United Airlines Credit Union huge, but traditional plans to start issuing debit cards in early 1995.
"This is a product that will be completely embraced," predicted Robert Bream, president of the country's third-largest credit union. "Ws accepted around the world, and we like that because we have a worldwide membership."
While Chicago-based United has $1.9 billion in assets, it does not offer basic products like checking accounts to members. But when the debit card debuts, so will checking.
According to a recent survey of 800 credit unions by the Credit Union National Association, debit cards ranked first among products a credit union is likely to add next year. Debit cards draw money directly from a deposit account.
Roughly 500 credit unions issue debit cards. said Elizabeth Taylor Quilliam, vice president of sales and electronic funds transfer services for CUNA Card Services Group.
About 200 of them issue cards through the services group, a subsidiary of the Madison, Wis.based trade association. That's up from 130 last year.
About 29% of credit union member households have a debit card.
"Credit unions are increasingly offering a wider range of products, much to the consternation of community bankers, their primary competition," said James Barth, an Auburn University economics professor who has studied the industry.
"I see a lot of participation in debit by credit unions," said Doug Miraglia, vice president of debit sales and business development for MasterCard International, New York.
For instance, of the 623 financial institutions involved in MasterCard's Maestro point-of-sale debit program, 168 are credit unions. And credit unions represent 'about 15% of the.463 financial institutions issuing offline debit cards.
Credit union officials say they like the product because it avoids the costs associated with paper check processing. Also, the cards generate interchange income fees assessed from merchants based on card transactions. Point-of-sale, 'or "on-line," cards reap a flat amount per transaction, while the off-line cards bring in a percentage of each transaction, Ms. Quilliam said.
Arizona Federal Credit Union, Phoenix, began offering off-line debit cards nine years ago through CUNA's Cards Service Group, making it one of the first credit unions to do so. Now 40,000 of its roughly 70,000 members have the card.
Arizona Federal gets roughly 1.4% of every sale done with the card, said Michael Buttery, electronic services supervisor of the $289 million-asset institution.
'He said the Credit union is urging its members to use the card instead of checks, stressing that using the card generates money for the credit .union and using checks boosts operating costs.
Patelco Credit Union,. San Francisco, started marketing a ViSa debit card - called "Plastic Check" - on Sept. 6. It is only the second financial institution in California to do so.
Cost control was a big reason the $906 million-asset institution decided to offer the card.
"The Plastic Check is automated, so we don't have to deal with check returns," said Patelco's chief operating officer Mandy Jones. In the future the credit union might offer incentives to use the card, or charge fees to discourage use of paper checks, she said.
Credit union officials also said the members who use the product like its convenience and acceptance.
Mr. Buttery said within the past year most grocery stores and gas stations in the Phoenix area have been accepting the card.
GTE Federal Credit Union, Tampa, first issued debit cards three years ago. Now 22,000 of its 75,000 customers have the card and nearly 10,000 actively use it. The credit union does 70,000 to 85,000 transactions a month for about $1 million in purchases.
"It's for people who want to pay cash; it's for people who want to pay now," said Wendell Sebastian, president of the $380 million-asset institution. "It takes less time to use the card than to use a check. You don't need to write out your phone number; you don't need to pull out your driver's license."
North Carolina State Employees Credit Union, the country's second-largest credit union with $3,7 billion in assets, started issuing point-of-sale cards last year with an eye toward the future.
"We got into it because sooner or later everyone's going to be getting into it," said senior executive vice president Bobby Hall. "It's not used a great deal at this time because not a lot of merchants in North Carolina accept it. But we feel that this is something that will grow."
