Changes to Reg. E, the financial reform legislation, and the uncertainties of the future, compel credit unions take decisive steps to protect their account relationships and their associated revenue stream.

Because of recent changes to Regulation E, all financial institutions, including credit unions, cannot charge a fee for overdrafts from everyday debit card or ATM transactions unless the account-holder has affirmatively consented.

If your credit union was unable to execute a well thought out opt-in program you may see a 50% or more reduction in overdraft fee income.

On Aug. 16, your account-holders’ debit cards started to be rejected     where they would have worked in the past. Account-holders view this as your credit union treating them badly and providing poor service. Let’s understand, they do not blame the federal government or the merchant who simply passes along the message that the card has been declined. They will blame the credit union for the embarrassment and any problems that arise from the card’s denial, like not being able to purchase groceries for the family.

This previously profitable account-holder is now embarrassed, upset and looks for another institution that will treat them better.

Consumers change institutions because they get mad at their current one.  Expect an increase in angry account-holders.

Significant revenue is “at risk” because of this one change to the regulation. Finding a solution to adequately address this problem should be at the top of a “to do” list. I know the “to do” is getting longer and longer.  There remains time to mitigate the effects, however, with that said, indecisiveness increases the likelihood of account-holder attrition and lost revenue.

Being ready to act when a cardholder has a point of sale denial, places the credit union in a better position to keep the account and its associated revenue stream.

Your debit processor can provide you with a denial report. The report should show those transactions that were rejected for a variety of reasons.

Your core processor should be able to provide you with a list of accounts showing which were opted-out automatically and which were opted-out because of an account-holder decision.

The key to here maintaining the revenue stream and member service is being able to combine the two lists and then develop a well thought-out message to your account-holders.  Education at all levels of the organization, especially platform staff, is critical for success.

If an account-holder failed to respond to the opt-in communication and then has a debit transaction declined, someone needs to reach out and contact then letting them know why the denial occurred. Your efforts achieve the following.

Contact me today to assist in developing and deploying a viable solution.

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