SRM releases report on planning for the now and future of card transactions

MEMPHIS, TN (April 27, 2020) — SRM (Strategic Resource Management), an independent advisory firm serving financial institutions, today published its most recent SRM Academy Report, “Preparing for The New Normal in Your Card Network Agreements.”

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Despite disruptions brought about by the COVID-19 pandemic, banks and credit unions still face deadlines and contractual obligations to their third-party suppliers. Notably, a significant number of card agreements are up for renewal in the next couple of years. Such contracts with major card payment networks, EFT processors, core processors and digital banking providers often affect the largest expenditures and non-interest revenue streams for many financial institutions.

This report outlines factors to consider before entering or extending a card program agreement: an overview of interchange data and dynamics; a look at the ongoing changes in the payments industry landscape; strategies to maximize card programs within a given set of terms; and considerations unique to each bank and credit union that should play a deciding role.

Key insights include:

  • Many of these expiring agreements were executed during the aftermath of the recession when the full effects of the Durbin Amendment were unclear; consider such developments as the mainstreaming of e-commerce and growth in mobile payments, increased transaction sets offered by domestic debit networks, P2P and real-time payments.
  • While surprises in the coming years are inevitable, card network renewals should account for additional volume growth as well as upcoming events. The prevalence of contactless card rollouts and the depletion of 6-digit Bank Information Numbers (BINs), which will necessitate the conversion to 8-digit identifiers, are the two to watch.
  • Card program optimization, especially with debit portfolios, is an oft-overlooked area to cultivate gains and deepen relationships with customers and members, at no cost to either. The PAU principle (Penetration, Activation, Utilization) offers guidance on where to focus key metrics with supporting tactics to promote improved performance.

Brad Downs, CEO of SRM, said, “The opportunity to negotiate a card and other payment agreements usually come every three to 10 years. We recommend that financial institutions begin to focus on these agreements well in advance, before they are scheduled to end. Banks and credit unions must make the most of those opportunities to avoid mismatched terms and missed revenue, particularly with how significantly the payments landscape continues to change. Despite the importance of these relationships, it’s not uncommon to find institutions unaware of how materially these decisions can impact their bottom line. We intend to bring greater awareness to the magnitude of these agreements and help educate banks and credit unions on where to best focus their energies and negotiating power when it matters.”

About SRM

SRM (Strategic Resource Management) has helped 1,000+ financial institutions add more than $5 billion of value to their bottom line in areas such as payments, digital transformation, core processing, digital assets, and overall operating efficiency. SRM has lowered costs, created revenue opportunities, increased productivity, and provided a competitive edge for clients in an environment of constant and accelerating change. Visit for more information and follow us on LinkedIn and X (formerly Twitter) for timely and relevant insights. 


Cristi Murray
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Alex Arango
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