MESA, Ariz.-Members of three CUs in Arizona responded so positively to a pilot test of prepaid gift cards dispensed at ATMs, the concept is being expanded nationally.

Todd Nuttall, CEO of Better ATM Services, said the pilot at Credit Union West, Marisol FCU and Pinal County FCU went "very well," so in the third quarter the company finished expansion testing and Visa gave it the go ahead to take the program to any FI in the U.S. that has a Visa program.

"Visa sees this as an improved form factor," he said. "The card is thinner and more flexible than a standard gift card to conform to ATM requirements. It dispenses just like a $20 bill at an ATM."

The company plans an announcement soon regarding which credit unions and banks will be dispensing prepaid Visa gift cards. Nuttall said the company recently launched a Discover Prepaid Card with Banner FCU in Phoenix.

"Credit unions have been watching their members go elsewhere for prepaid products. We recently wrapped up research on credit union ATMs and prepaid, and we found 81% of people who use ATMs are buying prepaid cards, almost all somewhere else," he said. "These are financial products people want, and credit unions own ATMs, so by changing one slot credit unions can offer these products."

Nuttall said he likes working with credit unions because they move so much faster than banks. "We have had a great experience working with credit unions and next year we will be announcing many more relationships," he said.

Tiffany Vasquez, systems and technology manager for $99-million Pinal County FCU, Casa Grande, Ariz., said it used to sell gift cards through its teller lines, "But once we put them on the ATMs we had a lot of usage. Members loved how convenient it was, and the fact there was no fee."

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