Members of one of the nation's largest credit unions now can transfer funds in real time between accounts multiple ways. The Municipal Credit Union, which serves 300,000 federal, New York State and New York City employees and their families, recently became the first financial institution to support the account-to-account transfer service of the NYCE electronic funds transfer network across two delivery channels, and it has a third delivery option in the works.
Municipal began offering the service using kiosks at brick-and-mortar credit-union sites late last year. Members now also can initiate transfers from the credit union's online banking service, and Municipal expects to begin supporting transfers from its ATMs by the end of this year.
Offering A2A funds-transfer service helps credit unions such as Municipal to better compete with banks, which usually have more branches than do credit unions, says Kam Wong, Municipal's executive vice president and chief financial officer. If credit-union members can send funds from or receive them into their accounts through ATMs or online, it matters less how many brick-and-mortar sites their credit unions have, he says.
Richard Crone, founder of Crone Consulting in San Carlos, Calif., says NYCE's A2A funds-transfer service helps meet consumer expectations for increasingly quick delivery of funds. "By having it offered and deployed, they are at the forefront," he says. "Real-time money movement is indeed the wave of the future."
To transfer funds using the NYCE service, the sender needs the receiver's ATM/debit card number but not the expiration date or the individual's personal identification number, even if the transfer is initiated via a kiosk or online instead of from an ATM. Both the sender and receiver must hold accounts with financial institutions within the Montvale, N.J.-based NYCE network, which is owned by Metavante Corp.
Steve Rathgaber, NYCE president and chief operating officer, says 98%, or about 2,200, of NYCE's member financial institutions are certified to receive real-time, A2A funds transfers. NYCE has extended the deadline for the remaining institutions to become certified to receive transfers, he says, declining to say how much longer they have to comply.
Getting set up to handle A2A funds transfers requires some time commitment, but the process is not onerous, Rathgaber says. "They have to certify the message format between their host system and NYCE," he says. "And then they have to make programming modifications to the software for whatever channel they're electing to use." Most financial institutions have their own employees or vendors do most of the programming work.
NYCE charges financial institutions 10 basis points of the transfer value plus a minimum fee not to exceed 35 cents, Rathgaber says.
Municipal does not charge for internal A2A funds transfers, and it will not charge for outgoing transfers to accounts at other financial institutions until July. Thereafter, such transfers still will be free for members who maintain a $2,000 aggregate balance but will cost members with smaller total balances $2 per transaction.
Municipal has processed approximately 1,000 A2A transactions so far. Wong says it is too soon to compile demographic information about the senders, recipients or purposes of the transactions.
Another credit union, Hartford, Conn.-based American Eagle Federal Credit Union, in February 2004 was the first financial institution in the NYCE network to support ATM-based A2A funds transfers. (So far, ATMs still are the only method by which American Eagle customers can initiate the transfers.) Another NYCE member, WCTA Federal Credit Union of New York, received one of those first transactions, as did Banknorth Group Inc. in Portland, Maine.
About half of the financial institutions in the NYCE network are credit unions, Rathgaber says, which explain why so many have been among the first adopters of NYCE's A2A funds-transfer service. "I would also say that credit unions have shown some initiative and desire to be leaders with these incremental service offerings," he says.
Rathgaber says NYCE began its A2A service to give customers of the network's financial institutions more options for sending money.
Rathgaber would not disclose how many A2A transactions NYCE has switched, or what percentages are initiated from ATMs, online or from branches, other than to say the number is small but growing. He also says that it is too soon to have any meaningful demographic data, but most of the activity appears to be between family members or friends, such as transfers from parents to children in college.
"It's probably a niche service, but there are lots of healthy niche services from ATM growth," Rathgaber says, adding that it is easy to add new payment methods to NYCE's existing infrastructure.
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