Your financial institution probably offers some sort of credit card. Or credit cards even. And savvy users know they can build credit, earn rewards, support their community, or just gain access to emergency money with an advantageous interest rate.
With all that in mind, your (under $10B AUM) institution should be raking in the interchange fees. After all, the average American spends more than $850 per month on recurring charges alone.
Unfortunately, FIs don’t always see that interchange income. For whatever reason, your card isn’t top of wallet.
Here’s why that might happen.
Your Card Is Bad
Okay, maybe “bad” isn’t the right word. But it could be. Here’s a wild hypothetical:
Let’s say a member’s card has a credit limit of $300, an interest rate of 24%, and many businesses don’t accept it. Can you really expect a member to use such a card?
Of course, this hopefully isn’t the case. It’s unlikely that there are any credit cards out there with such a tight leash. Nevertheless, the general point stands: if your credit card can’t compete with the top issuers of the world in at least some respects, then your card may not see as much action as you’d like.
Cards from Other Financial Institutions
Among Americans who use credit cards, most people hold an average of three credit cards. That’s a lot. Not only that, but Capital One, American Express, and Discover like to send mail to every eligible human in the world to tout their cards’ benefits.
It’s highly likely that if one of your members has one of your cards, they probably have a competitor’s card as well. Your institution’s card is competing directly with those offered by large national or even international banks.
Competitors’ cards are one of the primary obstacles to reaching top of wallet status.
Other Payment Methods
With the Apple Card, Apple is making another bid to keep Apple Pay relevant. And they’re not the only ones in the game. Samsung Pay is growing as well. And then there’s PayPal, Zelle, and peer-to-peer payments like Venmo, too.
Mobile wallets, mobile payments, and online payments are taking up traditional share of wallet. And when it comes to online transactions, recurring charges, and subscriptions, they add an extra layer of convenience and security.
You could also consider ACH and BillPay to compete for share of wallet, too. The easiest payments are the ones people never have to think about. All these alternative payment methods make it harder to reach top of wallet.
Ease of Use
If a card is difficult to use, then people will use it less. It’s that simple. Perhaps the card isn’t widely accepted by retailers. Or maybe it gets declined too often.
If there’s something impeding ease of use, then your card has an uphill battle to the top of wallet.
Reissued cards are a pain in the neck. In fact, reissued cards are one of the primary reasons why members churn their cards.
If their card is lost, stolen, damaged, or expired, they’ll just grab the next card in line. That next card may very well become the next top of wallet card.
How to Reach Top of Wallet Status
It’s a real battle to get to top of wallet. And once you’ve gotten there, it doesn’t mean that the battle is over. You have you defend that position, because competitors will be angling for it constantly.
Your best bet is to implement a proactive, user-friendly series of strategies to keep you top of wallet. Follow the links below if you’d like to read about how you can do that.