With An Increasingly Crucial Role In CU Card Portfolio Management, Certegy Works To Get Message Out

ST. PETERSBURG, Fla. – Is Certegy one of the best kept secrets of credit union credit card processing? Sometimes it can seem that way, even though company executives assert that the Alpharetta, Georgia-based card processor has begun working harder to help credit unions understand what it can do to help them manage their card portfolios. “I will agree that in that [marketing] aspect, we have had to make a cultural shift,” said Steve Beckerman, a senior vice president with Certegy. “We have had to begin being more persistent about getting credit unions to understand what we can do for them.” Beckerman explained that, up until relatively recently, the card processor would announce a new program or service to its card issuers, including credit unions, once and then not mention it again. “Now we have to keep going back to them,” he said. The stakes of getting the message out are enormous. Of the more than 6,000 financial institutions that process either cards or checks through Certegy, at least 2,600 of them are credit unions processing card transactions. That means that Certegy processes the card transactions for more than 55% of the roughly 4,700 credit unions that told NCUA that they had positive credit card balances at the end of 2003. While Beckerman wouldn’t speculate on what had previously prevented Certegy from taking a more proactive marketing stance, he acknowledged that the growing pressures on credit unions to better manage their card portfolios influenced the firm’s decision to start pressing its products and services more firmly. “Now is the time when we really have to step up to the plate,” he said. The need for more proactive marketing came somewhat more sharply into focus when credit union card executives, whose credit union’s process with Certegy, recently toured the firm’s St. Petersburg card facility. As a small clutch of card managers looked through a series of plate glass windows facing a call center floor, a Certegy card services manager described the different levels of card services Certegy provided credit unions and their cardholders. The manager explained that basic service provides cardholder phone service 24 hours per day, seven days per week, mostly through an interactive voice response system. Information covered includes current balance, available credit, payment activity and information on the last five transactions posted. Customer service representatives assist cardholders with more detailed information and person-to-person support. The next step up, premium service, offers basic service plus 24-hour fee reversal. Certegy representatives can reverse fees under $25, including annual fee issues, late charges, and returned check fees. But the most comprehensive service, the VIP Service, provides all of the proceeding but adds the ability for customer service representatives to make credit limit decisions, handle PIN/plastics requests, change payment due dates and reissue accounts using a credit union’s unique decision making criteria. In today’s card marketing environment, VIP service is the gold ring, an approach that can allow a credit union to let its cardholders to more easily increase their credit lines, and thus carry larger balances, as well as better manage their overall accounts more easily. It can provide the level of customer service that helps make the difference between whether a credit union’s card holds the coveted “top of the wallet” slot in a cardholder’s wallet. But even as Beckerman and other officials acknowledged how important the VIP service could be to credit unions seeking to better manage their credit card portfolios, they also had to acknowledge that only 19 of Certegy’s card issuers, both banks and credit unions, use the service, with another six on line to begin using it later this year. “That definitely shouldn’t be the case,” said Robert Bream, senior vice president with card services of North America, “but it’s been a slow process ramping up the marketing effort and getting it going.” Bream pointed out that since he had taken on running Certegy’s North American card services he had sharply increased the card services marketing budget and sought to make the firm generally better known among both banks and credit unions. “Heck, a lot of people who process with us don’t even know we are international in scope and that we have facilities all over the world,” he added. Many credit unions don’t know that Certegy has service facilities in the United States, the United Kingdom, Ireland, France, Chile, Brazil, Australia and New Zealand, Bream noted and many don’t know that a January issue of Forbes magazine named Certegy number 137 of the 400 best managed U.S. firms, a fact Bream revealed in a presentation to the Card Services for Credit Union’s 2004 annual meeting in St. Petersburg. But if Bream and Beckerman admitted that more credit unions needed to know about Certegy’s products, they also noted that the firm has many good products and services to offer, with still more on the way. For example, for as much attention is paid to credit unions selling their card portfolios, Certegy pointed out to CSCU conference attendees that the number of card accounts lost to sales is only a small part of those lost because the cardholder closed them or because they fell into inactivity or because they were never activated. “Last year, in 2003, we lost 250,000 accounts due to financial institutions selling their portfolios. But what really surprised us were the number of accounts, 1.4 million that were lost due to deletes and purges,” Bream said. “And so while portfolio sales are clearly an issue, what is an even greater issue is inactivity, dormant accounts.” In response, Certegy has developed and begun beta testing a product that it hopes will be able to help card issuers address these accounts which represents about 5% of Certegy’s card base, according to Beckerman. “This is a product that, while we are still beta testing it, I am really excited about,” Beckerman said. The product, which remains yet unnamed, will offer a mix a rewards, incentives and other measures for 90 days that card issuers can offer their members who have stopped using the cards to get them to start using their card again – along with the usual measures credit unions can take to offer credit line extensions and upgrade cards when appropriate. Beckerman said Certegy had research which indicated this mix of incentives can have a dramatic impact on a card portfolio, leading to card reactivations from 25% to 75 or 85%, depending on how long the cards had been inactive. This is an example of a program that, when it is rolled out, Certegy will probably market heavily to its card issuers, Beckerman said, maybe by offering introductory offers or other incentives to help card issuers take advantage of it. “We believe all our products offer card issuers, particularly credit unions, the right sort of mix of turnkey services that they need to be able to manage their card portfolios in a cost effective manner,” Beckerman said. “Our challenge is to help more credit unions know about them.” -