By Nicolas Beique
Credit unions build their customer base and strengthen customer retention around their unique (non-profit, member owned, operated and focused) business structures and offerings. When their business customers ask them about which suppliers they should get payment processing services from, it’s important that the credit unions have the appropriate partnerships in place to meet their customers’ expectations.
Here are several factors that credit unions should examine when evaluating processors.
- Revenue share. The first concern that a credit union may have when selecting a payment processor might be what the revenue share is going to look like. After all, having a favourable revenue share with their processor will allow the credit union to give more back to their customers.
However, revenue share should be just one of the factors that are considered. Even if the revenue share agreement with the payment processor seems favourable, if they are not delivering on processing rates and fees, customer service and functionality (as discussed next), the credit union may find that the referrals they send to the processor do not result in long lasting relationships. Seeing as revenue earned is directly related to the length of the relationship, it does not matter how generous the revenue share is if the payment processor is unable to sign up and retain merchants.
- Strategic value alignment. A partnership with a payment processor should help the institution build long-lasting relationships with its clients and improve retention by providing another avenue for meeting their financial needs. However, the partnership will only result in increased retention if it is strategically aligned and both the credit union and the payment processor share the same values.
Credit unions have invested significant time and resources to build organizations that are focused on loyalty, honesty and friendliness. If the payment provider they partner with does not mirror these core values, then the credit union’s customers will be set up for a disappointing experience. A poor experience with the payment processor may not only damage how the customer sees the payment provider but also how they view the credit union who referred them.
- Fees and pricing. When a credit union looks to find a payment processor that will uphold the values their business is built around, they should note the top attributes that attracted customers to their business in the first place and match them to a payment processor who has the same emphasis on delivering similar value. An easy place to start is with fees and rates. Credit unions can attract members because of their lower fees and low account minimums and higher interest rates for savings products. Customers enjoy banking at credit unions because they feel like their money is going further. When a credit union is evaluating the best payment processor for their business, it’s important to consider the processing rates and any applicable fees that the processor may charge their members. Selecting a payment processor that offers transparent pricing, does not charge unnecessary additional fees and which provides flexible low-cost options for hardware and software helps ensure that the credit union’s customers will not be spending more than necessary on their payment processing.
- Strong customer service. Because credit union customers have a say in the organization’s decisions and credit unions themselves are not worried about making profits, they typically have more local and smaller customer bases, and can take more of a customer-focused approach compared to the larger publicly traded financial institutions. Customers likely choose to bank with a credit union because they prefer this personalized approach to doing business and they appreciate being able to deal with a real person at their local branch when they have questions.
This expectation of helpful and friendly customer service, is another attribute for which credit unions should evaluate their payment processors. Check how a processor offers customer service before starting a partnership. Can customers reach out online? Over the phone? How about in-person? Or maybe a combination of these methods to get assistance? Read industry and customer reviews to see what people say about their experiences with the processor. Get to know your potential processor to make sure they’re offering service in line with your expectations, and those of your customers.
- Functionality. Finally, consider the functionality and software that a payment processor can offer a credit union and how they approach innovation. Just because a customer is looking for low rates and great customer service doesn’t mean they want the bare minimum in of functionality. Choosing a payment processor that offers more than their customers are expecting gives the credit union the opportunity to surprise and delight them by referring them to a partner which is going to help empower their business.
By focusing on finding payment processors who have values aligned with that of their own business, credit unions can increase their customer satisfaction and retention while maintaining a consistently positive customer experience. Choosing the right processing partner will allow credit unions to deliver a worthy customer experience at the same time as increasing deposit frequency and growing revenue that can ultimately be returned to their members.
Nicolas Beique is founder and CEO, Helcim (www.helcim.com).