COLUMBUS, Ohio-As banks boost fees across the board, especially for non-customers using ATMs, credit unions may have an opportunity to differentiate themselves with their own fee structures.
But there are inherent challenges in besting banks on fees, especially when it comes to using those automated tellers. "Recent regulatory changes ... have increased costs for many ATM programs," noted Paul Hixon, VP-marketing and communications for Corporate One FCU, who spoke to Credit Union Journal on behalf of Alliance One, its ATM network. "Additionally, many credit unions will be looking to upgrade their ATMs to be ADA compliant or to be image-enabled. These costs will most likely be passed on to members in the way of modest ATM fee increases."
For credit unions with ATMs, generating income is very important, as the machines and access to the machines can be costly, Hixon noted.
Stan Hollen, CEO of CO-OP Financial Services in Rancho Cucamonga, Calif., which operates a large, national, surcharge-free ATM network, noted that the consumer is often charged twice when using an ATM, with fees from both their own bank and again by the owner of the ATM.
Very few credit unions charge that second fee, Hollen noted. "I don't expect that to change," he said. "That's important. Many credit unions do charge a fee though to non-CO-OP institutions - usually that's a bank. But still, mostly credit unions do not charge a fee with members withdraw from a bank's ATM."
But even when they do, the fees are usually smaller than bank fees, Hollen said, noting that credit unions charge on average between $1 and $1.75, while banks charge between $2 and $3. "This has always been a hallmark of credit unions - that fees have been lower," Hollen said. "It does vary in some cases by market, and some by location."
Hollen said he does expect to see some credit unions raise their fees, but he expects they will still be lower than most of the non-credit union providers. "There's a message when banks charge the other fee to their customers," Hollen said. "The message is 'We don't want you using other people's machines, and if you do, we are going to charge you for it.'"
Tom Gandre, chief debit officer for PSCU Financial Services in St. Petersburg, Fla., said that growing bank fees offer an opportunity for credit unions to differentiate from banks right now. "The key is continuing to get the message out," he said, stressing the importance of marketing for credit unions. "The key is marketing and new member acquisition."
Credit unions should also spend more time in 2009 educating their members about cash-back options, Gandre said, pointing to retailers that permit cardholders to get cash back without a fee during a debit transaction. "Credit unions should encourage consumers who are POS users that is an excellent way to combat some of the fees in the marketplace," he said.
Jim Gowan, EVP for Credit Union 24 in Tallahassee, Fla., said he doesn't expect to see credit unions raising their fees, and is encouraging credit unions to aggressively market that difference. "I think this does create an opportunity because there are a lot of disgruntled bank customers right now," he said. "I think marketing is critical to credit unions' future. Those that invest in marketing would be better off than those that don't."
"With the tight economy, many people are starting to use credit cards less and debit cards more," Gowan said. "Pressure is on credit unions - and banks. Credit unions are going to have to figure out what they can do. If a credit union member does ATM transactions, most of the time there is an expense to the credit union."
Handel noted that Raddon Financial is hearing "quite a bit" from its members that may feel under pressure and are thinking about raising fees. He said Raddon encourages clients to be more consistent on collecting NSF charges and late-payment charges, and to charge fees for products that have value to the member.
"Make sure that you tighten up your system," he said. "Monitor the NSFs charged vs. NSFs collected. By being better at collections and being more consistent as far as waiver policies for your staff you can increase your fee income without actually raising fees. Also the obvious is to monitor pretty closely what your competition is doing."
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For info on this story:
* www.co-opfs.org
* www.pscufs.com
* www.cu24.com
* www.corporateone.coop
* www.allianceone.coop
* www.raddon.com
