For most credit unions, loan revenue dwarfs interchange revenue. For that reason, many credit unions don’t pay as much attention to their interchange income. But maybe they should.
After all, interchange income can be remarkably consistent. The average American spends about $850 per month in recurring charges alone. Capturing some of that can provide a major boost to any credit union’s bottom line.
But to capture that revenue, you’ll need to beef up your approach to credit and debit cards. You’ll want your card(s) to feature prominently in your members’ wallets. Here are five ways to increase your credit union’s share of wallet.
1. Provide Options
“One size fits all” is a lie. There’s no single credit card on the market that can fit every consumer’s needs. Credit unions should provide a few cards to accommodate their different members.
Just remember, you’re not just competing with the credit union down the street, you’re also competing with the likes of American Express and Capital One.
2. Introduce Transparency
Show people what they’re buying and how much they’re spending. Give them the tools they need to make better, more informed financial decisions.
In some ways, this may seem counterintuitive. If you show people that they’re spending too much, they may adjust their habits to spend less. That means less interchange income for your credit union.
However, introducing transparency also builds trust. If you position yourself as a transparent, trustworthy institution, your members will feel more comfortable continuing business with you. That could mean business loans, certificates of deposit, or applying for a premium credit card.
3. Incentivize Use
Sure, you know you need to provide perks and rewards to people for using your card. After all, your credit card competes with Discover and the Apple Card as well.
You can market your card more aggressively to encourage habitual use. Beyond the usual cash back and community rewards, you can leverage their spending data. Incentivize card use with targeted offers relevant to their interests. Home chefs might like a Hello Fresh discount, and cinephiles might enjoy a free month or two of Hulu.
4. Alert and Remind
What happens when someone’s free trial is about to expire? Do you let them start paying for the service, or do you remind them that their trial ends soon?
Sure, you can capture a bit of interchange revenue from that recurring charge. And sure, nobody expects their credit union to remind them to track their trial periods for software, streaming services, and so on. But going above and beyond for your members builds trust, appreciation, and continued business.
5. Facilitate Payment Updates
At some point, everyone gets a reissued card. Either the card expires, or it gets lost, damaged, or stolen. When that happens, members have to update their payment information for all their recurring charges. It’s a tedious process.
If you can remind your members that their card is about to expire, that’s a good first step. A great follow-up is to provide an easy way to update their payment information for all vendors.
Credit unions can increase their share of wallet by providing value to their cardholders. Make things more transparent. Make things more convenient. Make things more rewarding.
And then, once you’ve established a healthy share of wallet, keep going. You don’t want to stop promoting card usage once you’ve gotten them using it. Keep marketing to your existing cardholders. After all, your competitors won’t stop marketing to them! You must continue to show what value you provide.
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