ST. PETERSBERG, Fla. – PSCU Financial Services, the firm that services over 500 credit unions that process their Visa and MasterCard transactions with First Data Corporation, has rolled out a debit version of their card rewards program, CURewards, that could be the first step in an overall debit market restructuring. Under the program, members of participating credit unions will be able to earn points on both their credit card and debit card transactions and then collect, or aggregate, those points into one rewards account. That means that whenever a credit union cardholder pulls out a card and signs for a purchase, he or she will be earning points toward some goal that they have chosen, and that should really drive card use, explained Rob Jordan, PSCU Financial Services Product Manager of Enhancement Solutions. Jordan explained that although PSCU began developing its debit rewards, which it calls DebitAdvantage, prior to Visa and MasterCard's settlement with major retailers changed the debit environment, the product remained well suited to the different market debit cards face. "We are already working on applying the program to PIN-based transactions as well," he said. The Visa and MasterCard settlements cut the interchange earned on transactions in which the cardholder authenticates the transaction with their signature, lowering it to a level that is only a little higher than that earned on card transactions in which the cardholder authenticates a transaction with a personal identification number. On the one hand this weakened the incentive financial institutions felt to drive more transactions to their signature-based debit cards, Jordan explained, but from PSCU's point of view it increased the incentive to drive more transactions onto cards and away from cash and checks. "We want a person's choice to consistently be a card," Jordan said. "Allowing cardholders to aggregate their points is a big step toward that goal." Allowing cardholders to aggregate points earned on different cards has long been a goal of PSCU's and other card servicing firms. PSCU is the first credit union card services firm to offer this sort of aggregation. The program takes other steps as well, Jordan explained. For example, it allows credit union cardholders to earn points at the rate of one point per dollar spent for their debit transactions. This is significantly higher than the rate at which other debit programs allow cardholders to earn points. Also, aggregating the points means that the points can be counted against the larger travel and merchandise rewards that have generally been seen as primarily the rewards for credit card use. Other debit rewards programs, most notably Visa's, have been criticized for not having enough big ticket rewards for debit purchases and for requiring setting the dollar-to-point ratio too high on the dollar side. PSCU has also opted to keep the start-up cost for participating in the program relatively low, at $750, to encourage more credit unions to take part. There is a small service fee, Jordan said, but it is not large. "We decided we really wanted to use this program to drive transactions and that is where we would benefit the most," Jordan said. Although PSCU has announced the program, it seems clear that a few problems setting it up remain. So far only one credit union is beta testing it, although the firm says there are others waiting in the wings for when most of the problems have been ironed out. "We believe that the ability to combine the reward points from our credit card program with our debit card program on to a single statement will be valuable in strengthening member relationships," said Jackie Wong, CEO of Cal State 9 Credit Union, a $225 million CU based in Concord, California. Wong's credit union is the one working with PSCU on resolving the back office details of the program between the credit union, PSCU and the credit union's statement printer. Wong reported that none of the problems were that large, but there were a lot of details to cover. "Since we are the first one we really want to get this program right before we roll it out to our members," he said. [email protected]

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