FORT ATKINSON, Wis.-Fort Community CU is now among a growing number of credit unions leveraging local merchant-funded rewards programs to drive debit usage and differentiate its card.
The $186-million CU has signed on with Buzz Points, which awards bonus points only from local merchants and can only be redeemed for rewards from those same participating businesses. The net effect, according to Danielle Frawley, VP of marketing and communications, is that interchange revenue has increased at FCCU by 11% since starting with Buzz Points last October.
Much of the growth, she said, is due to the fact points are given for using signature debit, not PIN. "We have seen a 115% lift in signature debit use," said Frawley.
The program has also lifted debit card transactions, something the credit union wanted to accomplish to offset any per-swipe fee loss due to the Durbin rules. "Of our debit card members who are not enrolled in Buzz Points, only 43% use their card every month. Now our Buzz Points members-93% of them use their card each month. It's a big difference."
Frawley said Fort Community and its members like the local rewards because they pump money back into the local economy. Buzz Points members are also reminded of how much they have spent locally when they log into their Buzz Points web page to monitor their points balances.
"They see a percentage of their debit card spend broken down by national and local retailers, and that tells them if they are maximizing their rewards potential," said Frawley. Merchants pay about a penny a point, and points are redeemed for gift cards to the local businesses. Merchants generally award from one to five points per signed transaction.
Jay Valanju, CEO of fisoc, the company that created and runs Buzz Points, said the rewards program is effective at shifting national spend back to local communities. "Typically we will swing spending 20%. In a typical town a person spends 60% of their money with national retailers and 40% locally. We reverse that."
Valanju said Buzz Points also boosts debit swipes. "The typical card holder uses their debit card 18 times a month. We will drive that into the 30 range. We also change the typical mix of PIN versus signature, taking signature usage to about 80% with most Buzz Points members."
Targeted Message
Buzz Points also targets members with offers to local merchants based on card usage patterns and even social media activity. When members come on board with Buzz Points, they are asked if they will allow Buzz Points to access their social media activity so offers can be better targeted.
"When we sign up an end user, we ask to get access to their social graph information, we get info on where they went to college, are they married or single, what do you have posted on the web, what forums are you in? Whatever they have posted inside social media we have access to," explained Valanju. "About 50% give us this access."
