The world has changed since the first bank-issued, "general purpose" credit card was introduced in 1958. Today, we live in a credit card nation. Seventy-eight percent of American households had one or more credit cards at the end of 2008, according to the Nilson Report, and the average American has four credit cards. According to the U.S. Census Bureau, the 159 million credit cardholders in the United States in 2000 grew to 173 million in 2006, and that number is projected to grow to 181 million in 2010.
As the number of credit cards grew, so did the way they were processed. Early on, using a third-party processor was the only viable option for most credit unions. Today, however, in-house processing is an efficient and cost-effective option for credit unions of any size that want to gain the operational control, marketing advantages, and member service enhancements in-house processing can provide. Today's credit card processing systems are easy to use and maintain, and integration with other systems in the end-to-end transaction process provides credit unions better visibility into members' relationships and creates the opportunity to enhance member service.
In-House Processing Benefits
Credit unions traditionally looked to third-party processing as an easy way to enter the credit card marketplace. However, ceding control over processing to an outsourcer constrains a credit union to operate within the limitations of that provider. Sooner or later, many credit unions evaluate in-house processing as a means to not only take control of accounting and member service functions, but also to gain several other key advantages. Goals of in-house processing targeted by credit unions fall into five categories:
1. Provide better service to members.
2. Support innovation.
3. Protect the credit union and its members.
4. Leverage current technology.
5. Capitalize on current market conditions.
Built on a Solid Core
In-house credit card management relies on the credit union’s core data processing system to store member account information, authorize purchases, post payments, generate statements, and support customer service through various channels. Therefore, careful selection of the core system is essential.
Credit unions understand that, in a competitive marketplace, offering credit cards deepens member relationships while delivering high yields. In-house processing maximizes the benefits of credit card programs for credit unions by eliminating third-party processor expenses and delays. It increases operating efficiency and improves member service through immediate and consolidated account access and service. And perhaps most important, in-house processing puts control of credit cards back in the hands of credit unions.
For more information on how in-house processing can deliver added value to your members, download our white paper.