Banner Federal Credit Union hopes the addition of  new card technology will help draw more members and nonmembers to its 11 ATMs.

The credit union has partnered with Better ATM Services to be the initial financial institution issuing the myGIFT card, a closed-loop gift card that carries the Discover brand.  The new gift card is made of a new type of material that is thin enough and flexible enough to be dispensed through an ATM's cash dispensing mechanism but which is also firm enough to be used in a point of sale terminal.

The nine national retail and restaurant chains that are participating include Macy's; men's clothing retailer Cabelos; women's clothing retailer Express; Lowe's; Outback Steakhouse; Bonefish Grill; Flemings Prime Steakhouse; Carrabbas Italian Grill and Roy's Hawaiian Fusion Grill.

“We viewed this opportunity as a win for us, a win for our members and a win for our community,” said Roger Swanson, CEO at the $59 million Banner FCU. The credit union benefits from the interchange the cards will generate along with proceeds of a $2.50 purchase fee per card, Swanson explained. Members benefit by having easier and more convenient access to a gift card that can be used at popular national retailers and the community benefits from having the Banner Health Foundation, a company-sponsored nonprofit that seeks to expand health care services for the area's lower income residents.

The foundation receives a 50-cent donation every time a cards is sold.

Banner FCU, based in Phoenix, is solely sponsored by Banner Health, a health care and hospital network.

But will consumers, both members and nonmembers, purchase gift cards through an ATM?  After all, there have been numerous attempts to market all sorts of things through ATMs that have never caught fire with ATM users.

“Obviously, we have to get them to the ATM to buy a card the first time,” said Todd Nuttall, the CEO of Better ATM Services, the small Mesa, Ariz., firm that coordinated the details and technology for the new product.

“Once we can get them to buy a card through the ATM the first time, we find they are very willing to do it again. But if we just put the cards in the machines and didn't explain about them to anyone, no one would know to do it.”

Better ATM Services, which has quietly been working on a similar, Visa-branded product with some credit unions on the East Coast, believes ATMs provide a unique marketing niche for prepaid cards, a product line that Nuttall believes will be one of the decade's hottest.

Nuttall explained that gift cards, particularly those tied to individual retailers or retail chains, faced the first hurdle of making their gift cards available someplace outside their stores.  Many did that by getting their cards sold in different venues such as supermarkets or convenience stores, Nuttall explained, but then they faced a different problem. 

“You have your card on a supermarket rack,” he said, “but it's there having to fight for visibility and space and consumer's attention with all these other retailers cards.  Our myGIFT card enables retailers to move past that crowd.”

The firm knew it had a possibly winning idea early on its development, Nuttall said, retailers that had gotten wind of what the firm was attempting, they asked to be included in the product's pilot testing.