CLEARWATER, Fla. — Time for credit unions to "take their foot off the brake" and develop strategies to compensate for a loss of debit interchange revenue.
If CUs are stalling and waiting for the outcome of the Durbin debate, that's a mistake, according to Bill Lehman. Regardless of whether the proposed interchange legislation is delayed, adjusted, or repealed, the VP of portfolio consulting for CSCU said the time to put the foot on the gas is now.
"At CSCU we feel that ultimately market pressure will dilute our interchange revenue regardless of what comes out from the Durbin bill," said Lehman during a recent CSCU webinar titled Managing Your Debit Card Program Into the Future. "Interchange revenue will continue to be attacked and most likely will see some dip. So better start planning today and not tomorrow."
That planning should not focus just on the debit program, but "holistically" on the credit union, insisted Lehman. "Look for ways across the entire credit union to address the revenue challenge."
Lehman said sound strategies first start with gaining a strong understanding of the CU's membership base — who is profitable and who is not. The credit union should segment members based on profitability and develop products, services, and fee structures based on the value members bring to the organization. "For example, as the account value diminishes we should consider ways to charge for things, apply fees, or create a product or service that is less expensive for us so we can improve the account's value."
Strategies should not simply be punitive fees, but pricing aimed at creating more profitable behaviors, added Lehman.
