A few ways to maximize your interchange revenue
Understanding how this income stream works will help credit unions properly manage and make the most of it.
Visa, Mastercard, Pulse, Star. Most people in the financial industry would recognize these routing networks. After all, debit card transactions are the primary payment method for our customers. Consequentially, the interchange fees associated with debit transactions should also be easily understood and properly managed by financial institutions. Realistically, though, not every credit union executive understands how this revenue stream works from start to finish, which could be costing them thousands per year.
The Basics
To give you a basic understanding of interchange fees, we’ll focus on a common merchant transaction: one of your members uses their debit card at Walmart. The interchange fee is a payment by the merchant on a transaction. Every merchant knows that they will need to pay this fee to one of the networks.
These fees cover the expenses associated with the transaction … securing the network, fraud protection, verifying the funds are available and posting the transaction to the member’s checking account.
continue reading »
