ATLANTA and SAN JOSE, Calif. (10/9/09)--First Data announced an agreement with PayPal that will allow debit cardholders in First Data’s STAR Network--which some credit unions use--to link their STAR debit card to a PayPal account online. Consumers can enroll in PayPal, an online payment service, through their financial institution’s online banking site. They then use their debit card to fund their PayPal account to make online purchases without having to enter debit card information or expose their card number to merchants for each purchase. Member financial institutions, including credit unions, authenticate information for each cardholder to add another layer of security. JM Associates FCU in Jacksonville, Fla., participated in a pilot program with the STAR Network earlier this year. The partnership built member relationships through promotion of the credit union’s brand with each transaction, while allowing members to purchase items online securely, according to CEO Jim Ryan. Consumers are not as comfortable using debit cards for online shopping as they are with credit and prepaid cards, according to the 2008 Study of Consumer Payment Preferences, by Hitachi Consulting and the Bank Administration Institution. Credit cards have the highest penetration of all payment methods on the Internet, while debit cards and payment services like PayPal have the second highest penetration. The service seeks to address consumers’ fears about using online debit cards, said Julie Saville, STAR Network vice president. “As more and more consumers move to online shopping and banking, and we continue to see an increase in e-commerce, this new service gives our issuing institutions one more way to grow relationships with their customers, reduce their costs and increase revenues,” Saville said. First Data is an electronic commerce and payment services provider.