By Jennifer Kerry, Vice President, Credit Card Services, CO-OP Financial Services
The credit card issuing industry is quickly evolving. While 2015 may be characterized as the “Year of EMV,” the rush to EMV compliance is mostly behind us on the credit side of the business, even as merchant adoption of the technology gradually moves forward. Debit, of course, is another story.
In the year ahead, mobile payment technology will continue to advance, attracting consumers like never before. This makes your digital wallet offering more important than ever. Credit unions should embrace their cardholders’ desire to use tokenized payment options such as Apple Pay, Samsung Pay and Android Pay for both their efficiency and security. And, of course, you must ensure that your cards are in these wallets.
CO-OP’s own research reveals a changing consumer, one that is much more committed to paying down credit card balances. This trend may be related to our recent great recession, but regardless of why it is happening, credit unions need to adjust their business models and more actively manage their portfolios in order to maximize income.
There are many steps you can take to build income streams in this environment. Make sure you are meeting Visa’s and MasterCard’s minimum requirements for your rewards program in order to earn a higher rate of interchange. Identify consumer accounts whose spending patterns are like businesses, and then move these members into business products that are paid at a higher interchange rate. And, don’t put your credit portfolio on autopilot. Continually market to your accounts throughout their lifecycle, keeping your products front and center with members. Then measure the results of these campaigns and change course when needed.
Wherever possible, thank your members for their loyalty. Offer them a robust card-based rewards program that is easy to understand and earn points; flexible –allowing them to make choices that fit their lifestyle and wants; and which can be highly personalized. Remember that your rewards program is supposed to be rewarding for members – encourage them to redeem their points so they realize the value. Your members will tell you exactly how to reward them, and they will change their preferences from month to month, all the while expecting your program to change along with them.
When it comes to rewards, one size does not fit all. Even an offering as narrow as a cash-back program can incorporate several redemption options, ranging from account credits to end-of-the-year bonuses and checks in the mail. The more options members have for redeeming their points, the more members you will entice into your program.
As always, the credit industry remains a highly competitive marketplace, and credit unions have to do whatever they can to ensure members are selecting their cards to use. So offer your members a full suite of benefits on par with the national issuers. Understand their needs and preferences, and tailor your product offering accordingly.
Keeping pace with advances in technology and consumer expectations takes time and resources, but this investment will pay off in dividends down the road.