Chicago, IL – October
2004 – Credit union CEOs and Debit Card Executives
attended a Debit Card Symposium on October 6-7 at the
historic Drake Hotel in downtown Chicago. They were
the first to hear the results of the 2004 Debit White
Paper, “The Changing Environment of Debit in an
Evolving Payment Systems Market”, prepared by Raddon
Financial Group (RFG) and sponsored by Card Services
for Credit Unions (CSCU) and Visa.
According to Robert
Hackney, President, CSCU and Symposium moderator,
there are a number of environmental factors
influencing debit that our board wanted to convey to
our membership including:
-
Continued double-digit
growth in debit cards and volume
-
PIN pad deployment and
PIN prompting by merchants
-
PIN network
consolidation and network ownership shift to more
“merchant-centric” companies
-
The permanent and
negative impact of the Wal-Mart settlement on
signature interchange
In spite of these downward
pressures on interchange revenue, RFG’s research in
the white paper pinpointed several key findings that
make a compelling case for credit unions to reevaluate
their debit strategy. First and foremost, debit should
be a key strategic and core product in view of the
fact that debit cardholders have a higher propensity
to bring new loan and deposit business to the credit
union. As a result of the relationship power of debit,
credit unions should reevaluate their debit card
issuance strategy and risk management policies to
maximize issuance to as many cardholders as possible.
Further, with both signature and PIN volume growing at
approximately equal rates and with consumers
expressing no particular preference to sign vs. PIN,
there exists opportunities to modify consumer
preference and behavior toward signing through a
rewards program. Now that signature interchange rates
have stabilized somewhat, there remains room within
the margin to offer a reward program that provides
income after reward expenses that exceeds PIN revenue.
This is further evidenced by the fact some of the
largest debit issuers in the country are moving toward
a signature based rewards program.
Featured speaker Bob
Lawhead, President, RFG took a look at the impact
that debit card products have on a credit union’s
bottom line. He offered insights on how to identify
the segments that use debit card products and how to
target those households for future sales. Since 1975,
RFG has provided innovative research data, insightful
analysis, and marketing solutions to over 1,000 of
financial institutions across the nation. Because they
specifically serve financial institutions, they
understand the market and recognize critical issues
that shape the industry.
Bill Handel, VP of
Research, RFG, presented the findings of the White
Paper, the first debit card research conducted in the
post-settlement environment specifically for credit
unions. This ground-breaking analysis included a
discussion on interchange fluctuations, pricing
strategies and emerging markets.
Stacey Pinkerd, SVP
of Consumer Debit Products, Visa, discussed debit
marketplace challenges and opportunities. He shared
key industry insights and their short and long-term
impact on credit unions and highlighted key trends and
revealed opportunities for growth as well as how debit
rewards programs can be an effective tool to provide
additional lift in penetration, activation, and usage.
In addition, if the share of PIN transactions relative
to signature transactions is high, the financial
institution should consider a rewards program to
increase revenue by converting PIN transactions to
signature transactions.
The highlight of the
Symposium was a Panel Discussion which included
participants from three of the nation’s top credit
union debit issuers. “There’s no substitute for credit
union executives to hear first hand from their peers
about what made their debit programs successful. Then
they can walk out of the meeting with a ‘we can do
this too’ attitude”, stated Robert Hackney. The
panelists were:
-
Andy Hunter,
President/CEO of the $3.4 Billion Patelco Credit
Union in San Francisco, CA
-
Patrick McPharlin,
President/CEO of the $1.1 Billion Michigan State
University FCU in East Lansing, MI
-
David E. Purcell,
Vice President of Lending of the 1.3 Billion Travis
Credit Union in Vacaville, CA
“I recently acquired
the debit card program and the shared information was
extremely important for me to hear. I can’t want to
put this information to work,” said Star Dieter,
Card Sales Manager, DuPage Credit Union.
In addition, all attendees received a complimentary
copy of the 2004 Debit White Paper ($250 value). If
you are interested in obtaining a copy of the 2004
Debit White Paper “The Changing Environment of Debit
in an Evolving Payment Systems Market”, please visit
the CSCU website at
www.cscu.net or call 1-888-930-2728.
RFG and CSCU will also sponsor a Web conference on
November 16thNovember to discuss the key findings of
the 2004 Debit White Paper. If you are interested in
participating in the web conference, please register
at
www.cscu.net
About CSCU
Card Services for Credit Unions, Inc. (CSCU) is the
nation’s largest credit and debit card processing
association for credit unions, with over 2,600 member
credit unions representing over 9.3 million Visa and
MasterCard accounts. For more information about CSCU,
visit
www.cscu.net
or call 888-930-2728.
About RFG
For more than 20 years, Raddon Financial Group, Inc
(RFG) has provided primary research and marketing
solutions to the financial services industry.
Headquartered in Oakbrook Terrace, IL, RFG provides
research-based solutions to over 1,000 financial
institutions nationwide. For more information about
RFG, visit
www.raddon.com or call 800-827-3500.
For more information contact:
Dan McGowan, Marketing Director, Raddon Financial
Group (RFG)
Email: dmcgowan@raddon.com
Phone: 800-827-3500
Sue Chrzan
CSCU Communications
Email:
schrzan@cscu.net
Phone: 888-930-2728
