Moving transactions from ACH, checks and cash to debit cards helps credit unions both reduce their costs and improve their revenues, according to a paper published by Card Services for Credit Unions.
CSCU is the association of credit unions which process payment transactions with FIS.
The association pointed to industry research that shows that 39% of U.S. purchases in 2010 were made with cash and checks, two methods which cost credit unions money. Checks cost 14 cents to process, on average, and ATM cash withdrawals cost an average of five cents.
Most of the checks were written to pay bills and most of the cash went to retail purchases, two types of transactions which could be easily moved to debit cards.
“As more members migrate to debit cards, credit union efficiency goes up, transaction costs go down, and more interchange income is generated,” said Bill Lehman, vice president of portfolio consulting services for CSCU.
In addition, debit cards help credit union members better budget their funds and appeal more to the younger demographic that credit unions are trying to attract, the association said.