ONTARIO, Calif. -
CO-OP Financial said it expects the new program, Member Rewards, to be a big success with members and credit unions alike.
"Time will tell. But we think at the moment, from the feedback, we might have a better mousetrap," said James A. Hanisch, CO-OP Chief Accounting Officer.
CO-OP Financial, owned by 1,002 CUs and serving 24-million cardholders that generate $493 million in revenue, spent the last two years researching reward points for debit cards and talking to credit unions, according to Hanisch. He said credit unions around the nation are feeling the heat of competitors who are offering various debit card programs.
Hanisch said CO-OP officials were hearing the same thing across the board: debit card rewards are a good idea, but credit unions weren't sure how the economic model would work, especially for small CUs. He noted, for instance, that debit card reward programs have a less than 20% penetration rate.
In the traditional credit union ethos of cooperation, CO-OP decided to use the aggregate total of all its clients debit programs, from giant Navy Federal to CUs with only $10 million in assets, to make it economically feasible to offer debit card rewards.
"It yields a lower price point to the credit unions," he said.
CO-OP Member Rewards' standard turnkey approach gives members one point per $2 spent, but Hanisch said each credit union will have the final word on how much value is attached to their debit or ATM cards. Plus, participating CUs will decide whether to offer traditional reward items such airline miles, merchandise or retail cards. CO-OP Member Rewards also has the unique feature of members being able to make a donation to the Children's Miracle Network, a non-profit that raises money for children's hospitals. The program also offers "instant gratification" products and service such as downloadable ring tones for cell phones, that members can buy with a small amount of reward points.
"They control the parameters of (what) they're offering," he said. "It's totally up to the credit union."
Hanisch said Member Rewards doesn't have to be used strictly for debit/ATM cards stating that a credit union could use the program for a loan drive or to sell new certificates of deposit. CO-OP lists a 60-day start-up time frame for Member Rewards and track member reward points for each CU. Members can track their points online and CO-OP provides the credit union with a package of promotional materials and training webinar for CU staff. A CO-OP customer call center is available to members 24 hours a day, all year long.
Hanisch declined to say how much each CU would pay for Member Rewards but he said it would be based on the total number of each CU's accounts and that the program startup carried a "very modest" start-up fee.
