Ventura County Credit Union converted its credit card network from VISA to MasterCard in advance of the October 2015 EMV liability shift.
The credit union realized cost savings per transaction and more interchange income; however, it had to re-issue all of its plastic cards.
Credit unions re-issue credit cards for a variety of reasons, including for fraud, finances, and network conversions. When a credit union must distribute many cards at one time, the mass re-issuance presents operational challenges that require coordinated efforts across the institution to avoid disruption at the member level.
CU QUICK FACTS
Ventura County Credit Union
HQ: Ventura, CA
Data as of 06.30.19
12-MO SHARE GROWTH: 0.4%
12-MO LOAN GROWTH: 5.6%
Across late 2015 and early 2016, Ventura County Credit Union ($888.1M, Ventura, CA) converted its card network from VISA to MasterCard to add EMV functionality to its credit and debit cards not long after the October 2015 liability shift. The terms of the agreement required the $900 million cooperative to re-issue its plastics across the entire membership base.
Here, April Remnant, VCCU’s vice president of delivery services, discusses the credit union’s experience with re-issuing its plastic, including how it tackled the endeavor, how it worked around brand loyalty, and the lessons it learned.
When did you re-issue cards? What were the driving factors to this decision?
April Remnant: We re-issued credit cards in the third quarter of 2015 and debit in the second quarter of 2016.
April Remnant, VP of Delivery Services, Ventura County Credit Union
We analyzed expenses and income between VISA and MasterCard, and our data indicated a cost savings per transaction and an increase in interchange income. Also, MasterCard’s incentives for conversion and year-over-year incentives were more lucrative than anything VISA offered.
Why did you re-issue credit and debit at different times? What was the benefit?
AR: One of the benefits was our sanity. We started with credit because it is the smaller portfolio and is not as complex as debit. Starting “easy” gave us a feel for the transition and what to expect with member adoption.
Additionally, we felt changing both cards at once would be too complex at the member level, whereas a one-product-at-a-time approach allowed for a transition. Members had time to adapt to the new plastic in a phased approach rather than all at once.
What was your strategy for the re-issue?
AR: Because it was a brand flip, we had to mass re-issue all cards. We started with the smaller credit portfolio and moved to the more complicated debit side several months after the credit conversion.
We had waves within each product portfolio and mailed 5,000-6,000 cards per wave rather than 30,000 all at once. Each wave was two or three weeks apart.
How did you create these waves?
AR: We based waves on the expiration date of existing cards, ensuring households were in the same wave so spouses, children, etc. all received their cards at the same time. For example, if a card expired in October/November/December, then the entire household was in the first wave.
We had three waves for credit and six for debit, which determined how many cards went into each wave. We divided the portfolio as evenly as possible.
What went well?
AR: All the features, benefits, and functions of the new MasterCard product were equal to or better than our previous product, and we were determined there was no perceived inferiority of the product. We converted our credit card rewards product to a new vendor and updated our “Guide to Benefits.”
The coordination with internal staff was probably our finest work. Accomplishing multiple conversions at the same time required strong coordination and team effort within our organization as well as the orchestrated support of all vendors. We all worked together to ensure we managed the members and kept disruption to a minimum.
What could have gone better?
AR: Because we converted to chip when the technology was still new in the United States, we were not fully educated on the various profile options of each chip. As such, we chose a chip profile that is not the standard, which presents challenges when chips expire or during the programming of instant issuance.
We had waves within each product portfolio and mailed 5,000-6,000 cards per wave rather than 30,000 all at once.
Again, we wanted a feature-rich product with as much accessibility and availability as possible. The chip we chose allows for this; however, the negligible benefit might not be worth the challenges with the chip profile we selected.
What chip did you pick? What else is available?
AR: There are various profiles for how the chip is programmed. Because we wanted to ensure the most secure transaction, we choose a “pin preferring” profile. Meaning, if the merchant did not require a pin, VCCU did require it.
We also wanted to ensure our card worked in all types of merchant processing scenarios. For example, if a member was at the train station in London and the train ticket vending machine processed “offline,” we wanted to ensure our cards would still process and the cardholder would not be stuck.
What challenges have you experienced at expiration and instant issuance?
AR: Our instant issuance vendor had never programmed to the profile we chose. Thus, we were not able to instantly issue for nearly two years post-conversion.
What response did you expect from members?
AR: It’s not easy to change your card details, and we expected a select group of members would be frustrated by the required change and would pushback, demanding to keep their VISA card. We did experience some of this, but it wasn’t nearly as impactful as we anticipated.
We communicated heavily with members through various channels, including online, printed mailers, online banking banners, in-branch signage and communication, and more. We even had T-shirts printed for branch folks to wear on Fridays. We did this all before we mailed the first card. It was not a surprise to anyone that our conversion was coming.
What were call volumes?
AR: We expected a large volume of calls and that some members would be displeased with the brand flip. Some people are loyal to VISA — they did not want a MasterCard in their wallet. We are humans, and change can be hard.
We geared up our member service center in anticipation of higher than normal call volumes by creating a separate phone queue just for card conversion challenges: “If you’re calling regarding your new MasterCard card, please press X.” We filtered this phone queue through the member service center first, with backups ready within our electronic services team and branch staff. Although call volumes were elevated in the first few days of each wave, we were able to manage that well because of the separate phone queue and additional staff trained throughout the organization.
Overall, was your card conversion a success?
AR: Absolutely. Our blended interchange rate is higher, issuer fees are lower, and fraud losses have dropped dramatically because of the shift in liability and because counterfeiting a chip is simply not possible — at least, not yet.
We did not intend to be on the bleeding edge of the industry within the United States, but it worked to our advantage.
What lessons did you learn?
AR: Weekly project meetings were key to the success of the project and ensured the team was held accountable for each deliverable. We held these meetings well past the last mailing wave to ensure we attended to and resolved in a timely manner any residual issues.
This was a large undertaking. A credit union should give thoughtful consideration to the member impact before executing on such a product. Ensuring you’ve selected knowledgeable vendor partners affords greater success in product execution as well.
This interview has been edited and condensed.
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