VERNON HILLS, Ill.-Baxter CU optimized its PIN networks, and the result is that now PIN debit is generating revenue for the credit union instead of costing money.

Baxter eliminated two low-performing networks and received preferred network pricing with the help of the St. Petersburg, Fla.-based PSCU, saving the $1.4-billion CU $350,000 annually. "PIN transactions can contribute significantly to credit union profitability when PIN network participation is streamlined," explained Vladimir Jovanovic, PSCU's product manager for debit, ATM, and prepaid services.

Through its Network Optimization Analysis service-free to PSCU members-PSCU analyzed Baxter's PIN transaction volume by network and cardholder usage, unraveled each network's pricing, assessed the credit union's desire and contractual obligations to remain with networks, and then modeled an alternate network configuration.

The big change was eliminating overlapping networks, and making sure when coverage is maintained, it is with the better performing networks, Jovanovic said. "This was accomplished with virtually no impact to the credit union's cardholders."

Jovanovic contended that more credit unions need to streamline their PIN networks and move away from the thinking that collecting networks is beneficial. "We see many times when we do these network optimizations that the credit union thinks they need to have many networks in order to provide full coverage to their cardholders so there is no lack of coverage," Jovanovic said. "Due to network consolidation in recent years, including many regionals, you don't need as many networks anymore."

Part of what makes Network Optimization useful, according to Lori Reiss, ATM and debit card manager for Baxter Credit Union, is PSCU's ability to decipher the actual costs of each network, which includes analyzing each network's return. "Understanding what each network is costing you is very difficult because their pricing is so complicated. Having PSCU break it down and simplify it made network pricing very clear. When we got the numbers we were extremely surprised at the disparity in costs of the network's transactions."

BCU now has nine networks instead of 11 to reach its members, who are nationwide. "In this current economy, where it is very difficult to generate revenue, we are extremely pleased that not only are we covering our ATM and POS expenses, but earning money," Reiss stated.

More credit unions are understanding the need to evaluate their PIN networks, added Jovanovic, who said there is a backlog of credit unions waiting for Network Optimization. "Anymore, choosing the right network that meets the credit union's and members' needs is the key. Perception used to be that collecting networks was expanding your ATM and POS reach. The reality is that credit unions need to consolidate rather than collect."

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