Members "instantly bond" with the shiny, new debit cards issued on-the-spot at their credit unions-and usage rates prove it.
"Members feel that the card is like a new toy, and they want to try it," said Gary Doan, chief information officer at $131-million Dallas Telco FCU here. "They can walk out of the branch and start using their cards right away. This is significant from the standpoint of member loyalty, but also because the credit union immediately earns interchange income on the cards."
Card activation rates are through the roof at Desert Schools FCU in Phoenix, which has instantly issued new and replacement Visa debit cards and PINs for two years, according to Susan Chesnut, senior director, electronic transaction services, at the $2.6-billion CU.
Nearly 90% of members activate their new or reissued debit cards at Desert Schools, Chesnut said. That's up from an activation rate of 65% in its third quarter last year.
"We believe that the instant issuance capability accounts for a good part of the increase in activation," she said.
Dynamic Card Solutions (DCS) of Englewood, Colo., provides the CardWizard instant issue and PIN selection technology that is installed at each of Desert Schools and Dallas Telco's branches.
"With instant issue, there's less of a chance that you're issuing a card to someone who doesn't want it," explained Chesnut. "As a result, activation rates increase. Members use the cards as soon as they walk out the door instead of letting the card sit in a drawer at home.
"Instant issue is very compelling for the member," she said.
Before Desert Schools instantly issued debit cards, members might wait up to two weeks to receive a new or replacement card-if the card wasn't lost in the mail, Chesnut continued.
"If the member is used to using a debit card on a daily basis, then it's very inconvenient to wait for a replacement in the mail," she said.
Instant cards help keep members happy, agreed Ron Zanotti, vice president, sales and marketing, at DCS.
"You risk irritating a member if a new card is misrouted or is delayed in the mail," Zanotti explained. "It's easy to lose a potential member to one of the financial institutions you can find on every corner."
Arizona's largest credit union now instantly issues 9,000 cards per month, said Chesnut. That's up from 8,000 cards per month last year.
And Dallas Telco issues about 500 cards per month, Doan said. Dallas Telco started instant issue three years ago, partnering with DCS last year.
Debit card transaction volume increased more than 20% during the past year at Dallas Telco, said Doan. Volume increased 11% at Desert Schools, said Chesnut. Debit transactions exceeded check transactions several years ago, she added.
Whereas Desert Schools is the "huge player" in the instant card market among Phoenix credit unions, Dallas Telco is just one of many financial institutions offering instant issue in its market, said Zanotti.
Instant issue, therefore, is a must-have for Dallas Telco, said Doan.
DCS serves about 275 customers, three-quarters of which are credit unions.
"Some of our credit unions are using CardWizard as a proactive tool to capture members from a competing credit union that is converting to a bank," Zanotti said. Members who want to stay in credit union world are attracted by the promise of an instant debit card, he explained.
CUJ Resources
For info on this story:
* Dallas Telco FCU at www.dallastelco.com
* Desert Schools FCU at www.desertschools.org
* Dynamic Card Solutions at www.cardwizard-dsi.com
