MECHANICSBURG, Pa. – AmeriChoice Federal Credit Union has added payroll processing to its business services menu, the latest rollout since the AFCU business department was launched in January. Mark Ritter, who joined the credit union early this year to head the department, notes the credit union is relatively new to business accounts. Under AFCU's community charter, the potential market includes businesses in a county of 240,000 residents. "We were originally an IBM credit union," Ritter explains. "As IBM downsized, many of those people started their own businesses and wanted business services. "In addition, by switching to a community charter, we can serve pretty much anybody walking in the door. People who own companies come in and are also looking for business services." The technology aspects of handling business accounts can be a hurdle, he continues. It's tough to find a credit union operating system that lets you simply plug in and serve business accounts in the traditional manner business owners are used to seeing at banks. So a credit union either has to tweak its existing system a bit or make a substantial investment in a new operating system. "We were able to modify our system slightly. We're not going to offer detailed analysis accounts, but our market is really small and mid-size businesses. We aren't targeting huge-volume corporations who need an analysis account," Ritter says. Are business accounts profitable? "Many of our consumer accounts have more activity than our business accounts," Ritter answers. "So we almost look at business accounts as pricing the same. The difference between the business account and the consumer account is we can package merchant services along with deposit accounts and help subsidize the cost of the deposit account by earning fee income off services businesses are already using." For example, a business is paying someone – either internally or externally – to handle payroll. If the business owner signs up for AFCU's payroll services, provided through PayMaxx, there are no monthly charges for the deposit account. Business members also have access to other PayMaxx products including Section 125 and 401(k) administration and XpressTime, an electronic time and attendance tracker. Ritter says AFCU was looking for a turnkey payroll solution that would fit just about anybody's businesses. There's little or no overhead, he adds. Through the credit union Web site the business owner can do one of two things. The first option is to send each employee an e-mail advising them of their earnings and allowing the employee to print out a paystub. Or the employer can print out a form and distribute it to employees. All actual payments are direct deposited to each employee's account at their financial institution. Price and personal attention are the lures in attracting business accounts, Ritter says. "People who come and sit down with us are looking for just that – someone to sit down with and really have good service. In our county, only three banks are based here. One is very small, and the other one is at the other end of the county," he notes. "Other than that, the banks are all part of big corporations headquartered outside the area. That doesn't really allow a small company to go to their local branch and actually discuss what they need. The two biggest reasons people come to us and really like us is we're locally based with local decision-makers, and we are not going to be bought up by a larger out-of-state institution. We offer stability, which they haven't had in their accounts for quite some time." AFCU has partnered with First Data to offer Visa and MasterCard processing. Again, cost is attractive because the credit union looks at an entire business package and prices it accordingly. Service remains another plus. Many business account products are commodities, Ritter says. The key is the service the credit union puts behind those products. Ritter doesn't see business accounts drawing large numbers of consumer accounts from the employees at the same businesses. Many small employers want to keep their financial activity private. They don't necessarily want anyone to know where they are getting their business loans. But those same business owners are also consumers who have car loans, home equity loans and personal checking accounts. When they had their business accounts at a bank, they may have been required to use the bank for all their financial activity. But once they compare the bank package with the credit union, they often see significant savings. "We don't just sign them up for a business account. We can also cross-sell our personal services," Ritter says. Certainly Ritter is bullish about the prospects for credit unions that pursue business accounts. "Once you get into it, it's not as intimidating as people think," he says. "The biggest difference between the business account and the consumer account is businesses expect to pay for services. They don't expect everything for free. "They're already using these accounts, they're using these services, and they expect to pay. Nobody's giving away payroll services. Nobody's giving away credit card services. It's very easy to set up these programs." [email protected]