A war for students' wallets has broken out between banks and credit unions on a handful of university campuses.

Some college-sponsored credit unions in California and Minnesota are angry and worried that their schools have allowed banks to be the sole suppliers of "campus cards" that combine access to university and financial services.

As the affected institutions clamor about an uneven playing field, other student-related credit unions fear their university might be the next battleground.

The issue has sparked enough of a brouhaha that the industry's largest trade group - as well as the federal government - have alerted the Department of Justice to the issue. The battle is so heated because many long-term individual banking relationships are started in college, the key reason the banks want to exploit the niche.

"It's severe competition for us," said Warren E. Marshall, chief executive of $160 million-asset Stanford Federal Credit Union, who added that other institutions should be allowed to issue cards.

Starting this past summer at Stanford University, Wells Fargo Bank became the exclusive provider of campus cards to students. According to Mr. Marshall, a card can be used to access an ATM only if the student opens a checking account with Wells Fargo.

The credit union picked up only 800 new members during the beginning of the school year, compared with the 1,000 it usually would. It has since launched a marketing blitz to respond to the challenge.

Stanford University registrar Roger Printup said that creating the campus card system was complicated enough with only one financial institution.

"If on top of everything we had added two or three other financial institutions, it never would have happened," he said. Wells Fargo paid for some of the costs in issuing the cards.

The three-year contract will be reviewed when it expires in 1997, Mr. Printup said.

The tiny Minnesota State University Student Association Federal Credit Union has faced similar competition from Minneapolis-based First Bank System Inc. for two of its five years of existence, said Frank Viggiano, chief executive of the Mankato institution.

"Picking up new students has tapered off quite a bit," said the head of the $2 million-asset institution.

Wells Fargo and First Bank did not return calls for comment.

The industry has taken notice of the dilemma. In October the Credit Union National Association formally opposed exclusive relationships between universities and banks. Over the summer an affiliated organization, the National College Student Credit Union Council referred the matter to the Justice Department.

National Credit Union Administration Chairman Norman E. D'Amours also has weighed in.

"If a university is permitted to unilaterally choose its students' primary means of banking, hundreds of smaller, grass-roots student and other university credit unions will be detrimentally affected," he said in an Aug. 29 letter to the Justice Department's antitrust division.

Credit unions aren't relying on legal means alone to meet the challenge. CapCard Corp., a Madison, Wis., company owned by more than 20 credit unions, helps institutions develop campus card services.

In fact, California State University, San Diego, agreed to hire two CapCard members, Mission Federal Credit Union and University and State Employees Credit Union, to provide its card through what is intended to be a system open to other institutions.

Peter Livingston, president of CapCard, Madison, Wis., said a proliferation of such exclusive arrangements would have significant short- and long-term ramifications for the industry.

For one, credit unions that serve campuses could see their memberships shrivel to the point where they have to look elsewhere for accounts, he said. Also, some alumni retain memberships with the credit unions.

In the long term, it could lead to a future where some institutions have an edge in building unbreakable relationships with customers, particularly as electronic transactions become more prevalent.

"Any institution has to look at the costs in the future of recruiting members who come to you with a highly convenient and satisfactory relationship and no reason to change it," he said.

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