ST. PETERSBURG, Fla. – Credit unions across the country are reporting soaring debit card use by their members as the nation abandons the use of cash and checks for the convenience of electronic transactions.
The rapidly growing trend comes as Congress is proposing to rein in interchange fees charged on debit card transactions as part of the pending bank reform bill.
The surging use of debit cards benefits credit unions in two major ways. First by reducing the costs of processing paper checks at the Federal Reserve, traditionally between 5 cents and 10 cents per check. And second by providing a new reservoir of revenue via interchange, estimated at around $1.5 billion a year just for debit.
PSCU Financial Services, which processes card transactions for some 1,500 credit unions, reported yesterday that debit transactions for its credit unions soared 22% last year and is up 16% already for just the first quarter of 2010.
“Since debit interchange plays such a large role in credit union revenues, we have a specialized team that designs campaigns for our credit unions. We also negotiate with MasterCard and Visa to offer special sweepstakes promotions conducted specifically for our credit unions. The card companies provide very attractive prizes that drive increased participation, which ultimately leads to increased card usage and greater revenue for our credit unions,” said Tom Gandre, group executive, PSCU Financial Services.
A Debit Advisory Group, made up of 20 member-owner credit unions of all sizes, provides input to the cooperative’s product development and marketing teams to ensure the DebitAdvantage platform addresses current and emerging needs of credit unions.
