Smart Chip Payments Boost JMAFCU With Members, Sponsor Co.

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JACKSONVILLE, Fla.-JM Associates FCU has introduced a smart-chip payment system it expects will pay several dividends.

The new payment process allows employees of JM Family Enterprises to make purchases in the company's on-site cafeterias and hair salon by waving their identification badges over a card reader.

CEO Jim Ryan said the concept resulted from the sponsor approaching it about finding additional uses for its new new chip-based ID badges. "They told us they had 16 sectors on the chip in the badges and were only using two for security applications. They encouraged us to find a way to put in a financial application. They said the badges are not cheap and that employees don't always take good care of them. But if there was a financial use for the cards, employees might take better care of them."

So the $83-million JMAFCU went to work and developed a closed-loop system that does not communicate with an external processor, just transfers files between itself and the sponsor's database. JM Family Enterprises is responsible for tracking and maintaining balances. JMAFCU's system simply detects that a member has allocated money to the badge, sweeps the file, and sends the data to the sponsor company to load the money onto the badge.

Members can add funds to their badges by making deposits at the credit union, transferring funds online, or allotting funds through payroll deduction. No fees are charged.

It is too soon to gauge results of the new program that has been launched at four JM Family Enterprises' facilities. For now, the 4,000-employee sponsor has numerous locations across the U.S., but is employing the payment system only in locations that have a cafeteria or salon.

Ryan expects the cards will deepen relationships. "We are at about 80% penetration within our sponsor company and we are trying to get to 90%. We will be happy with 85%."

Ryan projects an increase in accounts per household, too, as the easiest way to use and monitor the card is to have a checking account with the credit union. "Members then have access to home banking...We'll have a much easier time showing them our additional services," Ryan said. "This smart badge is something we were able to do at little or no cost that is a benefit to our sponsor,"

Ryan added the smart cards also protect against fraud.

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