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Posted: Jun 8, 2018
Comments: 0
Author: Lou Grilli

[Editor's Note: This article was previously published in CUInsight, and has been modified.]

Credit unions think of branding in terms of advertising, mailings, inserts, logos and social media. However, payments, and all the touch points associated with digital and plastic payments, are an equally important part of a credit union’s brand.

Credit Union marketers are diligent in ensuring that the brand is consistent throughout all aspects of member contact. So, signage, logos, websites, mobile and online banking platforms are all inspected for consistency with the brand. Payments should also be included in this thought process.

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Posted: Feb 27, 2018
Categories: Debit Cards
Comments: 0
Author: Lou Grilli

If decoupled debit continues to gain acceptance among merchants, it will have an impact on issuers' card revenues.

[Editor's Note: This article was previously published in CU Insight, and has been modified.]

A few merchants have found that decoupled debit cards have helped to reduce the cost of payments acceptance without inconveniencing shoppers. This solution offers a significantly cheaper alternative for the merchant since payment bypasses the traditional payment rails, and instead uses ACH (Automated Clearing House) for payment from any of the shopper’s bank accounts. Whereas a merchant would typically pay its processor a 3% fee for the cost of processing a bank’s card, the fee to a third-party provider to handle the ACH is 0.8% and is capped at $5, and larger merchants can get even lower rates.

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Posted: Feb 21, 2018
Comments: 0
Author: Lou Grilli

Use of debit continues to grow as consumers shift their cash and check spend to the convenience of plastic. According to the Fed, the number of debit payments increased from 56.5 billion in 2012 to 69.5 billion in 2015, the largest increase in the number of payments among the payment types. More recently, and more relevantly, Trellance credit unions saw their Visa Signature Debit transactions grow year over year in January 2018 by 8.83%. Yet at the same time, credit unions are seeing a decline in average debit interchange. So, what is going on?

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Posted: Dec 14, 2017
Comments: 0
Author: Lou Grilli

It’s imperative for credit unions to understand interchange – the biggest component of non-interest income.

One of the most misunderstood, and possibly the most misaligned topic in the credit and debit card world is interchange. At a summary, it is a fee paid by a merchant, paid to the issuer, each time a credit or debit cardholder uses a card, in a store or online. The fee covers the cost of processing the credit or debit card; for a credit transaction the fee reimburses the issuer for the interest on carrying the balance during the cardholder’s debt repayment grace period; and the fee is intended to address the cost for zero fraud liability, which reimburses the cardholder in case of fraud. In addition, higher interchange is charged for signature rewards credit cards, to cover the cost of additional cardholder benefits such as cash back or auto rental collision damage waiver. The practice of a merchant paying the issuer interchange was established in 1971, when Bank Americard set 1.95% as the standard rate as compensation for the risk of card-issuing banks. Interchange is also paid to the ATM owner each time a cardholder gets cash out. Seems simple enough, but there’s much more complexity to it.
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Posted: Nov 3, 2017
Comments: 0
Author: Lou Grilli

Another way Credit Unions can keep members happy, reduce declines, and keep cards top-of-wallet.

The ability for an issuer to approve a “Partial Authorization” has been available since 2005, yet most issuers and merchants still don’t take advantage of it. As a result, transactions on debit, prepaid, and gift cards frequently get declined, resulting in frustrated cardholders, and lost sales. 

Simply put, a Partial Authorization occurs when an authorization request for a card presented to a merchant is attempted for the full amount of the transaction and, if there are not enough funds in the debit or prepaid or gift account available to cover the full amount, the authorization is approved for the amount available. This allows the cardholder to use the available amount in the account, and for the merchant to obtain an additional form of payment for the difference. For non-reloadable gift Cards, the issuers will also return a card balance which will be printed on the receipt. Partial Authorization keeps transactions alive without the merchant telling a customer it has been declined and allows the cardholder to pay the remaining amount with another form of payment.

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