An Interchange Opportunity Your Credit Union May be Missing: Subscription Services

Consumers are subscribers. Is your credit union leveraging this opportunity? According to a recent survey, Americans are spending more on monthly subscription services these days — for many an average of $237 per month. According to CO-OP Financial Services, retail subscriptions present a unique value proposition to credit unions to earn debit or credit card interchange revenue.

With subscription-based transactions, customers allow the merchant to auto charge the same debit or credit card on a regular, recurring basis such as monthly or annually. The merchant can continue charging the card without having to inform the customer, as it is the customer’s responsibility to cancel the subscription. This “set it and forget it” aspect of modern card-based subscription services is convenient for consumers, for the merchants, and at typical credit card interchange rates, potentially $38 in annual interchange income to the credit union per cardholder.

Optimize your portfolio with a subscription strategy.

The member data you have is a treasure trove! Identify accounts that already have active subscriptions. Since these members are already comfortable with the subscription model, they are ideal candidates for additional sign-ups.

CO-OP’s SmartGrowth consultants recommend these strategies:

  • Focus on specific merchant category codes that are popular for subscription services, along with up-and-coming merchant categories such as medical services and pharmacies.
  • Use your rewards program to offer extra dollars back to members with subscriptions that renew on an annual basis.
  • Incent local businesses. For example, encourage a Main Street coffee shop to allow customers to register their credit union cards on file with the store. Your credit union can offer incentives to both the merchant, and the members based on the number of subscriptions signed up.

The fact is that credit unions fulfill a unique mission for their members, who rely on them to provide the services that help them to manage their financial lives. With this established level of trust, credit unions can be guiding lights, as their members enjoy the convenience of subscriptions, while helping them to manage these services safely and wisely.

To help build a subscription strategy that will support your members and optimize your payment portfolio, contact the Strategic Link team. They’ll connect you with the CO-OP SmartGrowth consultants. Additionally, you can learn more about CO-OP online.

Posted in Industry Insight, Strategic Link.