2002. But forget about the cost issue. PSECU was also worried that some big institutions might no longer participate in the deposit taking ATM network because of the increase. If a big bank like a First Union pulled out of deposit taking foreign transactions at the ATM, it would substantially decimate the number of deposit-taking ATMs available to PSECU's members. Here's a progress report so far. Of the 1,322 members that were offered the product in the initial pilot, 42% accepted the offer, and 35% have so far actually used the product. More importantly, two out of the three deposits members of the pilot group made were done through UPost@Home. After that four-month pilot, PSECU offered it to another 10,000 members. At press time, there were about 1,900 members using it, about a 19% participation rate. So far PSECU has processed about 8,400 deposits through UPost@Home totaling some 13,000 checks. The total amount deposited through UPost@Home is approaching $4 million. The average amount of deposit is about $440, which is less than PSECU's average ATM deposit of $600. And maybe the most important stat is that there's been $0 in losses so far. A very important stat for the cost of the program is how fast members actually get the deposits to the CU once they enter the deposits online. The faster the members mail in the deposits to the CU, the less money in float the CU will lose. According to PSECU, 97% of the amount deposited online is to the credit union within six calendar days from date of deposit. That breaks down like this: 10% by day one; 34% by day 2; 67% by day 3; 87% by day 4; 94% by day 5. By day eight 99% of the deposits are in the CU. One of the experiments within the experiment was the postage factor. PSECU entertained the idea of providing postage paid envelopes to eligible members, but that would eat into the cost of delivery by more than they were willing. The credit union does provide pre-addressed envelopes for the member to mail in, but postage is up to them. PSECU President/CEO Greg Smith said that is the No. 1 complaint so far, but many of those complaining are the biggest users at UPost@Home. Smith said the convenience factor is outweighing the postage. He recalled an e-mail he received from a member who said it was a Sunday afternoon and snowing and sleeting outside. The member said the convenience of not having to get in the car to drive to an ATM just blew him away. PSECU mails eligible members four pre-addressed envelopes a month and they can order more online at UPost@Home. The credit union has learned some lessons with the envelope. Initially it mailed labels along with envelopes that members could affix to the envelopes, but for whatever reason many were falling off. The CU then moved on to pre-printed envelopes. As part of its risk management approach to the product, not all members are offered UPost@Home. To be eligible, members must have either a PSECU credit or check card and have been a member for at least six months. Tom Ruback, PSECU's vice president of card services, and the guy who dreamt up UPost@Home, said acceptance so far is beyond what he expected. "Members have taken to it better than I expected. My primary concern was marketing. The technology and infrastructure was there. I was worried if members would follow through on the instructions," said Ruback. The CU has made the solution as easy as possible for the member. Once in UPost@Home, online screens prompt members to enter date, check number, amount, maker of the check and the payee. The program may even become more important for PSECU if a new rule by NYCE is adopted by other networks. Starting in September, NYCE is allowing its financial institution members to charge consumers for making a deposit at an ATM. Ruback, the creator of UPost@Home said he couldn't have pulled it off without the help of assistant vice president of card services Jodi Harner, who after the concept was developed, was a key player on the operations end. [email protected]</p>

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