Now that the Durbin Amendment is going into effect July 21, how will credit unions respond? The impact of Durbin to the majority of credit unions depends on how the $10 billion exemption is handled within the Fed rules, and the requirements for network implementation. But whatever form this change may take, it is but one reason why credit unions should be taking a closer look at payments. The past few years have brought about significant changes in card usage. And new payment trends promise to change the landscape yet again in the years to come. Debit or Credit? For credit unions, the short answer to this familiar checkout line query is: both. The Nilson Report projects that debit transactions will reach 67.6 percent of purchase transactions (versus 32.4 percent for credit) in 2013. Debit services are critical to serving members who use your credit union as a primary financial institution (read: checking account holders). But debits are not the only piece of the puzzle. Now’s a great time to look at your options for the future – both in terms of debit transactions and issues surrounding payments. Some topics to consider:
  • Credit cards. As of now, credit card interchange income is not at risk. Credit cards also serve as an earning product and retention driver for affluent households.
  • Debit card analytics. Increase debit card usage (along with member loyalty) with targeted incentives, and gain valuable insights about your members and their activities in order to serve up tailor-made loan or credit offers.
  • Fraud detection and prevention. Even as reduced interchange income puts the cost of fraud services at issue, fighting fraud is more important than ever to member service and the bottom line.
  • Mobile banking. The future has already arrived – and it’s shaped like a Smartphone. Consumers are already paying for Starbucks by phone; look for eBay to follow suit. If you aren’t investigating remote deposit capture and multiple-platform mobile banking apps, get going.
Cooperative solutions. Whether they’re embracing new technology, looking for innovative solutions or negotiating with merchants, credit unions have the best advantage when they flex their collective muscle.