Interchange Fees and Credit Unions - Members Taking Action

by Ron Daly 

Interchange fees are the topic of many blog posts in the industry these days. Some posts are for changes, some are against, some are matter-of-fact and some are downright angry. One alarming article released yesterday says that 90% of yearly interchange revenue could be lost, which comes down to "$15 to $35 per debit card per year". 

CUNA has been pressing the issue in its daily News Now emails. Today's story deals with the Treasury and what Dan Mica called the "most serious threat" facing CUs at this moment in history. But it was a different story (and a different reaction by our company's clients) that caught my attention. 

Read this excerpt from the News Now article, "Grassroots interchange opposition, strong and growing":

WASHINGTON (6/2/10)--While the halls of Congress have emptied for the week, grassroots credit union advocacy regarding interchange legislation continues this week through both legislator-led town hall meetings and credit union activism on several fronts.

One of those fronts is a Credit Union National Association-backed effort to verbally and electronically reach out to representatives, and this communication effort resulted in over 80,000 individual contacts as of Tuesday.

CUNA is asking credit union backers to urge their legislators to oppose federal intervention into the current interchange rules. An amendment offered by Sen. Richard Durbin (D-Ill.) which was successfully added to the Senate's regulatory reform package would direct the Federal Reserve to issue regulations to govern interchange fees charged for debit card transactions. CUNA has recently said that this rule change forces the Fed into the role of a price-fixing body, when interchange fees should be driven by market forces.

State credit union leagues have also chipped in to back credit union concerns, and Virginia- and Louisiana-based credit union leagues are among those that have joined state-level small banking associations to publicly oppose federal interchange intervention.

Some examples of emails sent to members, compelling them to call and email their leaders and take action: 

From Horizons North Credit Union: 

 

From Shell Federal Credit Union: 

 

From Belvoir FCU : 

 

They're simple emails with a simple message: "Interchange is going to hurt the credit union. Contact your leaders now and tell them to act in our mutual best interest."

What does it cost you to send an email to your members? Hopefully, the answer is "not much". How much will interchange fee changes hurt your CU? The answer is probably "a lot". Risk versus reward, people. Members need to know about things like this and when it comes to asking them to do something as simple as sending an email, that's only about three minutes of their time. Never hurts to ask, right?

So, here's your million-dollar-question-of-the-week: What's your credit union doing to encourage calls and letters to legislators from members? Tell us about it in the comment section.

Reg E Opt-Ins, Part 2: Compelling Arguments

by Ron Daly 

Our last post walked through some of the headaches associated with Reg E opt-in programs at credit unions. Members are reportedly planning to throw away their opt-in forms and not bother with overdraft protection, and there's really not much we can do other than make a compelling argument as to why members should enroll.

An article from CU Journal from the 17th of this month has advice from Rory Rowland of Rowland Consulting. I thought some of it was worth sharing with you.

Some mistakes that Rowland says CUs are making: 

• Waiting to see what happens: "This is not a healthy strategy. Get a plan of action. Place an (opt-in) banner message on your website to encourage people to opt in. When members overdraw, send them and e-mail and tell them about the new regulation and that they need to opt in. If they are in the top 29% of your abusers, call them." 
• Lack of monitoring: "You need to know how much income you are making from courtesy checking-20% to 29% of your members give you 90% of your NSF income. Target those top 29% and get them to opt in before July 1."
• Front-line staff have no idea what they are doing: "Do you have talking points written for front-line staff to tell members how to opt in?"

Waiting It Out, or Just Not Getting On Board?

by Ron Daly

There's an old joke about a guy who lives at the foot of a volcano. The volcano erupts, spilling lava toward his home and his village. His neighbors hop in their car and say "Our car is fast, we can get away in time. Come with us." 

"No," says the man, "God will come for me and save me from the lava."

Later on, the lava has reached his porch and burned off the front steps and the siding. The man climbs to the second floor of his house and a military tank full of survivors rolls by and says "Sir, jump onto the tank. We can't get burned and we'll keep you safe."

"No," says the man, "God will come for me and save me from the lava."

The lava gets deeper, and the house starts to dissolve. The man must climb up to his roof. A helicopter drops him a rope ladder, saying "Climb up! Climb up!"

"No," says the man, "God will come for me and save me from the lava."

The man gets swallowed by the lava, and is reduced to ash.

He gets to Heaven and talks to God. "I thought you'd save me!" the man said to the Almighty.

God looked confused. "I sent a car, a tank, and then a helicopter - what more do you WANT from me?!?"

Which reminds me - Reg E is still an issue. 

Get with the program! 

Reg E is an issue that threatens everyone in the financial services industry - it's going to affect income and capital, it's going to affect member relationships, and it's going to affect the bottom line. Credit unions across the country are scrambling to try and find a way to get folks "opted in" before the deadline on August 15 (yes, there's a July 1 deadline on new members, but August 15 affects everyone). There's a lot of worry, as some credit unions/banks just can't do without the fee income. And when the next step is a choice that hinges on the members and customers, the results could be a blessing or a curse. 

Blessing: the income still exists, members just have to opt-in to overdraft protection (or courtesy pay, whichever you prefer). Which means they'll get their way at POS and pay for it later, and the CU can collect on the error.

Curse: everyone is automatically opted out after August, and that's going to mean a big hit on income. Whether they come back to overdraft protection or not is at their discretion. 

Everyone knows that Bank of America announced they were doing away with overdraft fees and came off looking like a good guy as a result. But they're still offering overdraft protection, they're just making it so that it takes the difference out of your savings or credit account and charging a $10 fee for it, according to this NYTimes.com article. When every headline related to that story says "Bank of America does away with overdraft fees" and you're asking people to CHOOSE to be assessed those fees, how do you win? 

What's worse, according to this CU Journal article, is that members are planning to throw out their opt-in forms when they get them, and somewhat more disturbingly: 

The findings should be noted by credit unions and banks, said [Brian] Beach, [CEO of ACTON Marketing], because those customers will not have overdraft protection when they overdraft, will start to have their retail purchases denied and most likely will move their accounts elsewhere. “The psychology of overdraft users is such that they are extremely averse to having their debit card transactions denied at retail,” said Beach. “If they begin to be denied, they will not just re-opt-in with their current bank or credit union. Most likely they will cut and run.”

So, here's the question: how obvious is your car, your tank, your helicopter? Will a person who is at risk to use this service you've provided to them for years know what happened when their transaction is declined? Or are they just going to blame you and leave for a bank? In a new, debt-conscious America, will people want the chance to go over the limit at all? 

The lava's on its way. Get as many folks on board as you can. And if they get "burned", remind them - they had (and still have) a chance.

Your feedback is always welcome. 

EDITOR'S NOTE: 

 Full disclosure time. DigitalMailer is offering a Reg E Opt-In package that uses email and secure online forms/databases to record member opt-ins and encourage more sign-ups. 

Email us at info@digitalmailer.com, let us do a walk-through of the system for you, and if you tell us you're a Soapbox reader, we'll give you a discount on the system. 

This is your call to action - get started now. 

NACUSO Annual Conference Wrap-Up

by Ron Daly 

Just got back from this year's NACUSO Annual Conference and happy to see that the attendance was up. Even more glad to see a number of new CUSOs and first-timers at the event. Many of my contemporaries, collaborators, business partners and friends were in attendance to share their thoughts and feelings about the current state of credit unions and CUSOs. The theme of this year's conference was "Big.Bold.Smart." I think the description fits. These three simple words sum up what credit unions need to be in the coming months and years. 

• Big - We need to drive up investments, membership and assets across the board to keep ourselves alive.
• Bold - As we've talked about before (in the wrap-up of the NACUSO Regional Meeting), CUs need to start drinking a little of their own Kool-Aid and acting like the super institutions we know they are. 
• Smart - In the course of being bigger and bolder, we need to stay smart and do right by our members and our bottom line. 

In my opinion, the conference did a great job of bringing together industry professionals to talk about ways to grow CUSO and Credit Union "opportunity share" through networks and collaboration. Interesting the difference between market share and opportunity share and how a small networked revenue piece of opportunity share could surpass the revenue brought in by large market share bought with a low-cost pricing model. 

Couple of questions that I jotted down that successful organizations ask themselves and might be worth your time to answer for your shop 

1. What is your value proposition? 
2. Why Me? AKA - Why should a customer or partner choose you for the service you are selling?
3. How does your value proposition help you compete? 
4. How can you switch your offering to compete for a share of the opportunity vs. a share of the market?

Some of the highlights that we wanted to share with our loyal Soapbox readers: 

• NACUSO has put a list of presentations from the conference online on their website. Take a look at presentations from Jeff Russell (TMG), Guy Messick (Messick & Weber), Dennis Dollar (Dollar & Assoc.), and George Hofheimer (Filene)
• NACUSO's Twitter feed had some great highlights - follow them and give it a read.
• CUInsight offered up some YouTube videos of Interviews (including one with yours truly!). Click here to view.
• CUInnovators' blog has a detailed wrap-up with even more links and info. Click here to read, and don't miss the interview with Robbie Wright on the aforementioned CUInsight video page.

Congratulations to our partner Ongoing Operations for winning CUSO of the year!

What WON'T You Collaborate On?

by Ron Daly 

Last Wednesday was a great day for those of us here on the East Coast. After months of snow and sleet and cold, we were treated to a mild, cloudy day and a visit from our fellow credit union service organizations at the NACUSO regional meeting. And what a visit it was. 

We met a lot of great folks last week who had a lot to say about CUSOs and the current "credit union economy". Following up from last Tuesday's Blog Post, NACUSO CEO Tom Davis kicked things off with a quick view of the industry and word on butterflies. "Butterflies?" You ask. Yes, butterflies. According to Tom's talk, when butterflies leave the cocoon they have to struggle to break free and fly off. If you help one out of its cocoon, it won't have to struggle - but it can't fly. I think that's a pretty good analogy, and a great thing to keep in mind when the going gets tough. 

HAMP Hampered

by Ron Daly 

The successes of President Obama's financial programs have been debated by pundits for the past year or so. Some say that progress is naturally slow in recovery and that the seeds of these initiatives will bear fruit for years to come. Others say that the programs have not helped enough in the short term to warrant their continued support. 

One program being debated currently is the Home Affordable Mortgage Program, or HAMP. A recent story from ABC News talks about the program - its proponents, its opponents, and its short-term success. 

Watch the video below. [EMAIL READERS - please visit the website to view the video. Flash player required.]

According to the online version of the story, only 116,000 homeowners have taken advantage of the $75 Billion program thusfar. Only 116,000 on a program designed to help 2 million? Why? Because bankers won't help customers and would rather foreclose. This has led some lawmakers to call the program a "failure" and has prompted the Treasury to suggest a stronger hand. If the Treasury and the Obama Administration had their druthers, banks would be required to see if homeowners qualified for HAMP help prior to foreclosure. Banks would only be allowed to begin the foreclosure process after a borrower had been officially unqualified. 

Your One-Stop GAC Wrap-Up

by Ron Daly 

Being based just a few miles outside DC has its advantages. Chief among them, we were able to pop in and out of the GAC and meet with our clients, our friends, and our fellow CUSOs. While we didn't hit any of the big talks or breakout sessions, we didn't feel out of the loop. Nor would anyone else, I would wager, as CU professionals from across the country that were attending the GAC were eager to share their thoughts via blogs, emails and social media outlets of all kinds. We thought we would do a service to our followers that might have missed some of the highlights of the week and try to bring all those links and stories together in one place. If you feel there's a link or two missing that might be vital to people reading along at home, leave us a comment with the link in it down in the comment section. 

BEFORE CONFERENCE: 

morrischris: For all you GAC attendees & burger lovers, there is a Five Guys about a block from the convention center. Thought you should know. #GAC10

A few enterprising CU professionals created a "hashtag" label for Twitter posts related to the GAC. If you want to see how the whole thing unfolded in 140 characters, go to Twitter's search page and search #gac10. 

Certainly one of the most talked about parts of this particular GAC was the "Crashers", a group of young CU professionals dedicated to making their CUs better. Crash the GAC was started by Brent Dixon of The Haberdashery and Filene, who took the idea to CUNA. CUNA offered a number of scholarships so that attendees wouldn't technically be "crashing" in the traditional sense, and Palmetto Cooperative Services LLC sponsored a number of beds at the DC Hostel for attendees. As Crashers went about the conference, they wore their custom CU*Swag shirts with their slogan "Five Star Leaders, Two Star Lodging". Having received a CU*Swag shirt (Jimmy won one and gave me his - It's a nice shirt!), I can say they'd be great for any CU that wanted to deck out tellers in some custom gear. 

HIGHLIGHTS FROM THE GAC:

aplusfcu: Packed crowd here at the GAC Opening Session. Lots of talk about job creation. #gac10 http://tweetphoto.com/12186755

The kickoff started with David Gergen, former presidential advisor and pundit, talking leadership in the Nation and in finance, and stating "The great American job machine is broken" and that innovation will be the key that gets it started again. 

CUNA President and CEO Dan Mica was greeted by a standing ovation when he took the stage for what will be his last GAC in said position. His talk centered around raising the MBL, the hot-button issue this year to be sure. His talk seemed well received by the majority of CU citizen journalists in attendance. [Read Dan Mica's opinion column here]

The MBL echoed throughout the conference, with more and more breakout sessions and private meetings devoted to its discussion. Gigi Hyland, also of the NCUA board, spoke her mind on day two about raising the MBL cap and the forward momentum of CUs through 2010, which she admitted would be a "tough year". She also gave due attention to the Crash folks, much to their delight. 

Debbie Matz, the newest chairperson from NCUA, took the stage to talk about what she felt should be key goals for every credit union in the nation, including expansion of online services and payday loan alternatives. [Some more thoughts from Matz in this article from cujournal.com]

CU_Ninja: RT @Paulsworld: Debbie Matz: 4 ways for CU's to succeed. Alt capital, biz lending, payday alternative and electronic services. #GAC10

There were quite a few impressive guests this year, including Joe Scarborough, Alan Greenspan, Ondine Irving, and even Reggie Bush snuck in at one point to the delight of attendees. Needless to say, if you weren't there, you missed out on a lot of interesting talk and a lot of insight. 

robwright: Hike the Hill! #gac10 http://tweetphoto.com/12386760

Wednesday was the day for attendees to "Hike the Hill", visiting with representatives and lawmakers from across the country on CU matters. Representatives Barney Frank and Spencer Bachus (MA and AL, respectively) stopped by Wednesday morning for a chat with attendees on Interchange Fees (which Frank said was not on the table) and, of course, more MBL talk (which Bachus said would be a tough fight for CUs to push through). Attendees then met with lawmakers to talk credit union issues, racking up pictures and stories along the way. 

Jimmy Marks, our CMD, and some of his Crashing buddies were also behind a "tweetup", a meeting of Twitter users in attendance. I'm told it was a big success and that there were some great conversations happening in the midst of all those young whippersnappers. 

FOR THE FULL EXPERIENCE: 

I couldn't possibly tell you everything that happened at the conference and around the conference - to do that, I'd have to start blogging Monday and not quit until the end of the week. Which the folks below did!

Carla Day of CU Chat Up was a one-woman GAC reporting supercomputer. She typed her poor thumbs right down to the knuckle on her Palm Pre, live-blogging and reporting events as they happened. To get a great recap of the whole experience, see her personal Twitter feed.  

To read about the full day's worth of events through Wednesday, spend some time with Rob Rutkowski's "That Credit Union Blog" which did a day-by-day recap. Read all about it here. 

The CU Water Cooler gang made time for a "Liquid Lunch" chat podcast, which can be heard here. 

If it gets summed up much better than this, let me know: 

Matt_Vance: At DCA getting ready to fly home. GAC has come to a close but the ideas, projects & action are just getting started #gac10.

Telling Potential Members to "Move It!"

by Ron Daly 

A new force is emerging in the battle for new members at CUs...from the pages of the Huffington Post comes the "Move Your Money" campaign. The goal: convince people across the country to move their money from any of the big banks to a community bank or credit union. 

moveyourmoney.info

When we first mentioned this, it was in passing, but we thought it was worth a whole post because of the traction it's been getting. We were interested to see our friends over at American Debt Relief Challenge wrote an article for Huffington Post about their good work getting folks to move their credit card balances to a CU. To date, almost $20 million has been saved thanks to balance transfers to a CU. 

Got Snow?: What our company (and our clients) learned from The Blizzard of 2010

by Ron Daly

This story originally ran on the DigitalMailer Blog. 

Call me an optimist, but I'm going to call this storm "THE blizzard of 2010", in the hopes that it's not just "A blizzard of 2010". 

It's been an interesting week here at DigitalMailer. In case you missed any news outlet of the past week, the DC/Metro area got almost THREE FEET of snow dropped on us in the span of a week. Many of our account managers, operations staff and marketing department had to work from home for the entire week - and one of our staff members won't be dug out until days from now. Hang in there, Steve! 

CUNA to Administration: Where Do CUs Fit In?

by Ron Daly 

For the past few weeks, CUNA has been striking out at the Obama Administration's new Small Business Lending Fund plan. The plan, which would distribute $30 billion in unused TARP funds to 8,000 community banks, doesn't mention credit unions as a potential business lender or alternative to community banks. 

From the above Fox News story:

Senior administration officials say the Treasury Department, SBA (Small Business Administration) and other White House officials and community bank groups worked on this legislation together and will affect banks that have between one billion and 10 billion dollars in assets.

CUNA, upon hearing the details of the President's plan, registered its outrage in a series of posts and stories on its website and in the CU Times. CUNA President and CEO Dan Mica registered his disappointment with further bank investments and is asking for face time with President Obama to speak on behalf of CUs across the country.

From CUNA News Now: 

"Credit unions have been making loans over the past year and can make even more if legislation expanding their capacity to make small business loans is enacted. I hear credit unions say: 'Don't just subsidize the banks; let us help this country get back on its feet--without using taxpayers' money,'" [Mica] added.

Business lending caps have been a hot topic for credit unions in the past year. A recent Washington Post article about CU business lending has this quote from a Treasury rep about bringing CUs into the fold: 

"We work very closely with credit unions and we have put forward a number of initiatives to help small businesses, but we are always willing to explore new ideas," Andrew Williams, a spokesman for the Treasury Department, said Monday.

We're eager to hear your opinion about the Small Business Lending Fund. If the business cap needs to be lifted, or increased, are the ramifications going to be so dire for banks? And what if the cap ISN'T lifted? Credit Unions nationwide have been doing more to lend to businesses with their own money. Do we really want to get in on the bonanza of $30 billion in TARP leftovers, or just keep up our "thanks but no thanks" attitude and lend to businesses as much as we possibly can without the cap disappearing?

Tell us your thoughts in the comment section.