How Interchange Might Also Affect Membership Growth

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MADISON-The top concern related to pending interchange reform is, of course, its impact on income, but there's something else that could take a hit, as well: membership growth.

"Going forward, I believe the debit interchange cap will lead to a reduction in membership growth," CUNA Mutual Group's Dave Colby said. "What I'm hearing from financial institutions across the board is that there will be a much deeper focus on relationship pricing, and that will drive consumers to consolidate their various financial services accounts at one institution."

That could be a real problem for national credit union membership numbers, when members who belong to multiple credit unions-as many do-decide it's time to pick just one. "Right now, we have a number of members who are being counted more than once because they belong to more than one credit union," he explained.

And that, in turn, could hurt credit unions in the political arena, where the ability to say, "we represent 90 million members, 90 million constituents, 90 million voters, 90 million grassroots that we can call to battle" has helped launch the credit union lobby into the top stratosphere of special interest groups.

NAFCU's Tun Wai said that although clearly the biggest issue related to interchange reform is its direct impact on income, there is a trickle-down affect that could hurt membership growth. "This will impact the bottom line, which means you have to look at other ways to make up that income, and one of the ways you do that is with fees," Wai offered. "But you have to be concerned about feeing your members to death. I do know of one institution that has said they will never give up free checking because its members demand it. That's going to be a tough balancing act-doing what your members want at the risk of the health of the institution."

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