Cashless in California

Credit Union Management, Mar 1999 by Jooss, Ron

A successful electronic cash initiative by Honda Federal Credit Union in one of its sponsor's production plants demonstrates the viability of cashless payment systems in controlled or campuslike environments.

To pay for food service purchases at Honda Transmission Manufacturing Inc. in Russells Point, Ohio, employees who are Honda FCU members can swipe identification cards to debit their Honda Cash accounts, which hold value for onsite purchases.

Similar to a debit system, Honda Cash is linked to Honda FCU's core processing system. Employees can add value through payroll deduction direct deposit and by transferring funds from Honda FCU accounts. A value transfer station at the HTM facility offers additional convenience.

With a two-second response time, the system eliminates the delay that often makes debit and credit card authorizations inefficient. About 15 vending machines and cash registers throughout the facility are equipped with Honda Cash terminals.

The initiative is part of the AT&T CampusWide Solutions debit payment system (www.att.com/acmpuswide/), and is the first of its kind in a corporate facility. Its implementation was two years in the making.

Steve Brandon, chief operating officer for $170 million, Torrance, Calif.based Honda FCU was introduced to the concept while he was pursuing his MBA at Long Beach State University, Long Beach, Calif. He realized the cashless system would have advantages for the 30,000member credit union, Honda and its employees.

From the credit union perspective, he saw a way to minimize the "merry go round" of constantly replenishing ATM cash.

At the same time, Honda faced challenges in moving employees through the cafeteria within 30minute lunches.

"We could solve a couple of problems: reduce the cash we have to deploy in ATMs and move Honda associates through the cafeteria faster," Brandon says.

He notes the project also shows how credit unions can truly serve their sponsors' best interests. "Honda's in the business of building cars, not processing transactions," he notes. "That's what we do. That's why this is such a perfect fit."