A new white paper offered by Card Services for Credit Unions urges CUs to review the way they process debit and credit card transactions with an eye toward both reducing costs on the debit side and increasing revenue on the credit side.
Card Services for Credit Unions is the association of credit unions which process their card transactions with FIS.
The paper, which CSCU commissioned from the First Annapolis financial consultancy, outlined three different approaches to card processing and laid out the costs and benefits of each.
The three are full-service card processing, where the CU outsources most of the day to day work of running a card program; self-administered card processing, where the CU and a processing vendor share responsibility for different parts of a card program, and the pass-through option where the CU handles almost all the card program responsibilities.
A key aspect of all three approaches is that many CUs rarely review or examine their processing approach, CSCU said. The authors of the paper attribute this phenomenon, to some degree, to entropy – a situation where the CU has made a decision years ago about what sort of card processing it was going to use and then never, or rarely, re-examine it.
The paper also urged that that credit unions evaluate their card programs not only by how expensive they might be but also by how much control they allow.
A full-service program might appear to carry a higher payment to an outside vendor, but that payment also needs to be compared against how many of the credit union's resources are tied up administering a card program.
But while a card program which is processed and managed in house might take more resources it also could allow the CU to have more control to meet member card needs, the paper noted.