BOCA RATON, Fla.-While data released by the Federal Reserve indicates 99% of credit unions (those of less than $10 billion in assets) have not seen any decrease in interchange income as the result of the Durbin Amendment, one person is urging CUs to prepare for decreases to come.
"We are already seeing a 4% to 5% drop from Visa's priority routing," said Stan Hollen CEO of CO-OP Financial Services. "We think it will be pushed down another 10 cents, but not down to the 23 cents [big banks are seeing]. We believe the big retailers are going to pit the PIN networks against one another and drive down interchange. We sounded the alarm last summer, and maybe we were too loud, but [interchange] went down and we want credit unions to be prepared. But it will not go down so far that it can't be overcome by new accounts and growth in debit."
Hollen, who spoke to Credit Union Journal during the company's THINK Conference here, noted that signature debit transactions represented about 63% of transaction volume and 61% of transaction value in 2011; the remainder were PIN debit transactions.
When it comes to debit, numerous analysts are forecasting that the real future of payments lies in mobile technologies. Hollen believes CO-OP Financial Services has the resources to provide market-leading mobile solutions. "We think we can keep pace with mobile," he said. "I worry more about the non banks, such as Google Wallet and the non-regulated payment providers. I think what we and other CUSO do well is that we are aggregators. We are the R&D arm of credit unions. We are fast followers in R&D. We were very early in image processing and that proved to be right."
75 Products Introduced
Hollen noted that CO-OP has sought to remain "innovative" and over the past six years has introduced some 75 new products. "We want to stay focused in the convenience arena with the network, with mobile, with payments, with the call center. The sandbox is bigger, but we've evolved."
The 30-year-old company has five business lines, many of which are sustainable by themselves, Hollen said. "The larger we get the more resources we have. Shared branching is a good example, as are the new video-assisted ATMs. We really try to listen to our credit unions and allocate resources and expenses along those lines."
Those video-assisted ATMs were announced during THINK as part of a partnership with Diebold.
Overall, Hollen is optimistic about CO-OP's future, as he is about credit unions themselves.
"I think we'll always hear about reaching new members. But how much growth is enough," Hollen said. "We're growing robustly, and existing members are bringing in more money. We're also seeing robust EFT growth. We are unique as credit unions and so different from community banks, because of cooperation. We have a unique opportunity with the industry structured the way it is."
