The Rundown

• Filene negotiates a pilot program with Amazon to offer CUcredit cards.
• Cards will be sold on Amazon with reviews.
• Researchers will help CUs perfect card offeringsites.

The Filene Research Institute has partnered with Amazon to offercredit unions a unique opportunity to market their credit cardsonline.

The opportunity centers on Amazon's Credit Central, a part ofthe giant online retailer's website that Amazon intends to use tobring its popular retail shopping experience to credit cards.

Under a one-year pilot project negotiated with Amazon, creditunions will pay one flat fee to Filene to have their credit cardlisted on the site and be able to take online applications fortheir cards through the site. The fee to Filene is only meantto fund the one year research project that will accompany theoffering. Each credit union will also agree to fund a $50 giftcard for every Amazon consumer that successfully obtains a cardthrough the site application. In exchange, participating creditunions will have a place on a retail web site that currently draws33% of U.S. consumers one a month and 66% of U.S. consumers atleast once a year, according to Amazon Project Manager SandraNaylor. She briefed credit union executives during a Filene webinarlast Wednesday.

Participating CUs will also gain the opportunity to recruit newmembers from the site as consumers seek their cards and toparticipate in Amazon's product review system that, Naylor said,will allow credit union cards to match or surpass cards from other,larger, or better known issuers.

“One of the things we are really excited about is the way we canbring attention to better quality offers and better deals for ourcustomers,” Naylor said. “We see the star review system and bestreviews to lift quality to the top.”

Naylor explained that the site was also open to local andregional credit unions and not just to credit unions with nationalbrands or national fields of membership. The site will have a placefor consumers to enter their zip codes in order to see more locallyissued cards or, in cases where the consumer is known to Amazon,the Credit Central page will automatically list cards from theconsumer's community.

Just as with other Amazon products, once a consumer clicks on acard he or she will be taken to a “splash page” where there will bean image of the card along with marketing information from thecredit union or bank at the top and links to consumer reviews ofthe card down below.

Naylor said Amazon was very confident about the success ofCredit Central because of how many U.S. consumers already apply forcredit cards online and because the retailer has created the samepages for Amazon stores serving Japan, Canada and Germany.

The fees Amazon are charging to participate in the pilot are$4,999.00 for credit union with more than $1 billion inassets, $1,999 for CUs of between $500 million and $1 billion and$999 for CUs of under $500,000. But credit unions that are membersof Filene or agree to become Filene members will be able to get a50% discount from those fees.

But when discussing fees, Naylor stressed that a Credit Centralwent forward, Amazon would be open to negotiating fees so thatcredit unions could reach a fee level which allowed it to makemoney on its card offering.

“We are sensitive to the issue of cost of acquisition and willbe willing to discuss fees,” Naylor said. “Our goal is not tomaximize profit but to endeavor to bring our customers the verybest available offers.”

In addition, because Filene is using the pilot as a means tostudy the best ways credit unions can offer cards online,participating credit unions can expect regular feedback fromFilene researchers assigned to the project, including updatesabout how other CUs are doing with their offers and direct feedbackabout ways that the CU can make its card offer or splash page moresuccessful.

Robert Rubin, CEO of Facilitas and a Filene researcher, said the effort would particularly look atthe conversion rate, or the rate consumers click through to thesplash page and actually fill out an application. Because the costsof the program are largely fixed, steadily greater efficiencieswill be gained as the credit union increases the conversion rate,say from 2%, where 20 out of every ,1000 consumers that click onthe splash page fill out an application to 4% where 40 out of every1,000 consumers do so will be significant, he explained.

Filene explained that the pilot is not limited to a certainnumber of credit unions, but is limited as to time. Credit unionswishing to participate have to sign up by May 31 and be able tohave splash page in place by the scheduled hard launch of CreditCentral on June 30.