FRAZER, Penn. – Developers of a new secure payments card for credit unions are inviting venture capital firms and private entities to invest in the project as credit unions are having trouble finding available cash to fund the effort.
“It is a struggle right now,” said Deb Jones, senior vice president of Members Gateway, the credit union incubator that is developing in the project, known as the xCalibur card.
So far, the group has obtained a commitment from 20 credit unions for about $3.5 million, enough to stage a pilot test aimed for this fall. But they need about $6 million to bring the card to market, according to Jones.
The group has staged roadshows around the country to raise funds in a limited partnership, called Xcard Systems LLC. Limited partnership shares are being offered for $100,000 each.
Plans call for the card, which features biometric fingerprint identification and can be used across different card brands, to be owned and distributed by credit unions, then introduced to a larger market, including banks.
Mark Cox, a long-time member of Keystone FCU, who is developing the card, said it is working with Visa on a prototype and likewise will work with MasterCard. The group also is working with IBM on development.
But the tough economy is having an effect on fundraising, as few credit unions have extra cash to invest. “The main thing is to get the card funded and get it completed,” Cox told The Credit Union Journal Friday.
Plans call for three credit unions that are investing in the card – Keystone FCU, Mazuma CU and Nevada FCU – to conduct a pilot around November. But the schedule could slip if the pilot stretches too far into the holiday spending season.
The card, which can be used as a magnetic stripe, contactless or contact card, boasts cutting edge security features, including a biometric fingerprint reader that only can be activated by the authorized user(s), and it can be used at the same time as any of the major card brands, as a Visa card, MasterCard, Discover or American Express.
Cox sees the card as the platform for the next generation payments system, connecting credit union members with their ATMs, credit and debit accounts, smart cards, loyalty programs, event ticketing, membership in other entities (e.g. the gym), as well as mobile banking.
