When the Merchant Customer Exchange (MCX) shut down CurrentC on June 28, large retailers lost a round in the continuing tug of war over interchange fees and access to consumers’ mobile payments. But this struggle will go on.
Don’t wait for the bottom to drop out of interchange fee income. Strive to offset it now by gaining more income and encouraging members’ loyalty through your plastic card products.
Here are four strategies to bolster your plastic card programs:
1. Make your cards mobile-wallet compatible
Mobile wallet use doesn’t appear to be taking off in the U.S. as quickly as in other countries. Even so, enable your cards to link with mobile wallet services.
For example, Walmart Pay, launched in all of U.S. Walmart stores in July, could quickly gain traction because of the retailer’s size and ability to link its mobile wallet to rewards.
2. Integrate your cards with your mobile banking app
Fiserv conducted a year-long study including data from 240,000 credit union members, 27,000 of whom were mobile banking users. It showed that customers who use mobile banking use credit and debit cards more than those who don’t.
Although existing mobile banking users account for 14.4% of the customer base studied, they account for more than 39% of the total point-of-sale (POS) spend.
In the three months after adopting mobile banking, the credit union members studied averaged 19% more POS purchases and 25% more ATM transactions than in the three months before the study.
Update your mobile banking app frequently, and integrate features that help members make the most of rewards programs.
3. Establish a card brand built on your strengths
Take a lesson from a large retailer’s debit card, which links to the consumer’s checking or savings account without a fee from the store. It works only on purchases at the store or its website, but cardholders get 5% off every purchase and other perks.
The retailer is leveraging a key value proposition: It features modestly priced products designed in somewhat more upscale or distinctive styles than you’ll typically find at other big box stores.
Customers understand they can’t buy a certain type of products for a better price anywhere else. So the card makes sense for them.
What are your key value propositions?
For most credit unions, a key value proposition for credit cards is the interest rate.
Target your marketing to consumers who carry credit card balances. Highlight the amount they can save over a given period with an interest rate that’s lower than competitors’ rates.
4. Grow from within: Give existing cardholders good reasons to use their cards more
Look for innovative ways to boost use of existing cardholders. Consider the following best practices as merely the table stakes you need to compete for member card uses today: