News Now Archive

Filed on October 5, 2009, published the first business day after.

• Congress this week: CUNA to testify on interchange, CARD Act
• CUNA backs lawmakers’ urging for UIGEA delay
• Online NCUA Town Hall set for Oct. 22
• Inside Washington
• Iowa league files application to buy Ariz. bank
• Federation reacts to CDFI Fund awards
• More than 200,000 youth save with SECU programs
• Online surveys help CU improve cash management
• CU hopes to turn around Alaska community
• Scams hit four CUs
• Group Health CU embraces environmentalism
• CU System brief
• Market News
• News of the Competition
• Mobile P2P payments could be key to Gen Y

Congress this week: CUNA to testify on interchange, CARD Act

WASHINGTON (10/6/09)—Among items of interest on Capitol Hill for credit unions this week, Mark Caverly of Local Government FCU is scheduled to testify Thursday at a hearing on interchange fees. He will speak on behalf of the Credit Union National Association (CUNA) and the Electronic Payments Coalition.

Caverly, executive vice president of the Raleigh, N.C.-based credit union, will testify before the House Financial Services Committee on H.R.2382, the Credit Card Interchange Fees Act of 2009 and H.R. 3639, the Expedited CARD Reform for Consumers Act of 2009.

The proposed interchange bill would amend the Truth in Lending Act to prohibit certain electronic payment system network practices and required increased disclosures.

The Credit Union National Association (CUNA) has publicly stated that changing the current interchange fee structure, as some merchants, including 7-Eleven, have promoted doing, would adversely limit consumer options, competition and technological innovation.

CUNA believes interchange fees allow business costs, including the risk of consumer nonpayment, to be shared by the payments participants and discussions regarding what value should be placed on the use of electronic payments should be within the purview of the industry participants.

Legislation that would allow merchants to negotiate interchange fees has also been introduced in the Senate, but it is expected that neither H.R. 2382 nor the Senate-based legislation will be brought up for a vote during the fall session.

Regarding H.R. 3639, that bill would move up the effective date of some portions of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act to December of this year.

Bill sponsor Rep. Carolyn Maloney (D-N.Y.) has said that the "breadth and depth" of interest-rate hikes that credit card companies are imposing ahead of the full imposition of the CARD Act points to the need for "faster consumer protections."

Ryan Donovan, CUNA vice president of legislative affairs, has said the outlook for the legislation is uncertain. "The legislation seeks to move a February effective date up to this December, which is only about 10 weeks from now. In order for the bill to become law in that timeframe, it would seem that the bill would need to move through the legislative process at incredible speed," he noted. Other items of credit union interest on Capitol Hill this week included:

• On Tuesday, a Senate Small Business and Entrepreneurship Committee hearing titled The Recovery Act for Small Businesses: What is Working and What Comes Next?;

• On Wednesday, a Senate Banking subcommittee hearing titled Securitization of Assets: Problems and Solutions;

• On Thursday, in addition to Caverly's appearance before House Financial Services, the Senate Banking Committee hearing will look at "The Future of the Mortgage Market and the Housing Enterprises"; and

• On Friday, a different Senate Banking subcommittee has scheduled a hearing on the topic of restoring credit to manufacturers.

CUNA is a member of the Electronic Payments Coalition.

Resource Links

New Law Shows CU Cards Still the Best: statement stuffer

CUNA backs lawmakers’ urging for UIGEA delay

WASHINGTON (10/6/09)—At a time of economic crisis, it is too great a burden on regulators and the financial services industry to move ahead with rules to implement the Unlawful Internet Gambling Enforcement Act (UIGEA), according to a bi-partisan coalition of 19 lawmakers.

House Financial Services Committee Chairman Barney Frank (D-Mass.) and 18 other members of that panel sent an Oct. 1 letter to the heads of the U.S. Treasury Department and the Federal Reserve Board, the agencies charged with implementing UIGEA. The lawmakers requested the UIGEA effective date be pushed back a year.

Credit Union National Association (CUNA) President/CEO Dan Mica Monday applauded the committee's letter urging delay.

"While CUNA supports efforts to eliminate payments to unlawful Internet gambling businesses, we have consistently raised concerns about impractical aspects of UIGEA," Mica said in a letter addressed to Frank and circulated to Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke, as well as National Credit Union Administration Chairman Deborah Matz.

Under the Internet gambling law, credit unions, as well as other financial institutions, must establish and implement policies and procedures to identify and block restricted transactions, or rely on those established by the payments system.

In the committee's letter to Geithner and Bernanke, the lawmakers acknowledged that the regulators did not seek the task of implementing what has always been a controversial law.

"We...believe this is an unreasonable burden on regulators and the financial services industry at a time of economic crisis, and it contradicts the stated intent of the Financial Services Committee," the letter stated.

CUNA opposes the agencies' draft implementation proposal. Also, CUNA testified against the plan at a House Financial Services Committee hearing in April. CUNA witness Harriet May, president/CEO of GECU, El Paso, Texas, reiterated CUNA's concerns that aspects of the proposal would be difficult, if not impossible, to implement.

May also said financial institutions could be swamped by the compliance burdens associated with UIGEA. The current plan to implement the complicated law, she said, lacks clarity and sufficient definition of terms.

The lawmakers' correspondence also referenced H.R. 2266, a currently pending bill that would push the UIGEA compliance date back to Dec. 1, 2010—one year from the current date.

Without predicting the outcome, the letter states, "We believe this legislation is likely to move."

Online NCUA Town Hall set for Oct. 22

ALEXANDRIA, Va. (10/6/09)—The National Credit Union Administration reported that more than 130 attended its final of three Town Hall-style meetings to gather credit union comment on regulatory issues. The final meeting was held yesterday in San Diego, Calif.

For those unable to attend any of the live Town Hall meetings, NCUA Chairman Deborah said she will host an online webinar Oct. 22 at 3 p.m. Sign up information will be posted on the NCUA website later this week.

Matz said in a release that she considered the live meetings "invaluable in providing a forum for real dialogue and genuine input to the regulatory process."

Matz added, "As NCUA moves forward with rulemaking on corporates, I am confident that the information and suggestions garnered will become a key ingredient in what I expect to be a strong and durable new rule. And the discussions regarding the variety of other relevant issues such as member business loans, the examination process and alternative capital have added new dimensions to our assessment of those topics as well."

The first live meeting was held in St. Louis, Mo. on Sept. 15, and the second last week in National Harbor, Md., which is in the Washington, D.C. area.

Inside Washington

• WASHINGTON (10/6/09)--A delegation of 16 individuals representing 15 credit unions recently spent two days in Washington, D.C., lobbying legislators as a part of the Illinois Credit Union League's annual "Hike the Hill" event. The delegates attended a presentation by Rep. Peter Roskam (R-Ill.) at Credit Union House, and participated in a briefing with Credit Union National Association legislative and public affairs staff.

  Click for larger view

  The credit union representatives then traveled to Capitol Hill to meet with their lawmakers and discuss their opposition to interchange fees and Community Reinvestment Act regulation for credit unions. They also talked about support for increasing member business lending caps and maintaining the National Credit Union Administration (NCUA) as the independent federal credit union regulator. In addition, the group met with Sen. Richard Durbin (D-Ill.) and attended an NCUA board meeting. "Our political success over the years has been due in large part to organized events to educate lawmakers about credit unions," said Dan Plauda, Illinois league president/CEO. "This year's ‘Hike the Hill' was another opportunity for attendees to visit their federal lawmakers and NCUA regulatory officials to maintain a strong political and regulatory future." Pictured are the Illinois representatives in front of Credit Union House. (Photo provided by the Illinois Credit Union League) ...

• WASHINGTON (10/6/09)--House Financial Services Committee Chairman Barney Frank (D-Mass.) circulated a discussion draft of legislation that would regulate over-the-counter (OTC) derivatives. Frank also said that the committee will schedule a hearing for Wednesday to discuss the reform of the OTC derivatives market and the discussion draft, which was released Friday ...

• WASHINGTON (10/6/09)--Financial services representatives are debating whether a single bank regulator could threaten the dual banking system (American Banker Oct. 5). Community bankers and Federal Deposit Insurance Corp. Chairman Sheila Bair say that a single regulator would focus attention on the nation's largest institutions, which could disadvantage smaller banks. They also argue that eventually, banks would not have a reason to opt for a state charter since they would have an additional regulator but no benefits of a national charter. However, single regulator proponents--like Senate Banking Committee Chair Christopher Dodd (D-Conn.)--say that a single regulator can be created without disadvantaging small financial institutions. The end of a dual banking regulator is just a scare tactic, said Lawrence Kaplan, a lawyer at Paul, Hastings, Janofsky and Walker LLP. It's unlikely anyone would get rid of state regulation, he said. Kip Weissman, a partner at Luse Gorman, added that a single regulator would weaken the state charter, so companies would switch to a federal charter. However, Doug Elliot, Brookings Institution economic studies fellow, said the concerns are just a "resistance to change." Dodd has assured credit unions that plans for a single regulator would not apply to credit unions (News Now Sept. 30) ...

Iowa league files application to buy Ariz. bank

DES MOINES, Iowa (10/6/09)--The Iowa Credit Union League has filed an application to purchase Tucson, Ariz.-based CreditCard National Bank in response to member credit union needs and an understanding that Iowa Corporate Central CU is looking at its future.

Iowa Corporate Central CU, Des Moines, is a small but well-capitalized corporate, according to Patrick Jury, Iowa league president/CEO. However, the Iowa corporate has conveyed to its members that it is examining its future to determine if it can continue to provide the same competitive products and services, considering its relatively small size in a changing regulatory environment.

"Based on that understanding, our membership directed the Iowa league to look for a resolution that would maintain local autonomy and direction of Iowa credit union correspondent services," Jury said.

In addition to local ownership and autonomy, Jury said other priorities include:

• Ensuring credit unions' transition to a new institution is seamless;

• Assuring that the alternative serves all credit unions regardless of asset size; and

• Ensuring that the alternative provides similar products, services and pricing, and retains current Iowa Corporate Central CU employees.

The proposed bank charter would provide credit unions with settlement services, access to payment systems, and relationships with Visa and MasterCard for Iowa credit unions, Jury said. A secondary benefit of the charter would be to facilitate the league's credit card processing expansion through The Members Group, a league affiliate.

"This application is in response to the needs communicated by Iowa credit unions based on the uncertain future of Iowa Corporate," Jury said. "We have complete confidence in the National Credit Union Administration."

The league has conducted several town hall meetings for Iowa credit unions about the application to buy CreditCard National Bank. The credit unions have expressed "strong support," Jury said.

The application, filed with the Federal Reserve Bank of Chicago, has a 60-day window before a decision is made. The bank could ask the league for more information, which extends the decision-making process. If the application is declined, the league will look at other alternatives to serve its members, Jury said.

He emphasized that should the league purchase CreditCard National Bank, it would not have a retail operation and no board member or staff member would receive stock or a financial benefit as a result.

Federation reacts to CDFI Fund awards

MILWAUKEE (10/6/09)--The National Federation of Community Development Credit Unions said it is pleased to have received an award from the Treasury Department's Community Development Financial Institutions (CDFI) Fund.

The federation received $750,000 from the fund. The awards were announced Friday in Milwaukee. The funds support CDFIs' lending activities in underserved areas. They also help organizations, including credit unions, to provide affordable financial products and services to low-income communities and populations.

"We have seen significant positive changes in the fund's awards over the past year, thanks to the efforts of the CDFI Fund's committed staff, but we remain concerned about the under representation of credit unions among awardees," said federation President/CEO Cliff Rosenthal.

"Credit unions are central to the CDFI industry because in addition to affordable financing, they provide low- and moderate-income communities with a full range transaction and insured deposit services, asset building programs, financial literacy education, and other lifeline products that are so desperately needed in the current economy," Rosenthal added.

Of the 62 CDFIs receiving awards, two awards totaling $850,000 went to two community development credit unions (CDCUs), less than 2% of the total financial assistance awards this round, the federation said.

The two CDCUs were Neighborhood Trust FCU, New York City, which received $350,000, and Union Settlement FCU, New York City, which received $500,000. One million dollars also was given to Self-Help Venture Fund, Durham, N.C., an affiliate of Self-Help CU in Durham. With the federation's award, the combined four awards account for less than 4% of the $52.7 million that was distributed, the federation said.

National Credit Union Administration (NCUA) Chairman Debbie Matz applauded credit union participation in the CDFI's supplemental funding round, and encouraged broader credit union involvement in the currently open 2010 CDFI financial assistance program.

Credit unions receiving funds under the Recovery Act and 2009 Round as noted by NCUA include:

• Alternatives FCU, Ithaca, N.Y., $2 million;
• ASI FCU, Harahan, La., $2 million;
• Brooklyn Cooperative FCU, Brooklyn N.Y., $1.1 million;
• Communicating Arts CU, Detroit, $2 million;
• First Legacy Community CU, Charlotte, N.C., $2 million;

• Latino Community CU, Durham, N.C., $2 million;
• Mendo Lake CU, Ukiah, Calif., $2 million;
• Opportunities CU, Burlington, Vt., $2 million; and
• Santa Cruz (Calif.) Community CU, $2 million.

The CDFI Fund also awarded $4.4 million to 10 CDFIs through its Native American CDFI Assistance (NACA) program, which is designed to encourage the creation and strengthening of certified CDFIs that primarily serve Native American, Alaskan Native and Native Hawaiian communities, the federation said.

Of the 10 NACA awards, two went to credit unions--$470,000 to Federation-member Molokai Community FCU (Kaunakakai, Hawaii) and $225,000 to First Hawaiian Homes FCU (Hoolehua, Hawaii). While the percent of total NACA awards to community development credit unions (CDCUs) was 6.45%, CDCUs represent nearly 20% percent of the CDFI industry. The federation is committed to closing this gap.

"We will continue to advocate vigorously for CDCUs to receive grants commensurate with their leading role in community development finance," Rosenthal said. "We look forward to working closely with the fund to determine the barriers to increased credit union funding, especially at a time when financial services are so desperately needed in low-income communities, and when CDCUs have been hard hit by credit union system problems not of their making."

More than 200,000 youth save with SECU programs

RALEIGH, N.C. (10/6/09)--State Employees' CU's (SECU) youth accounts are continuing to grow, as more young North Carolinians embrace the concept of saving. The credit union's two programs--Fat Cat, for children up to age 12, and Zard, for teens aged 13 through 19, recently surpassed the 200,000 mark in accounts opened with deposits totaling more than $80 million.

Fat Cat and Kristy Spaulding, vice president of SECU's Lumberton-West Fifth Street branch, meet with students at a local elementary school as part of the Fat Cat program for children up to age 12 that places an emphasis on youth financial education. (Photo provided by State Employees' CU)

Fat Cat and Zard place emphasize youth financial education, with dedicated websites, newsletters and in-school presentations by SECU personnel.

Launched in 2000, SECU's Fat Cat account was developed to foster a relationship with members at a young age and to assist parents in teaching their children the value of saving and managing money wisely. When Fat Cat members establish their accounts, they receive incentive items, and a passbook to track their savings.

In addition to the Fat Cat website, www.cufatcats.org, and Fat Cat Paw Prints newsletter, SECU utilizes a Fat Cat Smart Money booklet as a teaching tool in many North Carolina elementary schools. With more than 35 Fat Cat costumes statewide, SECU personnel take the mascot into the schools to help them teach basic money concepts.

SECU's Zard teen program, which started in April 2002, expands account and service options for members to include a checking account, ATM/debit card and other lending and savings products. Zard members also receive an incentive item, and financial information on topics such as budgeting, checkbook balancing and credit scores via its Money Matterz newsletter and www.teenzard.org website.

To enhance the program, SECU personnel use the National Endowment for Financial Education High School Financial Planning program and BizKid$ curriculum in North Carolina schools.

"We are so happy to see the growing number of youth accounts at our credit union, as SECU personnel have worked diligently over the years to reach out to younger members," said Leigh Brady, SECU senior vice president of education services. "Our youth programs also allow us to expand our financial education efforts--giving back to North Carolina through presentations to youth on money management topics. As SECU's Fat Cat and Zard members grow older, we look forward to their financial success."

Resource Links

CUNA Resources for Youth and Young Adults

Online surveys help CU improve cash management

BREA, Calif. (10/6/09)--A credit union that positions itself as a banking resource to ministries faced new challenges helping customers navigate the changing financial landscape when the economy went into crisis mode last year. One way Evangelical Christian CU (ECCU) met the challenges was by partnering with the ministries they seek to serve.

ECCU created a ministry advisory panel to solicit--through brief online surveys--the insights and expertise of ministry staff, leaders, and financial decision-makers regarding financial management and other relevant issues. Panel participation was not limited to ECCU member ministries.

The credit union's goal is to explore new ideas and uncover best practices that can help ministries better manage their financial resources.

Besides keeping the surveys brief, ECCU attracts new panelists by assuring that their feedback is anonymous, offering them eligibility to receive incentives for participating, and assuring panelists they will be the first to be notified when survey results become available.

The $1.264 billion asset, Brea, Calif.-based ECCU is a banking resource for Christian churches, schools, and other evangelical ministries nationwide.

Resource Links

There’s Nothing Like a CU statement stuffer

CU hopes to turn around Alaska community

ANCHORAGE (10/6/09)--An Anchorage-based credit union is hoping to help turn around an Alaska community that is known for its high crime and low income.

Credit Union 1 plans to open a branch in spring in Mountain View, a community located near Anchorage. Although the branch's opening is months away, the staff is already helping Mountain View residents by providing financial literacy and organizing community events and projects in the area (KTUU.com Sept. 30).

The credit union also began offering a new elective class at a local middle school that teaches personal finance to seventh and eighth graders. Rachel Ramsey of Credit Union 1 told KTTU that it takes "baby steps" to get individuals into the habit of saving and opening checking accounts.

Credit Union 1's plans to open a Mountain View branch is viewed as a "personal finance renaissance," that will hopefully end Mountain View's poor economic stigma, the news outlet said.

Mountain View has failed to keep many national businesses in the area, and its last financial institution--Alaska State Bank--closed in 1989, KTTU added.

Credit Union 1 has $661 million in assets.

Resource Links

When Times Are Tough We Can Help lobby brochure

Scams hit four CUs

MADISON, Wis. (10/6/09)--Several recent scams have targeted four credit unions in various regions of the U.S.

The following scams have been reported:

• Suffolk FCU, Medford, N.Y., and Island FCU, Hauppauge, N.Y., debit card holders were targets of scam text or voice messages, which tell members their debit card numbers have been deactivated, police said. The victims were instructed to call a phone number to provide account and personal identification numbers to reactivate their accounts. Police reminded the public that credit unions do not contact members by mail, phone or Internet to request account information (Newsday Oct. 3).

• Shoreline CU, Two Rivers, Wis., reports that a website--www.SurveyLot.com--is mailing fraudulent cashier's checks to Internet visitors nationwide, according to Sharon Tome, Shoreline chief operating officer. The checks are written for $3,975.20 and contain the routing number for the credit union and an account number--now closed--of a Shoreline member. The credit union has returned roughly $30,000 worth of checks that tried to clear through the account, Tome said. No Shoreline members have been victimized by the scam, she added. Shoreline officials are alerting other financial institutions that the checks are fraudulent (Herald Times Reporter Oct. 1).

• Paducah (Ky.) FCU, has received dozens of calls from members who received a suspicious text message that said in part: "This is an automated message from Paducah FCU. Your ATM card has been suspended. To reactivate, call URGENT at 1-866-571-7629." When the number was dialed, the caller heard an automated message requesting the caller's bank account number. The telephone number has been disconnected, and the credit union is not aware of any members who were victimized by the scam (INFED Oct. 1).

Resource Links

ID Theft: How to Prevent It and How to get Over It statement stuffer

CUNA CPF Fraud and Security materials

Group Health CU embraces environmentalism

SEATTLE (10/6/09)--Group Health CU, Seattle, encouraged members to be more environmentally savvy with a promotion that will literally bear fruit for the community.

The credit union launched a Neighborhood Harvest promotion last month that involved placing a fruit tree at each Group Health branch. The credit union branches cared for the trees until the trees were taken to their permanent home--the Dakota Orchard and P-Patch in Rainier Valley. The fruit from the trees will be shared with the community, and the overflow will be donated to local shelters and food banks.

The credit union used the fruit trees and Neighborhood Harvest promotion to encourage members to sign up for the credit union's paperless services--including e-statements and online bill pay. Members also could opt to receive the e-mail version of Gear Up, the credit union's newsletter.

The credit union got the idea for the promotion with connections it received through social networking site Twitter. Shannon Perry, Group Health CU assistant marketing manager, posted a tweet on Twitter asking for some ideas to help the promotion. Perry connected with an executive from the Arbor Day Foundation in Nebraska, which eventually led to Perry talking with a Seattle arborist (Seattle Times Oct. 4).

The experts led Perry to a local tree nursery--Raintree Nursery--where she was given several recommendations for fruit trees that would do well in the Seattle area. The credit union then used the trees as a part of the Neighborhood Harvest promotion.

Group Health embraces environmentalism as a corporate strategy, the Times said. In addition to the Harvest promotion, the credit union offers discounts on loan interest rates for hybrid vehicles, the newspaper added.

Group Health CU has $285 million in assets.

Resource Links

Online Banking: Fast, Simple, Safe drive-up envelope

Online Banking: Fast, Simple, Safe statement stuffer

CU System brief

• TOLEDO, Ohio (10/6/09)--Efforts to raise $100,000 in start-up capital for a proposed state-chartered credit union in Toledo, Ohio, are underway (eLumination Sept. 30). Credit unions have committed nearly $1.3 million in non-member deposits for the proposed Nueva Esperanza (New Hope) Community CU (NECCU), but regulators require that 10% of that amount be raised for capital before the credit union opens. Toledo-area businesses, business leaders and individuals are being asked to contribute. The Ohio Credit Union League, Ohio Credit Union Foundation, NECCU incorporators and Toledo-area credit union leaders met with business leaders to discuss the benefits that NECCU would provide the community. NECCU will serve residents of South Toledo--primarily Latino residents. The credit union hopes to increase financial literacy, and provide a safe, reasonable alternative to higher cost financial services that many residents use ....

Market News

MADISON, Wis. (10/6/09)

• Federal regulators shut down three more banks Friday, including Warren Bank in Warren, Mich., and two smaller banks--Jennings State Bank in Spring Grove, Minn., and Southern Colorado National Bank in Pueblo, Colo.--pushing the total number of failed banks this year to 98. Rising loan defaults in a poor financial climate are the main reason for the failures, analysts said. The Federal Deposit Insurance Corp. (FDIC) took over Warren Bank, which had roughly $538 million in assets and $501 million in deposits as of July 31. Warren Bank's six branches will reopen Saturday as offices of Columbus, Ohio-based Huntington National Bank, which agreed to assume the deposits and about $83 million of the assets of Warren Bank. Its failure is expected to cost the FDIC an estimated $275 million. The FDIC will retain the remainder of Warren Bank's assets for later disposition, FDIC said. Legacy Bank of Wiley, Colo., agreed to assume the deposits and assets of Southern Colorado National Bank. Central Bank of Stillwater, Minn., will assume the assets and deposits of Jennings State Bank (Associated Press Oct. 3) ...

• Economists should not dismiss employment as a lagging indicator--or merely a sign of where the economy has been--says Mohamed El-Erian, CEO of Pacific Investment Management Co. The current 26-year high unemployment rate also is a harbinger of things to come, he added. "Today's unemployment rate is much more than a lagging indicator, El-Erian said. "It also is a signal of future pressures on consumption, housing and the country's social safety net." Normally, the job market trails the economy in an economic recovery because companies are reluctant to hire more workers until they feel assured the expansion will last. However, in the current economy, the "large and protracted" uptick in joblessness and the likelihood it will stay at a high level for years means unemployment will affect the economy going forward--not just as an indication of where it has been, El-Erian explained (Bloomberg.com Oct. 5) ...

• The Treasury Department is coming under fire for making some misleading public statements last fall. The allegations made by Neil M. Barofsky, inspector general--who oversees the government's bailout of the banking system--have brought up the possibility that Treasury has unfairly disbursed money to the biggest U.S. banks, analysts said. A Treasury official made erroneous statements about health of the largest U.S. banks as the government was giving out billions of dollars in aid, according to Barofsky's report on the Troubled Asset Relief Program. Regulators were wrong to tell the public last year that the earliest bailout recipients were all healthy, said the inspector general's office. The truth is that regulators were worried about the health of several banks that received the first bailout payments, Barofsky said (The New York Times Oct. 5) ...

News of the Competition

MADISON, Wis. (10/6/09)

• For the first time in 13 months, the U.S. service sector grew in September. The Institute for Supply Management's (ISM) non-manufacturing Index increased a larger-than-anticipated 2.5 points in September to 50.9 from 48.4 in August. Analysts had expected a reading of 50--the dividing line between growth and contraction--according to a Thomson Reuters poll. In September, business activity and new orders both had improved--which is an encouraging sign for future growth, analysts said. However, the employment index is weak and portends a slow improvement in the labor market, they added. As the economic recovery continues, the ISM nonmanufacturing index should increase throughout the fourth quarter, analysts said. The index, which tracks more than 80% of the country's economic activity, hasn't grown since August 2008 (Moody's Economy.com Oct. 4, and The New York Times Oct. 6) ...

• Alfred F. Kelly Jr., president of consumer business American Express Co., is resigning to pursue a top job at another company, said company spokeswoman Joanna Lambert. Kelly, 51, an American Express employee for 22 years, is leaving because CEO Kenneth Chenault intends to remain at the company for the "foreseeable future," Lambert added (Bloomberg.com Oct. 5) ...

Mobile P2P payments could be key to Gen Y

MADISON, Wis. (10/6/09)--Credit unions who want to reach Generation Y may be interested in offering mobile person-to-person (P2P) payment services.

Jeffrey Yabuki, president/CEO of Fiserv, said mobile P2P services could be the key to reaching Gen Y. He noted that while Gen Y accounts for 9% of P2P transactions, it's likely that number will jump to 40%. P2P payment services "are likely to be one of those vehicles used by that group as a regular part of their day," Yabuki added.

P2P services allow users to route money to others with their cell phones. Gen Y members grew up with e-mail and mobile phones as a significant part of their lives, Yabuki said.

Fiserv plans to launch a P2P service next month. As many as 2,500 financial companies could use the service when it becomes available, said Steve Shaw, Fiserv director of strategic marketing (American Banker Oct. 4).

CashEdge, Inc. and MasterCard have already launched P2P services. CashEdge launched POPMoney in June, and MasterCard offers MoneySend. POPMoney allows users to send electronic payments by using the e-mail address or mobile phone number of the payment recipient. Similarly, MoneySend lets MasterCard issuers send each other payments, the Banker said.

About 33% of online consumers with mobile phones surveyed by Javelin Strategy and Research said they would be interested in using P2P payments. Sending and receiving money quickly would be a primary motivation for using a mobile P2P program, respondents said (BusinessWireJuly 29).

Roughly 81% of respondents said they would use a P2P service if it was offered by their financial institution, a CashEdge survey found. About 77% said they would use a P2P service from their financial institution instead of an independent provider. Seventy-three percent said their financial institution would be more secure than an independent provider, while 69% said the service would be more convenient than using an independent service.