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Best practices for capturing members’ end-of-year spend.
This was originally published on The Payments Review and is reprinted with permission.
It’s only mid-October, but back to school is over, fall and pumpkin spice are in the air, and your members are already thinking about holiday purchases. If you have a co-worker who has marked the employee break room calendar with a countdown of the number of paychecks left before the holidays, now is the time for your credit union to create holiday credit and debit usage campaigns to compete for transactions and capture the projected increase in holiday spending this year.
According to the International Council of Shopping Centers’ Holiday Shopping Intentions Survey, nearly a third of holiday shopping started as early as August. Survey results indicate consumers will spend an average of $728 on gifts this holiday shopping season, with millennials playing a major role in retail success by spending $554 using their debit cards or cash.
Additionally, Deloitte is forecasting retail sales will increase 4 percent to 4.5 percent from November to January, resulting in $1.04 trillion to $1.05 trillion in increased revenue, citing confidence in the economy as a key driver for retail sales growth. Online sales will drive growth with a forecasted spike of 18 percent to 21 percent, totaling $111 billion to $114 billion. This is all good news considering recent store closures by Sears and Macy’s, along with the recently announced Toys R Us bankruptcy.
Thanksgiving is still weeks away, but Best Buy, Walmart, Target and other online retailers already have web pages published so shoppers can sign up now to receive Cyber Monday deals emailed to them. Consumers are researching, planning and making their 2017 holiday spend lists now. Your credit union needs to be ready—whether you plan to offer a special rewards promotion or simply hope for organic sales growth in your debit and credit portfolios.
Now is the time for issuers to review authorization approval rates with their processors to ensure they are approving the highest number of transactions as possible and to review daily spend limit parameters that may need to be increased during the holiday shopping season to meet cardholder transaction demand.
Factors that may hamper holiday sales volume for issuers include inadequate credit lines. Issuers that have not provided a credit line increase program to their credit programs, need to consider and implement a CLIP as soon as possible. This will help them gain the projected increased holiday spend. If they don’t have a CLIP in place, they run the risk of members opening another credit line with a new issuer. Many issuers have not offered a CLIP since the Card Act requirement for proof of ability to pay language was implemented, but issuers can and should offer CLIP to their credit-worthy cardholders annually.
Also, with the recent Equifax breach, issuers need to continue strong fraud monitoring and account security messages to their cardholders to create confidence in card product usage, while also communicating to cardholders effective cash to card spend strategies. According to last year’s Federal Reserve Bank of San Francisco State of Cash Report, cash continues to generate the largest number of transactions.
Lastly, Q4 is an excellent time for new cardholder acquisition. Plan to prepare and train member-facing staff to offer and promote your credit union credit and debit card products to new and existing members.
Stephanie Hainje is a senior portfolio consultant with CUES Supplier member CSCU, Tampa, Fla. Hainje is an experienced card industry professional with credit and debit card program management from her previous career at Purdue Federal Credit Union, a leading affinity credit card issuer and top 100 Visa USA issuer.
