Skip to main content

Now Is the Time for CUs to Start Offering Commercial Credit Cards

Owning your own credit card program gives you the freedom to serve the needs of each member while deepening relationships.

By Anil Goyal | March 31, 2023
credit card program Source: Shutterstock.

Offering credit cards to commercial members has not been something that credit unions have prioritized in the past, but as the opportunity for commercial lending increases, credit unions are in a unique position to support their small business and commercial members.

As credit unions continue to pursue innovative ways to compete with larger financial institutions, providing their members with services that support their professional interests is a fantastic way to add value to member relationships and retain members. Offering credit cards to commercial members not only brings value to those relationships, it also brings monetary value to the credit union.

Provide Solutions to Unique Problems

Local financial institutions are known for their personalized service and close relationships with their members. As a result, small businesses prefer to work with their local financial institution. These businesses are important to their local economies and often have unique financial needs that require different solutions. Issuing credit cards allows credit unions to provide those solutions.

Credit unions can improve credit access and help their small business and commercial members with an additional source of funding to allow them to grow. A small business or commercial credit card can give businesses the ability to make larger purchases on demand, which can help manage cash flow. Small business and commercial cards often have detailed reporting features that make it easy for owners to track and manage their expenses. The increased control also gives owners a choice between central billing and individualized billing, as well as the opportunity to keep business expenses separate from personal expenses.

Deepen Your Relationships With Your Members

It is important to be able to provide unique and valuable services not just to consumers, but to small businesses and commercial members. Advanced services like virtual cards and expense reporting can be very valuable for business members to streamline their spending. It is crucial for credit unions to understand the new digital payment capabilities that are needed by small business and commercial members in today’s environment. Investing in programs that are going to meet their needs and add value to their banking experience will continue to build the trust and loyalty credit unions should be aiming for.

Credit unions already have a leg up on megabanks when it comes to relationship banking and serving as the primary provider of financial services, including credit cards, in their respective markets. Building a sustainable program requires tapping into relationship banking to build continued loyalty. Owning your own credit card program as a credit union gives you the freedom to make decisions and serve the needs of each member while deepening relationships, which leads to a well-rounded and profitable credit card program.

Many credit unions offering credit cards either launch their program with a limited product set and limited digital technology, or they outsource their credit card program to an agent bank. With advanced, fully digital capabilities that are now available at a low or no implementation cost, credit unions are in a great position to upgrade their credit card program. With more personalized service and local convenience, credit cards offer a differentiated opportunity for credit unions to deepen their community relationships. It is proven that members who have more financial products with a financial institution show improved retention and more activity across their products, leading to higher profitability. And small businesses benefit from relationship lending, which is core to community banking. What’s more, many credit unions that use relationship data in underwriting for credit cards have higher approvals and lower loss rates.

Anil Goyal Anil Goyal

Anil Goyal is CEO at Corserv, an Atlanta-based payment card issuing company.

Comments

Post a Comment

Please no profanity or political comments.

Popular posts from this blog

Without President’s Signature, ROAD to Housing Act Becomes Law; Includes CU Board Modernization Act

WASHINGTON — The bipartisan 21st Century ROAD to Housing Act became law Friday without President Donald Trump’s signature after the president allowed the measure to take effect while Congress remained in session, choosing not to sign it in protest over the Senate’s failure to advance separate voter identification legislation.  The legislation includes the Credit Union Board Modernization Act, which reduces the frequency with which credit unions must meet and which had strong support from the credit union trade groups.  Trump announced on social media that he would not sign the housing package because the Senate had not passed the SAVE America Act, a measure he has championed requiring proof of citizenship for voter registration. Under the Constitution, a bill becomes law if the president neither signs nor vetoes it within 10 days, excluding Sundays, while Congress is in session.  Scott Simpson ‘Steadfast in Commitment’ “America’s Credit Unions, our league partners, and cr...
Post a Comment
Read Complete Article HERE>»

Invest in Education - Invest in Tomorrow

 
Post a Comment
Read Complete Article HERE>»

Inflation Cools in June Report, But One CU Economist Says There’s One Reason–And it Could Change

WASHINGTON — U.S. consumer inflation cooled more than expected in June, offering relief after several months of elevated price pressures, though economists cautioned the improvement could prove temporary as renewed geopolitical tensions threaten to push energy prices higher. The Consumer Price Index fell 0.4% in June on a seasonally adjusted basis, the largest monthly decline since April 2020, after rising 0.5% in May, according to data released Tuesday by the Bureau of Labor Statistics . Compared with a year earlier, consumer prices rose 3.5%, down from 4.2% in May.  Foot off the Gas Dawit Kebede “Falling gas prices led June’s decline and pulled headline inflation lower year-over-year. Renewed hostilities could complicate the energy picture ahead, and a reversal in gasoline costs would be the most likely channel for that pressure to show up,” said America’s Credit Unions Senior Economist Dawit Kebede. “But softening core prices point to broader-based moderation, suggesting the ea...
Post a Comment
Read Complete Article HERE>»

More Consumers Turning to Digital Wallets to Manage Finances

BOSTON — Consumers facing financial pressure are increasingly turning to digital wallets not only for convenience, but also as a way to better manage their household finances, according to a new report from PYMNTS Intelligence . The report, titled “ The New Checkout: Crimped Consumers Lean Into Online Retail and Digital Wallets, ” is based on a survey of 2,108 U.S. adults and found digital wallet adoption is growing fastest among younger consumers and those experiencing financial stress. According to PYMNTS Intelligence, digital wallets are evolving beyond simple payment tools by offering features such as buy now, pay later options, real-time balance information and spending management tools that help consumers monitor their finances. Source: PYMNTS Intelligence Among consumers experiencing high financial stress, 28% said they used a digital wallet for their most recent retail purchase, compared with 11% of consumers reporting low financial stress. For grocery purchases, 21% of financi...
Post a Comment
Read Complete Article HERE>»

What You Might Not Know About July 4th.

Post a Comment
Read Complete Article HERE>»

White Paper from WOCCU Examines How Stablecoins are Reshaping Financial Infrastructure

WASHINGTON– World Council of Credit Unions (WOCCU) has released a new white paper that examines how stablecoins are reshaping the financial infrastructure that credit unions and other cooperative financial institutions rely on to serve their members.  According to WOCCU, the white paper, How Digital Money Is Impacting Credit Unions, Part 1: Focus on Stablecoins , is the first in a planned three-part series exploring how emerging forms of digital money are affecting the global credit union movement.  “The report begins by noting that stablecoins are no longer a niche fintech development, but part of a broader structural shift in how money is stored, moved and regulated,” WOCCU explained. “As commercial banks, payment networks, technology firms and retailers build stablecoin offerings or integrate stablecoin rails into their platforms, credit unions must consider how these changes could affect deposits, payments, member relationships and long-term institutional relevance.” For ...
Post a Comment
Read Complete Article HERE>»

The FedNow Service will launch in 2023 "Are you ready?"

The FedNow Service is a new instant payment service that the Federal Reserve Banks are developing to enable financial institutions of every size, and in every community across the U.S., to provide safe and efficient instant payment services in real-time, around the clock, every day of the year. Through financial institutions participating in the FedNow Service, businesses and individuals will be able to send and receive instant payments conveniently, and recipients will have full access to funds immediately, giving them greater flexibility to manage their money and make time-sensitive payments. Consistent with the Federal Reserve’s historical role of providing payment services alongside private-sector providers, the FedNow Service will provide choice in the market for clearing and settling instant payments as well as promote resiliency through redundancy. Financial institutions and their service providers will be able to use the service as a springboard to provide innovative instant p...
Post a Comment
Read Complete Article HERE>»

New GDP Data is ‘Positive,’ Clouds Clearing, Says NAFCU Economist

WASHINGTON–Although discussion and forecasts continue to focus on a recession in the U.S. economy, economic growth remained solid at the end of 2022, according to new federal data. Curt Long The Commerce Department said U.S. gross domestic product, adjusted for inflation, increased at an annual rate of 2.9% in the fourth quarter of 2022, down slightly from a 3.2% growth rate in the Q3. Consumer spending grew at a 2.1% rate, according to the Commerce Department data, which will be revised at a later date. “The big picture view of economic growth in the fourth quarter is a positive one,” said NAFCU Chief Economist and VP-Research Curt Long. “Much of that grow...
Post a Comment
Read Complete Article HERE>»

The ‘Vexing’ Challenge in Front of the Fed

WASHINGTON–Wages, prices and consumer spending all increased over the year ending in June, according to new government data, creating a challenge for economists and the Fed as they seek to interpret what all the numbers mean and how to best move forward. “The latest government data…showed evidence that the economy remains resilient amid fear of a recession, but also that inflation is likely to remain a vexing problem for the Federal Reserve,” noted the New York Times in its analysis. As CUToday.info reported, the new data show consumer prices were up 6.8% through June, according to Personal Consumption Expenditures  measure. That was the fastest pace since 1982, the government said. Yet as quickly as prices have increased, consumer spending ro...
Post a Comment
Read Complete Article HERE>»

The Federal Reserve has opted to make no changes in interest rates

WASHINGTON–The Federal Reserve has opted to make no changes in interest rates following the conclusion of its meeting here, but it has indicated it could move as soon as next month to cut rates if the United States and China isn’t able to find ways to resolve their trade dispute. As a result,  For now, the Fed left its short-term rate at a range of 2.25% to 2.5%. Eight of the 17 votings, Fed policymakers did predict there could be as a half percentage point decline in rates in 2019. In a statement following its meeting, the Fed did dial down a bit its forecast for the economy.   “In light of these uncertainties and muted inflation pressures, the FOMC will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market” and inflation near the Fed’s 2% goal,” the Fed said.  Fed Chairman Jerome Powell in recent interviews has expressed concerns over what he ...
Post a Comment
Read Complete Article HERE>»