TALLAHASSEE, Fla.-Credit unions should consider encouraging members to use PIN debit over signature, one analyst suggests.
Jim Park, president of CU24, recommended that CUs at least evaluate their true return on signature debit transactions in 2012, because the costs associated with those swipes-typically higher than PIN-and the impact of market pressure on interchange thanks to the Durbin rules, may make PIN the more profitable rail to run debit now, and especially in the next few years.
"I think many credit unions have not evaluated the overall costs of their signature network, many not for the last seven years," observed Park, who said that he never believed the 30% to 40% difference between signature and PIN bandied about by financial institutions was ever accurate. "Banks and credit unions just said signature gets me about 36 cents more per transaction and were content with leaving it at that. Now with Durbin, interchange revenue is being affected despite the two-tier system. There are a lot more costs loaded into signature than PIN, and credit unions need to focus in the first six months of the year on evaluating the true return of signature debit-see if any diversity exists between signature and PIN and what that really is."
Also at the top of credit union's growth objectives this year should be maximizing the relationships with the new members coming on board from banks, and from existing members as well, Park said. "The potential is big from all the new members. But I believe the potential to grow relationships with existing members is unlimited, if credit unions promote their products and services correctly."
Park advised that credit unions closely analyze their member data to find out who needs checking accounts, credit cards, loans and more. "Then they need to take those groups, split them up by demographics, and target those groups with campaigns that address how each group uses a particular product."
