June 10, 2008

Ellen Hein, CEO

Chris Hutson, CFO

Texas Tech Federal Credit Union

1802 Texas Tech Parkway

Box 41072

Lubbock, TX 79409-1072

Re: Gift Cards as an Electronic Financial Service.

Dear Ms. Hein and Mr. Hutson:

You have asked about the permissibility of a proposal Texas Tech Federal
Credit Union (FCU) is considering where the FCU would receive payments
for gift cards and track payments for the Texas Tech University Athletic
Department (Athletic Department). We conclude it is within the FCU's
incidental powers to offer this financial service to the issuer of the
gift card if the issuer is a member of the FCU.[^1]

The Athletic Department wants to offer Texas Tech fans a gift card for
the purchase of athletic event tickets, concessions at events, and
apparel at the university's athletic store. Fans would access
information about gift cards on the Athletic Department's web site; when
the fan initiates a card purchase, the fan would be transferred by an
electronic link to the FCU's website. The FCU would receive funds
electronically from the purchaser on behalf of the Athletic Department
into an account the Athletic Department would maintain at the FCU. The
FCU will track the use of the gift card and debit its member's account
when the card purchaser uses the card to make a purchase. A local bank
with which the FCU already has a relationship will provide the cards
showing the logos of the FCU and the Athletic Department.

Essentially, under this proposal, the FCU would receive and transfer
funds on behalf of its member, which are traditional financial services
credit unions perform for their members but, in this instance, through
the electronic media represented by the gift cards, a type of stored
value card product. We conclude the proposal is permissible under the
provision in NCUA's incidental powers regulation permitting an FCU to
provide electronic financial services to members that states:

> Electronic financial services are any services, products, functions,
> or activities that you \[an FCU\] are otherwise authorized to perform,
> provide, or deliver to your members but performed through electronic
> means. Electronic services may include automated teller machines,
> electronic fund transfer, online transaction processing through a web
> site, web site hosting services, account aggregation services, and
> Internet access services to perform or deliver products or services to
> members.

12 C.F.R. §721.3(c). Gift cards are a type of stored value product that
FCUs may provide to their members, 12 C.F.R. §721.3(k); please note that
we are not authorizing the proposed activity under that provision of the
incidental powers regulation. The proposal may involve the Athletic
Department issuing gift cards to nonmembers; therefore, the FCU may be
receiving payments from nonmembers for the gift cards. An FCU may
receive funds into the account of a member from nonmembers. For that
reason, we conclude the activity would be permissible under §721.3(c).
*See also* OGC Op. 03-0908 (September 10, 2003) (Under 12 C.F.R.
§721.3(c), FCU may process payments on payroll cards its member issues
to nonmember employees as a means of making disbursements to
third-parties from the member's share draft account) available on the
agency website at ncua.gov.

Sincerely,

/S/

Sheila A. Albin

Associate General Counsel

GC/RPK/SAA:bhs

08-0121

[^1]: A threshold issue for the FCU and the Athletic Department is
    establishing the Athletic Department as a member. We are not aware
    whether the Athletic Department would be considered a separate legal
    entity from Texas Tech University and, as an alternative, we suggest
    you consult with NCUA's regional office regarding having the FCU's
    sponsor, Texas Tech University, join as a member of the FCU if it
    has not done so already and have it be the issuer. Another option,
    if the Athletic Department is not a separate legal entity and
    eligible in its own right for membership, might be that it could be
    eligible under the provision in your charter for an organization of
    persons who are already enumerated as eligible in your charter.