Credit cards are likely going to continue their expansion into the credit union industry in 2013 as more credit unions start to issue cards and credit unions that already issue them expand their programs. In an era of steadily shrinking noninterest income, improvements in fraud detection and protection, combined with more targeted underwriting and card portfolio management will continue to make credit cards an important part of portfolios.
But there will be some shifts within the credit union card issuing industry. Credit union card reward programs, often offered through deals with payment CUSO's, may be overhauled and modernized. Many credit union card reward programs still rely on a catalog, whether in paper or digital format, filled with merchandise eligible for purchase with rewards points to drive their card reward programs. But affinity rewards are moving forward at a rapid rate, and credit unions will begin to offer other forms of rewards. such as cash back and slashes in interest rates as part of the affinity reward mix.
Instant issuing of both credit cards and debit cards will continue to elbow onto the scene. Instant issuing, studies show, sharply increases card activation and member satisfaction. In addition, instantly issued debit cards also provide for instantly issued PINs that the cardholders is able to select themselves, leading again to greater member satisfaction.
Next year will also likely see the interchange rate on credit union issued debit cards continue to drop, but debit card usage will only continue to expand, blunting the impact.