DES MOINES, Iowa-The bottom line in 2010: How do you generate more fee income?
According to The Members Group, revenue can come through beefing up credit and debit rewards programs, and then adding fees to those programs. It's a balancing act, offered Sara Petty, VP-strategic initiatives. "How robust must that program be, and then how much can you fee on rewards?"
Petty cautioned that before deciding on any new fee, the credit union must first review what competitors are doing. If others are not charging a similar type of fee, that could put the credit union in a "tenuous" position.
Merchant-funded rewards is a strategy that allows credit unions to add value to their card base at a lower cost to drive transaction volume and interchange revenue, Petty explained. "The merchant actually picks up the cost of fulfilling the reward. For example, cardholders automatically receive a 5% discount if they go to a certain store. That discount shows up on their statement, and if the purchase was made online, they see it right away. So the member sees the benefit and the merchant pays for the fulfillment piece of it."
Petty suggested that revenue can also be generated through fees for card services, such as an automatic alert on any transaction over $100.
