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In many financial experts’ minds, the new interchange rules have raised as many questions as they have answered. Some industry leaders have been quite vocal about their concerns. Here are a few examples:
So, what are credit unions to make of it all?The Fed’s ruling directly influences credit union interchange and network affiliations. Interchange is getting most of the attention, and the good news is that the interchange restrictions in the rule, which takes effect October 1, 2011, apply to financial institutions with more than $10 billion in assets, a threshold high enough to exempt most credit unions. Therefore, interchange – a valuable source of non-interest income – should remain stable for most credit unions at a time when large bank competitors are faced with a double-digit decrease in interchange revenue. Less noted – but affecting all credit unions regardless of asset size – are the rules prohibiting network exclusivity. Upon initial reading, this rule may be viewed negatively from a credit union point of view. The Fed is requiring affiliation with two unaffiliated networks to fulfill the minimum compliance requirement. In practical terms, this means your credit union can take advantage of increased interchange rates and manage costs by electing to participate in Visa or MasterCard signature and one unaffiliated PIN POS brand. In order to best manage operations and associated costs, credit unions should align themselves with networks that provide the best overall expense and revenue structure.
It is time for credit unions to seize this golden opportunity by expanding their payments business and growing market share. You can begin by implementing payment strategies focused on revenue optimization, expense reduction, and maximizing efficiencies, while enabling a superior user experience for your members. Start by taking stock of your operations. Consider the following in your holistic assessment of your payments portfolio:
Today’s consumers demand the flexibility and real-time payment capability their debit cards provide. They also appreciate the safety and convenience of a payment vehicle that reduces their need to carry cash or a checkbook. In this changing environment, a well-utilized debit card program will continue to provide credit unions with a recurring source of fee income, while enhancing member loyalty and offering greater potential for relationship growth.
The credit unions that will thrive going forward will be those that are best able to address and serve their members’ needs within an evolving funds access and payments landscape.
ACCEL/Exchange is a premier payments network, providing financial institutions with the infrastructure to deliver cardholders secure, convenient and innovative debit payment solutions. The network is owned and operated by Fiserv, Inc. (NASDAQ: FISV) through its Card Services business unit. ACCEL/Exchange offers anytime, anywhere funds and payments access with our expansive network of ATMs in 50 U.S. states, territories, and Canada, and a point-of-sale brand that is accepted nationwide at retailers large and small – nationally and locally – everywhere PIN debit is accepted. Visit us at accelexchange.com.
July 25, 2011
Joseph D. Funair
7/26/2012 04:13 PM
I enjoyed reading your article and it is nice to see the Fiserv name in this medium. Clever commercial at the end! Nice job!!
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