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Reward program encourages debit card users to sign for purchases vs. using PIN
Members are embracing the opportunity to earn 1 percent cash back for signature debit transactions, and East Idaho Credit Union is enjoying a nice return as well.
Since the $260 million, 40,138-member, Idaho Falls credit union introduced “Card Cash” in May 2013, 41 percent of its members with debit cards have enrolled. The credit union earns an average $7.90 in interchange revenue monthly per enrolled member, netting $3.66 after paying out the rewards. The average annual payout for members taking the extra seconds to sign for their purchases rather than key in a PIN is $33.
Sharing interchange revenue with members in a time when dividend rates are so low “was our end goal,” says eCommerce Director Danny Fuhriman, a CUES member. “Obviously, increasing interchange revenue matters, but these rewards also give us a way to deepen the relationship, keep our card top of wallet, and give back to members.”
The number of signature-based transactions has increased almost 24 percent (with a 27.7 percent increase in total dollar amount) since East Idaho CU introduced the rewards program, and enrolled members are also more likely to use their debit cards than those who haven’t yet signed up for rewards (86 percent vs. 65 percent).
Members do need to proactively sign up to earn the cash back and sign for at least $500 a month in debit purchases. The credit union promotes the added benefit of increased security (cardholders are not responsible for fraudulent signature transactions but may be on the hook for up to $500 in losses for PIN transactions), but that feature seems to be just “the cherry on top” for most members, Fuhriman says.
East Idaho CU continues to market Card Cash to members who haven’t yet signed up, using direct mail and emails showing what those members would have earned if they had been enrolled.
Front-line employees also earned incentives for helping promote the program last fall and continue to talk it up based on their own experiences. “One of our employees says she is saving for Christmas with her cash-back savings,” Fuhriman notes.
On the back end, managers are negotiating with their card networks and processors on processing expenses. “Interchange revenue is not negotiable, but expenses are. If you’re not fighting for the lowest-possible expenses, you’re hurting your members because that’s less you can give back to them,” Fuhriman adds.
Karen Bankston is a long-time contributor to Credit Union Management and writes about credit unions, membership growth, marketing, operations and technology. She is the proprietor of Precision Prose, Stoughton, Wis.
