CHARELSTON, W.Va.-Pioneer West Virginia CU is paying members to use the credit union's debit card.
The decision was made, said SVP/CFO Dan McGowan, to make the $140-million CU stand out as banks load on debit and checking charges.
"We took a look at Durbin, Bank of America's $5 debit fee, and we got to thinking what if we not only maintain free checking and debit but paid our members five cents every time they swiped their debit card?," McGowan said.
McGowan believes the move will bring over bank customers in "droves," not only to avoid fees but to "get paid. We have done the preliminary metrics and we believe the additional account relationships in terms of just debit alone will pay for the debit reward. And it gives us the opportunity to show the credit union difference and become the PFI for those new members who will bring over their other relationships."
Advertising asks, "Fee'd up with banks? Let's make change! Pioneer WV will pay you 5 cents every time you swipe our debit card."
What got PWV CU thinking even harder about the debit reward is news of Navy Federal's addition of 3,500 new accounts over a recent weekend, largely fueled by Bank of America's announcement. "That sparked strong internal conversations about how we might seize the moment, too," said McGowan. "BofA has a relatively small presence in our market, but the other chain banks here are expected to similarly hit their customers, as well."
What Analysis Showed
McGowan said the silver lining in the new interchange rule is scale. "We can afford to give up more per swipe on interchange income if we can generate additional volume to make up for it. We performed a break-even analysis and believe the threshold point to begin contributing net positive incremental income is achievable, given current consumer sentiment about rising bank fees," he said, declining to disclose details of the analysis.
McGowan said Pioneer West Virginia Federal Credit Union had been, like most other credit unions, lamenting the fact it will have to live with the negative income effects of the new interchange rules.
"But we perceive an opportunity here," he explained to Credit Union Journal. "This is one of those rare best-of-both-world opportunities to simultaneously do something really good for our current members and introduce unhappy bank customers to the credit union difference."
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