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Co-Op Boosts Debit Usage Among Infrequent Users with a Charitable, Not Personal, Appeal
December 19, 2012

While some big banks pull back on debit card promotion, smaller institutions are finding ways to boost usage among customers who have cards but seldom use them. And some are finding out that, perhaps because of the time of the year, charitable appeals may work better than personal rewards.

Co-Op Financial Services, a debit-network operator and payment-technology provider that serves credit unions, reported this week that a November campaign raised transactions per card and spending per transaction for the month by better than 70% among infrequent users at 10 client institutions around the country.

The campaign, which focused on signature debit and offered to pay to have 10 trees planted in the name of each cardholder who increased usage, saw 824 cardholders respond. Overall, the responding users boosted their spending better than 200%, from $62.60 per card per month on average to $188.87 for November.  Average tickets also boomed, with spending per transaction growing 73% from $16.18 to $28.01. Average number of transactions per card soared by a nearly identical percentage, from 3.87 to 6.73.

For the participating credit unions, the campaign more than doubled average interchange income per card, from $1.21 to $2.78. Most credit unions, including the 10 that participated in the November promotion, are small enough to be exempt from the debit-interchange ceiling imposed by the Durbin Amendment, which took effect in October 2011. The pricing cap, which applies to institutions with $10 billion or more in assets and covers both signature and PIN debit, has led some big banks to trim back rewards-based debit promotions or eliminate them altogether.

For Co-Op , the tree-planting promotion “was clearly one of the better-performing campaigns we have done, particularly in the [return on investment] for the credit union,” says Michelle Thornton, senior product manager for the Rancho Cucamonga, Calif.-based network. She says Co-Op runs four quarterly campaigns each year to promote debit. Some focus on PIN debit, some on signature, she adds. Issuers exempt from the Durbin caps earn more interchange on signature –debit transactions.

An interesting note on the November campaign is that it represented the first time Co-Op used a charitable incentive, rather than a personal reward for the cardholder, to gain results. While the campaign was not Co-Op’s highest-performing so far, it ranked high, Thornton says.

Altogether, Co-Op processes debit, credit, and ATM transactions for some 3,000 credit unions and 30 million cardholders. For the promotion, Co-Op relied on analytic technology from Saylent Technologies Inc., Franklin, Mass.

The 8,240 trees that will be planted as a result of the campaign will be provided by Treecycler, which links businesses with reforestation organizations. Half of the 40 reforestation projects where the trees will be planted are in the United States.


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