...Another Sees Advantages To Be Offered By The Service

Member-directed ACH transfers and electronic bill pay help place a $31-million CU here in the "technology forefront."

That according to Cathy Bolling, manager at Tuscaloosa VA FCU (TVACU). "If we don't offer electronic payments to our members, they're going to go somewhere else," she said.

Many large CUs, industry analysts, and national associations agree with Bolling, marking 2003 as the year of account account-to- account (A2A) and person-to-person (P2P) electronic transfers.

Tuscaloosa VA FCU this month is offering its 3,000 members a plush electronic payment platform, which includes A2A, P2P, interbank transfers, and aggregated bill payment.

Called Bill Pay-e Plus and provided by Elizabethtown, Ky.-based iPay LLC, the outsourced service also features member-specific security and e-mail reminders.

Bolling said the platform should act as a magnet, pulling in members and potential members to use TVACU's Internet branch as a financial hub. "We feel that the more services we can offer, the more likely it is that members will move all of their accounts to Tuscaloosa VA and manage them all from Tuscaloosa VA," she explained. "The services will help keep the VA in front of members' minds when it comes to products such as loans."

Still, member adoption rates for the bill payment feature probably won't be something to brag about for a while, Bolling said. "I think the average adoption rate across the industry is 1 or 2%. We think we'll get 1%, or about 30 members."

And penetration of A2A and P2P will probably be even smaller. "We don't expect a whole lot of membership to use P2P and A2A."

Despite the small potential penetration for online member-directed payments in the short term, the $31 million CU is "future- looking," Bolling said. "Technology is going so fast that members will soon start learning about A2A and P2P and we'll already have them. They're mainly features that we just want to have in place when members need them."

Besides, electronic services at the CU often "catch on like wildfire," Bolling continued. Because members all work and bank at the VA hospital building, word-of-mouth works as an effective marketing tool, she said.

Bill presentment, another up-and-coming electronic payments initiative that could require less set-up time for members, isn't really an appropriate substitution for member-directed transfers at TVACU, said Bolling. With a "tight staff" of nine full-timers, presentment would simply stretch the staff too thin, she said.

The cost of Bill Pay-e Plus wasn't much of an issue for TVACU. "Our membership is employees of the VA hospital, and we are housed inside the hospital, so we don't have a lot of expenses such as brick and mortar," Bolling explained. "We get a lot of the benefits from the hospital. In turn, we provide a lot of benefits to our members."

How Pricing Will Work

That means Bill Pay-e Plus pricing will be attractive to members. "We're going to offer the services free through the end of the year as a promotion."

In January, members can continue to make payments online for free if they maintain three additional qualified CU products, such as a loan. Other members will be charged $2.95 per month. "Our board isn't interested in charging members a bunch of fees," Bolling explained.

Employees were the first to test Bill Pay-e Plus in early May, and qualified members will follow suit this week, Bolling said.

TVACU members started showing an interest in online bill payment services three years ago, Bolling said. "Now, we're finally ready to offer the service."