An electronic funds transfer network has paired up with a regional credit union to test a smart card program.
Magic Line of Dearborn, Mich., one of the top 10 regional automated teller machine networks, will issue reloadable chip cards to 200 employees of State Employees Credit Union in Lansing, Mich. The cards will double as debit cards with a magnetic stripe.
The pilot test is slated to begin in July.
The program widens the scope of smart card pilots into the realms of debit cards and credit unions. These smaller financial institutions have typically lacked the resources or technological clout to undertake such projects.
"This represents a broadening of smart card pilots ... in the United States," said Dan A. Cunningham, senior vice president of Phoenix Planning and Evaluation Ltd., Rockville, Md.
"In general, most U.S. programs have been with disposable and prepaid cards," Mr. Cunningham said.
Credit Union Central of Canada, which represents 900 credit unions, has joined the coalition supporting the Mondex smart card program, including a pilot in Guelph, Ontario. But Canadian credit unions tend to be larger than their U.S. counterparts and play a prominent role in testing new technologies.
"State Employees Credit Union is an extremely progressive credit union," said Magic Line president and chief executive officer John G. Bascom.
He said Magic Line is the first EFT network to set up a smart card program.
"Smaller institutions don't have the deep pockets of a regional or global bank," Mr. Bascom added. "We think this is a role of Magic Line, to use our scale and cash flow to invest in technology and spread availability of technology to our membership."
Employees can load up to $100 on the chip at the credit union's main office, and they can use the cards at eight merchant locations, primarily restaurants, in the Lansing area. The magnetic stripe on the card allows it to work at ATMs and to function as a MasterMoney or Maestro debit card at the point of sale.
Employees can also use the smart card as a key card to gain access to credit union offices.
"We believe the card we are developing will become the standard," said Christopher J. Day, vice president, retail delivery systems at State Employees Credit Union. "We are making the transition between magnetic stripe and computer chip technology."
Schlumberger Electronic Transactions and Diebold Inc. are the terminal vendors.
State Employees Credit Union, with 69,000 members and $340 million of assets, and Magic Line, which supports 113,000 ATMs and 12.9 million cardholders, said they plan to expand the pilot after six months if it is successful.
"State Employees Credit Union recognizes the way financial institutions deliver services to consumers is changing dramatically," Mr. Day said. "We are advancing our delivery of information," and "we are working toward an electronic wallet."
