A switch to PSCU payment processing delivers a better experience for members.
Sponsored by PSCU
Card fraud is a severe problem for all concerned. Legitimate cardholders—while typically limited in financial liability—can face months or even years of headaches trying to straighten out the mess with creditors. In addition to having merchandise essentially stolen, business owners may be liable for damages on several fronts. But more often than not, it is the card issuer that is left holding the bill.
$650 million Mazuma Credit Union, with 63,000 members and nearly 200 full-time employees in Overland Park, Kans., strikes a different sort of marketing pose than most credit unions in terms of its brand image, with a certain fun-loving cheekiness. For instance, the board of directors is referred to as “Da Board.” And Mazumans (as the CU’s employees refer to themselves) are committed to social responsibility and work to help in the areas of community development, education and the arts.
Yet, like any other credit union, Mazuma CU takes the threat of card fraud very seriously. Having relied on a previous payments processor to provide fraud protection, the CU began to question the efficiency of the service—especially in terms of inconvenience caused for members trying to use their Mazuma-issued cards.
A specific pain point for Mazuma was the number of false-positive blocks being placed on accounts. This became a major topic of conversation as the credit union considered a new fraud-protection service provider. The industry standard at that time was 17 blocked cards to every actual case of fraud. With its then-provider, Mazuma CU saw 22 card blocks per one instance of actual fraud. Frustrated members were losing confidence in their Mazuma cards.
The Solution
Mazuma considered a number of payments companies before settling on two finalists. Ultimately, CUES Supplier member PSCU was chosen due to its history of helping credit unions reduce their fraud losses. Mazuma went live with PSCU credit and debit processing in November 2016. Today, Mazuma subscribes to a number of PSCU services and solutions, including handling its card-related calls through PSCU’s Total Member Care contact centers.
According to Mazuma’s Director of Awesomeness, Laura Eblen—more formally, the CU’s director of payments and AVP/strategic initiatives/operations and member experience—“PSCU was the right choice for Mazuma not only because of its strong fraud monitoring, innovative services and future-focused mindset, but also because PSCU understands what it means to be a CUSO. For them, ‘Owner’ is not just a phrase used during the sales process. Instead, it is embodied and demonstrated in all strategic decisions made by the PSCU team.”
During the contract process, a strong focus was placed on fraud monitoring and capabilities. The two parties worked to create a clear understanding of what PSCU offered, how much control Mazuma would have in the day-to-day risk management process and the ability of Mazuma to create fraud rules. The credit union identified key areas of previous fraud loss and provided transaction history for PSCU to learn the behavior of Mazuma cardholders.
PSCU implemented all fraud rules created by the previous processor and those created by Mazuma, as well as the standard PSCU rules. The integration was seamless, and PSCU provided frequent updates to Mazuma on how the rules were performing throughout the process. “We were very impressed by the data analytics used to determine potential and current member impact,” Eblen says.
By having frequent performance reviews, Mazuma was able to achieve the right mix of rules to lower fraud. Eblen recalls that PSCU asked careful questions to better understand the credit union’s risk tolerance and used these insights when developing future rules. Finally, the Mazuma cards team received training to ensure consistency in handling dispute intakes and was given tools to help facilitate conversations around disputes with members.
On go-live day, 99.5 percent of all cards worked with no identified issues. Eblen credits the strong partnership with PSCU’s sales and implementation team for the success, saying it would not have been possible if PSCU and Mazuma had not established such a strong relationship.
The Results
Almost immediately, Mazuma began to see a decline in fraud claims. In 2016, Mazuma had 9,073 disputes submitted by members and only 6,707 in 2017. The number is continuing to trend downward in 2018.
Though most financial institutions do not share their total card-related fraud losses, Eblen confirms that Mazuma’s actual fraud losses have significantly decreased since making the switch to PSCU. In 2015, Mazuma experienced $509,000 in losses, approximately 0.20 percent of net spend. In 2016, fraud loss continued to rise to $624,000, representing 0.23 percent of net spend—a 22.6 percent increase over previous year losses. In 2017, now fully live with PSCU, the numbers were drastically reduced: Mazuma experienced only $230,000 in actual fraud losses, or about 0.07 percent of net spend, and a 63 percent decrease over previous year losses.
Since converting to PSCU, there has also been a marked decrease in the number of falsely blocked cards. Today, one out of every three blocked cards is, indeed, fraud.
As Mazuma CU looks to the future, it will depend on PSCU to increase the tools and methodologies used to combat fraud. “Creating a positive member experience must remain top of mind for both institutions,” Eblen says. She hopes that as the use of data analytics continues to grow, PSCU will be able to write cardholder-specific rules based on usage patterns and cardholder need. “By continuing to work together and keeping open lines of communication, PSCU and Mazuma can continue to reduce fraud losses,” Eblen declares.
Mazuma’s leadership continues to be pleased with PSCU payment processing and the corresponding fraud protection. Eblen now sees PSCU as more of a partner than a service provider. “By having PSCU understand Mazuma’s values, risk tolerance and member behaviors, the right rules can be put into place to help mitigate fraud while providing a high-quality member card usage experience.”
PSCU, a CUES Supplier member headquartered in St. Petersburg, Fla., is the nation’s leading credit union service organization. Founded in 1977 as a credit union cooperative, PSCU offers a comprehensive, highly integrated suite of payment solutions for credit unions to optimize their member experience. Today, PSCU supports the success of nearly 900 Owner credit unions representing 20.4 million accounts. Leveraging digital technology, PSCU provides secure, best-in-class solutions including payment processing, risk management, analytics, loyalty programs, marketing, strategic consulting and mobile platforms. Comprehensive, 24/7/365 member support is delivered by contact centers located throughout the United States. For more information, visit pscu.com.
