Increasing member awareness
Scott says credit unions have to teach members that signature transactions earn more money for the credit union, which ultimately benefits members through lower loan rates, higher dividends, and other benefits.
But sometimes merchants won’t give members a choice—they simply offer PIN-based transactions, he says. “In cases where there’s a choice, most merchants or cashiers don’t mind if you ask for a signature transaction. In the case of small, family-owned businesses, getting a customer to use PIN may mean a bit more revenue for them versus signature.”
Scott suggests providing incentives to members who ask for signature transactions when they use their debit cards.
“You can do it via awards, such as a $0.05 credit for each signature-based transaction, or by applying a fee to PIN-based transactions after a certain number of such transactions,” he says.
“We’ve found that credit unions that charge a fee haven’t run into much negative member reaction.”
Another wrinkle: "Rounding-up" programs where transactions are rounded up to the nearest dollar with the difference going to a charity, he adds.
Thornton sings the praises of debit card rewards programs. “These should be more than just cash-back offers. People react more positively to the promise of a tangible reward such as dinner than they do to the abstract image of cash.”
Credit unions also can reward members for debit card transactions that exceed a certain amount, such as $50, says Scott. “If they’re making a purchase totaling $46, the offer of a reward will incent them to add something to bring their payment past the $50 threshold. You can’t underestimate the need to educate members on the use of debit cards in terms of frequency and the mode of transaction.”
Moore agrees. “Offering rewards for debit is one of the most effective ways to increase use. Ongoing promotion of rewards, bonus point promotions, and spend-and-get campaigns have been very effective in driving additional usage.”
Household and relationship rewards, where points can be combined with other accounts’ reward points, help members more quickly accumulate redeemable points, Moore adds. Also, encouraging use for everyday spending and recurring bills, and communicating such debit card benefits as $0 liability and purchase protection, can get members to use their cards more frequently.
“Another tactic is to provide alternative benefits in the form of higher interest rates on deposits if certain criteria are met,” he says, “such as enrolling in e-statements, conducting a certain number of debit transactions each month, having at least one direct deposit, and one online banking log-in each month.”
Debit card ‘don’ts’
The biggest mistake credit unions can make in the debit realm is failing to understand how to encourage debit card use, Scott says.
Another, Thornton adds, is ignoring the large percentage of members who use their debit cards frequently—a segment no credit union should treat casually.
Also, “don’t fail to segment and target specific members,” she says.
“Say you want to reach 18- to 24-year-olds,” Thornton says. “You would look at such statistics as iTunes, coffee shop, or entertainment-related transactions that include a high number of members in that demographic and target the campaign and incentive to fit that demographic.”
Moore sees slack debit card marketing as “a failure to communicate and promote their use and value. They need to effectively market the differentiated features and benefits that their competitive advantage gives them the ability to offer.”