CHIQUIMULA, Guatemala—Sporting goods merchant Flavio Sontay knows the way to improve his competitive edge is to offer the products and services his customers need. In addition to stocking a complete line of soccer balls, athletic shoes and other related merchandise, Sontay is installing a point-of-sale (POS) device that links him to Cooperativa de Ahorro y Crédito Integral San José Obrero R.L (COOSAJO), the credit union that supports his two retail stores. The POS device will enable customers who are credit union members to pay for purchases at the store electronically and withdraw cash from their accounts.
"The young people who come here to buy sports equipment are always in a hurry," said Sontay, whose stores serve Chiquimula, an eastern Guatemalan city of more than 300,000 residents. "They do not want to stop at the credit union to pick up cash and then come to my store to shop, so I will let them do both things here."
In addition to providing his customers greater convenience, both Sontay and COOSAJO will make a few cents on each transaction. That's far different than the 8% fee the merchant would pay for sales charged on an international MasterCard or Visa, which Sontay now feels less obligated to accept. It's an added advantage that has attracted more businesses to the Central American country's credit unions, according to Brian Branch, executive vice president and COO for World Council of Credit Unions (WOCCU).
"The credit union-issued debit cards work throughout Guatemala's credit union system," Branch said. "Members can access their accounts from any credit union branch, ATM or POS device across the country, paying just a few cents per transaction for the convenience."
Guatemala's electronic transaction network, similar to those that link credit unions and their members in several Latin American countries, is also part of WOCCU's outreach development plan. Guatemala's network follows networks already established in Ecuador and Bolivia and is the model for services soon to be offered in Peru. The emphasis on electronic transactions is a new addition to development strategies that in many countries previously focused on marketing efforts and brick-and-mortar facilities, Branch said.
"Much of WOCCU's current outreach strategy involves technology applications that expand services into rural areas," he explained. "We have successfully experimented with service extensions through ATMs, POS devices, personal data assistants (PDAs) and mobile phones."
COOSAJO began its electronic efforts by installing lobby ATMs to reduce teller traffic in late 2008. It took some time for members to warm up to the machines for several reasons, including past negative experiences with electronic transfer technology at other institutions. The credit union addressed such concerns by stationing a receptionist near the ATM who trained members on the equipment as necessary to attain ease with the process. The ATM has since been moved to an enclosure outside the credit union, where transactions have tripled since its initial installation.
The growing acceptance of electronic transaction options, particularly POS devices, has been a boon to merchants like Sontay, who have seen the benefits of both increased sales and the modest fee income paid by members to use the service. COOSAJO and other credit unions also benefit from growing acceptance of the technology, both by members and other area businesses.
"The credit unions are gaining trust, along with higher transaction rates, by providing services from gas stations, convenience stores and local restaurant franchises," Branch said. "They see the greater benefit of being able to serve more members more effectively and more often."
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 56,000 credit unions in 101 countries serve 200 million people. Learn more about World Council's impact around the world at www.woccu.org.