Prepaid Cards Help Honda FCU Nurture Alliances
With a niche field of membership, Honda Federal Credit Union is always looking for ways to create and expand opportunities that will not only meet members' needs but bring in additional income.
One such product that has proven to be a boon is reloadable, prepaid cards, said Jim Updike, CEO of the $538 million credit union in Torrance, Calif. The cards are provided to salespersons at approximately 1,300 Honda and Acura dealerships as incentives for meeting performance goals. Since it first started offering the cards in 2009, the cooperative has earned $22,000 each month in interchange income through the program.
The card program is run by The Members Group, a card processing and payment solution provider. HFCU has issued roughly 13,000 cards. Updike said it has saved dealerships $2 million because it was able to offer a better deal than the one previously in place with a bank. In the past, salesmen would be rewarded with merchandise and checks.
"We didn't think it was an efficient way to do it. We approached Honda two years ago with an alternative. It has increased the relationship between us and the sponsor," Updike said.
The alliance is not a new one for HFCU. Prior to the reloadable cards, the credit union started providing ACH payroll origination, Visa credit cards for business travel and entertainment, Visa purchase cards and merchant processing to Honda and Acura employees. One of the newer programs allows staffers to transform their ID badges into debit cards for on-site expenses such as cafeteria transactions.
Updike said the loads on the reloadable cards are used by all sales associates, regardless of their membership to HFCU.
Jeff Falk, TMG director of product development, said in addition to standard payroll and incentive pay, the card can also be used for wellness and health programs, restaurants, fitness centers and temporary staffing agencies.
"Small businesses can benefit from the convenience, efficiency, and improved retention the card can provide. Businesses with variable and bonus pay needs can especially benefit from the card's flexibility," Falk said.
Credit unions can work with their business development resources to identify potential small business partnerships, Falk suggested. Tellers can also provide an opportunity to cross sell and form relationships with small business partners, he added, saying sponsor employment groups can also be a great resource for forming relationships with small businesses. TMG provides marketing kits to train employers and to assist them in educating their employees on the card's benefits.
"It's been a part of our long term strategy to look for opportunities with our sponsor company," Updike said. "It generates income for us. Because we have this source of income, the savings are passed on to our members."