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                                                                         N    February 2008                    N




                                            The Prepaid Debit Card:
                                                            Seven Marketing
                                                                          Strategies
Route to:                                                                                  N
  I EVP
  I VP Operations
  I VP Finance                        From Gift Card To Travel Card ...
  I VP Marketing
  I VP Lending                            It’s Seven-Cards-In-One
  I Newsletter Editor
  I E-Coordinator
  I Marketing Manager
                                                    And
                                          A Very Powerful Product




                          PUBLISHED AS A PUBLIC SERVICE BY THE CREDIT UNION CENTER OF AMERICAN INCOME LIFE INSURANCE COMPANY, P.O. BOX 2608, WACO, TX 76797.
                        CALL THE CREDIT UNION CENTER HOTLINE AT 1-800-278-6661 WITH SUGGESTIONS, QUESTIONS AND REQUESTS. VISIT OUR WEBSITE AT: WWW.AILIFE.COM
N The   Prepaid Debit Card: Seven Marketing Strategies N


                                         The most recent holiday shopping season proved two things:
The latest craze is
the realization that                     N Sales were down.
a gift card for cash                     N Gift cards went through the roof.
— unlike one from
Macy’s or Target —                       As expected, gift cards and Internet shopping were the only two areas to
can be used                              gain market share. Even electronic gadgets didn’t live up to expectations.
anywhere and                             So obviously a Credit Union should wonder, “Isn’t it time to introduce (or
therefore has so                         vigorously market) a prepaid debit card?” Yes, for seven reasons — and
much more value.                         they coincide with the seven key uses for the card … making it “seven-
                                         cards-in-one.”

                                         Let’s examine each “card.”

                                         Card #1 — IT’S A GIFT CARD. The latest craze is the realization that a gift
                                         card for cash — unlike one from Macy’s or Target — can be used anywhere.
                                         Consequently, it has so much more value.

                                         The Members Group, affiliated with the Iowa Credit Union League,
                                         reported that for the recent holiday season they had 55 Credit Unions
                                         selling 15,000 cards with an average load of more than $90 per card.

                                         America First Credit Union in Utah almost doubled their 10,000 cards of a
                                         year ago. The new twist: a personalized gift card with the giver’s photo.

                                         Stan Hollen, CEO of CO-OP Financial Services, reported that prepaid gift
                                         cards have become one of the fastest-growing payment methods for
One of the foremost                      consumers. To help CUs remain apace, CO-OP Financial Services has
newspapers in                            developed their own “CO-OP GiftCard,” designed to be convenient and
London, the                              competitively priced for Credit Unions and their members.
Independent,
                                         Card #2 — IT’S A TRAVEL CARD. Newspaper articles across America, as well as
stated last May
                                         overseas, have now started touting the advantages of using a prepaid Visa or
that this was the
                                         MasterCard for travel. One of the foremost newspapers in London, the
ideal way of “taking
                                         Independent, stated last May that this was the ideal way of “taking cash for
cash for holiday
                                         holiday travel.” The paper explained, “These cards have been likened to a
travel … These
                                         hybrid of a debit card and a traveler’s check.” The Member can use them to
cards have been
                                         get cash at an ATM, charge a purchase, or pay for dinner.
likened to a hybrid
of a debit card and                      More than a decade ago, Patelco Credit Union of San Francisco began
a traveler’s check.”                     marketing its CU debit card and CU credit card as “travel cards.” The
                                         suggestion was to overpay your VISA card and then use that instead of
                                         travelers’ checks. Today the easier way is to just get a prepaid card.


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                                                                    N The   Prepaid Debit Card: Seven Marketing Strategies N


Card #3 — IT’S A CARD FOR BUSINESS. Small businesses have begun to
utilize the prepaid debit card for employee expenses. It automatically gives
you a record of expenditures as well as a limit on spending. After revamping
its own procurement process by means of a specially designed card,                       As a “business card,”
Teachers CU of South Bend, Indiana, is now offering this added                           it allows a CEO to
convenience to its select employee groups. Its “Purchase One” card,                      authorize employees
created by WesCorp’s Procura CUSO, allows a CEO to authorize employees                   to make business
to make business purchases from any merchant, streamlining the                           purchases from
management process of authorizing expenses, spending limit adjustments,                  any merchant,
requisitions, and purchase orders.                                                       streamlining the
Card #4 — IT’S AN EXPENSE CARD FOR STUDENTS. Parents are finding that
                                                                                         management process
the prepaid debit card is the ideal way to handle expenses for the student in
                                                                                         of authorizing
college (as well as for some in high school). It’s easy. It’s convenient. And it
                                                                                         expenses, spending
sets an allotment limit that can’t be overspent.
                                                                                         limit adjustments,
                                                                                         requisitions, and
Card #5 — IT’S A HOUSEHOLD CARD. Credit Unions have now started                          purchase orders.
offering the prepaid debit card as the perfect way to itemize expenses that
previously were handled by putting money into a “kitty.” And recently,
organizations, clubs, and other groups have begun to use the prepaid card
instead of messy recordkeeping and to alleviate problems connected with an
office or club “kitty.”

Card #6 — IT’S A CREDIT CARD TO HELP LESS FORTUNATE MEMBERS. By
using a prepaid debit card, Members who lack the credit rating to obtain
a regular VISA or MasterCard can still enjoy many of the same advantages
those cards offfer: shopping, obtaining cash at ATMs, renting autos, etc.

Card #7 — IT’S THE VERSATILE CARD. The potential of the prepaid card is
limited only by the creativity of the Credit Union or the Member. Some
employers are using it as a unique and “more tangible” method of giving
out bonuses. Parents have used it as an educational tool to teach fiscal
responsibility to their children. The options, of course, are endless.                   The potential of
                                                                                         the prepaid card is
                     THE KEY IS IN THE MARKETING                                         only limited by the
                                                                                         creativity of the
Though debit cards date back to the 1970s, they have only recently gained
                                                                                         Credit Union or
consumer acceptance and begun to skyrocket. For the Credit Union, these
                                                                                         the Member.
cards are used to secure Member loyalty, offer cross-selling opportunities,
and help cement your CU as a Member’s primary financial institution. They
can easily become one of your CU’s most powerful marketing tools.


                                                              continued on page 4

                                                    N   February 2008        N                                       N   3
N The   Prepaid Debit Card: Seven Marketing Strategies N


                                         continued from page 3

                                         However, as Karen Fry, Director of Marketing for Card Services at Credit
                                         Unions, Inc. (CSCU) in Clearwater, Florida, has stated, “Just like all
                                         the other products you offer, debit programs don’t just sell themselves.”
Research by VISA                         The CU has to market them, promoting all seven of the uses and
International has                        advantages listed above.
shown that 58%
of those who use                                                                    CONCLUSION
debit cards have
                                         Research by VISA International has shown that 58 percent of those who use
stated they would
                                         debit cards have stated they would switch institutions if their debit card
switch institutions
                                         was discontinued.
if their debit card
was discontinued.                        That’s quite an endorsement for one of your services. So now is the time
                                         to either institute the prepaid debit card or begin marketing it with its
                                         multitude of uses. N




                                             THE AIL CREDIT UNION CENTER
                                             Your            can now offer you
                                             back issues of The Blue Paper.
                                             Recent issues include:
                                                  January 2008
                                                  “2008 — THE YEAR FOR CUTTING EXPENSES”
                                                   The eleven steps that have proven effective cost cutters for many Credit Unions.
                                                   There could hardly be a more appropriate time!

                                                  December 2007
                                                  “YOUR CALL CENTER: THE MOST CRITICAL OF YOUR FIRST LINE CONTACTS”
                                                   It’s a service and a profit center … and there are seven steps to help it
                                                   reach its full potential. How does your call center compare?

                                                  September 2007
                                                  “THE PERFECT TIME FOR CREDIT UNIONS TO OFFER REVERSE MORTAGES”
                                                   Housing sales are plummeting, our membership is aging, and HECMs
                                                   are in demand. See what other Credit Unions are doing.
                                                                                          !
                                                           Just contact your AIL representative for the topic of your choice.



                                           The advice, suggestions, ideas, and information herein are offered strictly for educational purposes.
                                           The Blue Paper is not intended to provide legal counsel, nor is it a substitute for legal counsel. Consult
                                           an attorney if you require legal advice.


4   N                                         N   February 2008              N


CU 02/08

				
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