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The CU2.0 Podcast
This podcast explores contemporary, critical thinking and issues impacting the nation's credit unions. What do they need to be doing to not just survive but prosper?
The CU2.0 Podcast
CU 2.0 Podcast Episode 355 Prizeout Is Putting New Life in Debit Card Cashback at Credit Unions
25% cashback on an Amazon purchase. 35% back at Kroger.
Now do I have your attention?
And this is cashback on a debit card. You thought debit card cashback vanished a decade ago? It had.
But now it just may be coming back.
On the show are David Metz, CEO of Prizeout, an innovator in adtech, and he is here to talk about a new product, CashBack+ Pay.
Also on the show is Amy Sink, CEO of Interra Credit Union, an Indiana institution with assets around $2 billion, an investor in the Prizeout CUSO.
As for those eye popping cashback purchases, they are real and both were enjoyed by Interra members who had signed up Cashback + Pay, relates Sink.
According to Prizeout, “The first group of credit unions now live with CashBack+ Pay includes Interra Credit Union, Michigan State Federal Credit Union, United Financial Credit Union, Golden 1 Credit Union and People Driven Credit Union.”
Cashback rates vary - sometimes by day, often by a member’s particular demographic. But, says Metz, the usual rate now is averaging 6.8%.
Rewards are instant too.
Metz in the show tells about the mechanics of Cashback + Pay and Sink is the articulate evangelist.
Also on the show in a cameo is Andrea Holland, who handles communications for Prizeout.
Listen up.
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Welcome to the CU2.0 podcast.
SPEAKER_00:Hi, and welcome to the CU2.0 podcast with big new ideas about credit unions and conversations about innovative technology with credit union and fintech leaders. This podcast is brought to you by Quillo, the real-time loan syndication network for credit unions, and by your host, longtime credit union and financial technology journalist, Robert McGarvey. And now, the CU2.0 podcast with Robert McGarvey.
SPEAKER_04:25% cash back on an Amazon purchase. 35% Mac at Kroger. Now do I have your attention? And this is cash back on a debit card. You thought debit card cash back vanished a decade ago? It had. But now it just may be coming back. Coming back big time. On the show are David Metz, CEO of PrizeOut, an innovator in ad tech, and he is here to talk about a new product, Cashback Plus Pay. Also on the show is Amy Sink, CEO of Interra Credit Union, an Indiana institution with assets around$2 billion that is an investor in the PrizeOut CUSO. As for those eye-popping cashback purchases, they're real, and both were enjoyed by Interra members who had signed up for Cashback Plus Pay Relate Sync. They were short-term, too. They were real. According to Priceout, the first group of credit unions now live with Cashback Plus Pay, including Interra, Michigan State Federal Credit Union, United Financial Credit Union, Golden One Credit Union, and People Driven Credit Union. Cashback rates vary sometimes by day, often by a member's particular demographic. But, says Metz, the usual rate now is averaging 6.8%. Rewards are instant, too. Metz tells about the mechanics of cashback plus pay in the show, and Sink is the articulate evangelist. Also on the show is, in a cameo, is Andrea Holland, who handles communications for Price App. It's a good show, and it persuaded me that There is future for cash back on a debit card. Listen up. Good. I always like talking to you. In college, I majored in philosophy, and one of the core philosophical principles is ex nihilo nihil fit, out of nothing, nothing comes. And along comes David Metz, and he says, wow, I can make something come out of nothing. I find that intriguing. I'm not saying, therefore, you can't do it.
SPEAKER_03:And look where we are today. We've evolved.
SPEAKER_01:Now it's rewards programs for debit cards, soon to be credit cards. It's members being able to earn money on things that they would buy. Anyway, it's going to be a buy local strategy here in my credit union shortly, eventually.
SPEAKER_04:How are you going to make that happen?
SPEAKER_01:Well, I think the big thing, Robert, is... we have to get the members used to the product. So we have to get them in using the things that they normally buy. So gas, groceries, you know, targets, the things that they go to. But we are a, we have a lot of commercial, small commercial loans here. We are a very, and so, and I would love for my Main Street people to be able to put this into their, into their product line and us to be able to help them subsidize it with some of our, you know, no different than we do with other things that we give them, you know, a better rate here, a part of a triangle of use our card, come to the Ace Hardware store, and, you know, be an Interim member. And, you know, so that buy local strategy. We had to start, though, with the members being used to the product. We couldn't start with the businesses using it to that degree. But eventually, that is a goal of ours, mine, to get that into the hands of that buy local. Because I think, I mean, anybody can be put into this product, anybody. So it's not just for the big box stores. It can be a local hot dog vendor. It can be a local, we had a bait and tackle shop that used it. It can be an AIDS hardware store. It can be, you know, clothing stores on our main street. So I think it can be part of our treasury management offering. It's just, I think that's it. We needed to get it into the hands of our members to show them how to use it first, instead of having the businesses being burdened with show them how to use it.
SPEAKER_04:I remember I was one of them. first people to sign up for android pay years ago and it was the only place that took it was whole foods the only place i shopped at and it rarely worked there and no one at the store knew how to talk about a problem nobody right and i was i was more interested in tech so i played with it but no sane person would have done that
SPEAKER_01:right i mean this one this one for them it shouldn't be that difficult. It looks like a Facebook ad, you know, kind of advert, you know, you're putting it together and very, should be very easy for a business. It's just, we did, we need to get, we needed to start with the member instead of starting with the businesses. And I think that's what we've done. And I, I mean, our members are now, what are we close to 2% now, David?
SPEAKER_03:Yeah. Especially since we launched pay. It's really, it's really taking off. It's funny. I did a, I, Vision Day, right? Amy does a once a year Vision Day and I was one of the presenters. And one of the things we talked about was just the adoption of new payments over the years. And it was interesting in my research that, you know, debit cards came out in like 1969, but by like 1985, less than 2% of people actually used it, right? So it's interesting how slowly people are new technologies, that's moving faster just because technology is moving faster, it's becoming easier. But the fact that we've made this inroads this quickly has been really encouraging. But when you're giving people cash back where they normally have never gotten it before, it's a lot easier, right? Because use your debit card, get nothing, use pay and get cash back on average around 7%, which is pretty cool.
SPEAKER_02:I'll just chime in right now because I don't know when you want to officially start it, but I know obviously you've covered our initial QSO. You're familiar with the announcement. You spoke to Suncoast back at the time. You've covered the launch of Cashback Plus initially, and then in addition, the QSO expansion. So we've kind of kept you up to date as we've gone here along our own journey and roadmap of the company and the product and the partners that we brought on. So this latest announcement that we're going to be going out with next week is the called Pay. And so it's really an expansion of our current ecosystem, which both of them are here to talk to you about today, what it is, what it looks like, and then Amy specifically, how it's been with their members so far and also within the credit
SPEAKER_04:union. The tape was rolling. So, you know, debit rewards basically vanished around 2015. So talking six, 7% today, that's a pretty big deal. It's a big number. That said, I looked up Amazon marketing budget for last year and an estimate was$24 billion and change. So they got a few bucks to throw at something like this. Is Amazon involved in this, by the way?
SPEAKER_01:They gave us 25% for one day on a Saturday for all of my members.
SPEAKER_04:That is cool. That is really cool. I wish I wish I'd been in India.
SPEAKER_01:Exactly. It was a surprise thing. And we throw up and see, that's the cool thing about a product like this is, you know, working with David, working with his team, we can run, you know, kind of these these types of surprise events or things that are unplanned and give, you know, give it now, you know, take money. I mean, basically taking money from Amazon. Right. But I mean, who doesn't want to take money from Amazon? I mean, my
SPEAKER_04:point is that if they're spending twenty four billion on marketing. This is just another part of that marketing. So we don't buy that hat on Facebook. Okay, fine. We'll throw the money into this. That's
SPEAKER_01:right. And I think that our members, you know, once they got the, you know, once they get that and yeah, it was getting, so that was part of the cashback plus rollout, right? For us was throwing that kind of a surprise, you know, ad for our members and sending it through a few different things and trying to let it go viral with some other, you know, some of our employees and some of our members saying, oh my gosh, Interra's got, you know, this great product. You should download this thing. And people are like, I can't find it. I don't know where it is. Show me how to find it. And, you know, I was even sending it to my, I sent it to my board members and they're like, how do I get it? How do I find it? And, you know, because everybody wanted, you know, who doesn't want to get 25% from Amazon? So it is one of those fun things. That's what we need to make it be like. Payments need to be fun in financial services and, you know, get them to, you know, somewhat how to game it so that then they start to use it even on a regular basis. And I think that was part of it. So Amazon, what other one did we do, David? We did another one.
SPEAKER_05:Okay.
SPEAKER_01:Kroger. Oh, yeah. I missed the Kroger one. I waited too long. We did it for 24 hours with Kroger. And that one was 25, 35% at Kroger.
SPEAKER_04:At a grocery store where the margin is paper thin.
SPEAKER_01:I know. And again, people were like, I mean, who doesn't want 35% off of their groceries?
SPEAKER_04:No, that's, I would have run down there too. I never shop at Kroger.
SPEAKER_01:I never shop at Kroger. But I mean, how many of my employees and my members need that type of, you know, boost? It's phenomenal. And if we can run things like that and give people access to things, that's what we're here for. And I love it. I love that mentality of being, and no, is it there every day? No, but Kroger's on the list
SPEAKER_04:every day. Oh, you're getting me used to using it. That's it. Yeah, so what Discover Card does is every quarter they have a 5% category. And I only use that card in one quarter of the year. Their training hasn't worked for me. But yes, I'm attracted to that 5%. David, do any of your other credit unions, are they doing things this ambitious?
SPEAKER_03:Yeah, so we went live with Interra first. Just recently went live with MSU. A week ago, we went live with Golden One. And we have Langley and Suncoast up next. We're moving pretty quickly. Would it be helpful if I kind of just walk you through what Pay is? Yeah, sure. Sure. Pay is actually a standalone app that we built. We've walked through a couple of times the core product where members can log on to their online banking and buy digital gift cards. What started to happen is... Power users started to emerge and they wanted to use gift cards for more and more everyday spend. But the issue was like, how do I get it faster? Because a lot of times they're standing in line at Kroger or Walmart. And a lot of times you're reliant on online banking or core and like, it just, it wasn't fast enough. So we work with our credit union, like how do we build a standalone app where it's a much more consistent and fast process? Because if we want people to change their their spending habits, they need to get the gift card instantly. So we built a standalone app and this app members from any credit union, as long as they're part of a prize out partner can download the app and they'll see their credit union on there. They'll click on the credit union and they'll actually log on and connect their checking account to the app. So whenever they go in store, they just click on the merchant and they type in the exact amount. So if they're at Walmart and it's$97 and 23 cents, They just type it in and within a second, the gift card appears. Now they're earning cash back on average 7% on every transaction. And because they're paying with their checking account, it's the same thing as if them paying with their debit card. The only difference is now they're paying through this app and they're earning cash back on all their purchases. And for debit card users for a long, long time, like you said, since 2015, they haven't been rewarded. And now they're getting rewarded on things like groceries and everyday spend And people that have downloaded it made a purchase with one of those merchants. So let's say they purchased OnPay Kroger. What happens now is 60% of their previous debit spend on Kroger now goes entirely through the app. So it's basically replacing their debit card altogether, which is pretty cool. It's great because the member's now getting cash back and the credit union's making more non-interest income off of it than if they just swipe their debit card and gotten on it and got interchange off of it. So everyone's walking away a winner.
SPEAKER_04:So you're dismantling the traditional debit rails though, right? Yes. And I'm sure that overjoys the folks at Visa and MasterCard.
SPEAKER_03:Well, when I say everyone walks away a winner, not everyone exactly.
SPEAKER_04:Yeah. Yeah. And how do you work this magic? I mean, these rails, the Visa MasterCard rails, they're reliable, well-established, blah, blah, blah.
SPEAKER_03:It's interesting because gift cards is the only thing in the world that's universally accepted everywhere, but doesn't live on the Visa and MasterCard rails, right? You can walk into any merchant online or offline and you can pay with a gift card. So it is a form of currency, but it doesn't live on the Visa and MasterCard rail. So we're just levering that behavior and allowing consumers to pay that way. It just has never been thought of that way. It's always been thought of me giving Amy a gift card for her birthday. It's really never been thought of as self-use. So we just took something that has always existed and just really redefined it.
SPEAKER_01:Well, and I think that's where David's team has been so good at listening to how our members need it to work. And instead of it being, you know, like he added this cashback plus because they saw the need of the speed at the membership being at the location and being like it. I needed it sooner. I couldn't wait for it to hit my account and then open it and do all of these steps. This is more seamless and it makes it, it's like paying with your card. You open up the Cashback Plus, you type in the dollar amount and there you go. And once the member gets the hang of that, they know that they're saving money. And It was so easy. I just looked to make sure that the vendor that I'm at is on there. And then that's all you do. So I think David's team, we've evolved this as credit unions because David's team has listened and helped us as a partner build these tools.
SPEAKER_04:Are there any caps on how much reward a member can get? I'm thinking about, I have an Amex rewards card that Groceries, you can get your 5% back up to$5,000 worth of groceries, something like that. But there is a cap on it.
SPEAKER_03:So the only cap is gift card laws. So you're only allowed to spend$5,000 a day per merchant on a gift card, right? So you can only spend$5,000 in one day at Kroger. So that's the only cap is what the gift card laws are. But$5,000 on one merchant a day is pretty reasonable. What if
SPEAKER_04:I go to the Apple store and my bill is$7,000? What happens then?
SPEAKER_03:In that case, you would do$5,000 on pay and then you'd pay the rest with your... So
SPEAKER_04:have them bring it up in two transactions. Yes.
SPEAKER_03:The only time we get those kind of numbers really is we've kind of dominated travel in the credit union, especially in the cruise space, because we're giving 10, 15% on the major cruise lines. So if you're spending, you know, four or$5,000 on cruises and you're getting 10, 15%, that's real money back. So that's the only time we really see it in any single day transaction. Do
SPEAKER_04:you have Carnival and Royal Caribbean? We do. Wow. that's uh silversea which is a rough ribbing cruise a couple can easily spend 10 grand
SPEAKER_01:oh yeah
SPEAKER_04:oh for
SPEAKER_01:sure oh yeah we've had we've had employees that are like we can't even believe how much money we saved just putting that on there um the one the other one is uh airbnb people buy airbnb money all the time
SPEAKER_04:how much how much back on airbnb
SPEAKER_01:You're
SPEAKER_04:going to hurt me on this because I've recently spent like three or four grand on
SPEAKER_03:Airbnb. It's been as high as 20%. Let
SPEAKER_01:me check. I'll check today. I'll give you, because it changes all the time. That's the other thing. You got to check all the time.
SPEAKER_03:Robert, April Clobus at the CEO of MSU told me recently that They've had a few new members join because they heard about the cashback on travel, specifically cruises. So they've gotten new members because word got out of the kind of cashback you're able to get on it, which is pretty cool.
SPEAKER_01:Mine is currently at six, though, for Airbnb. But see, the other thing, Robert, is that you might know this. It does it based on demographics and your your market. So like my son lives in Chicago and, you know, sometimes my Instacart for getting me giving Mike is like 10, 11, 12 percent. But when he opens his up, it's like eight. And so I will buy it because they're trying to get me as a consumer on Instacart and his demographics, not as much. Right. So it kind of just depends on where you are and who you are that there because these people, they throw money at different parts of the demographic. So I like that, too. We like the fact that it's different for different people.
SPEAKER_04:It's interesting. Yeah. Cruise lines, I'm sure part of their motivations, they'd love to disintermediate travel agents who are getting 10 percent. So if I give 10% to a consumer who's buying directly, it's a wash in my mind if I'm a cruise executive.
SPEAKER_03:Yeah. Also, Robert, remember the merchant's not paying interchange as well. So they're saving on that as well. So why do you only have a handful of credit unions, David? Come on, man. No, no,
SPEAKER_04:no. You're giving away money. You have a little money printing press downstairs.
SPEAKER_03:We have about 35 credit unions live. We're just now rolling out the pay feature.
SPEAKER_04:I'm talking about, this is the most exciting thing. Every time we've talked, you come up with a new wrinkle. It's more exciting, but you're kind of outdoing yourself this time.
SPEAKER_03:I know. I got to go on a pilgrimage and think about what's next, right? We're not going to, we try not to bother you unless we have exciting news, Robert.
SPEAKER_04:No, Andrew is very good about that. If she gets in touch, she usually has something that interests me. This is free money. And it's adding some life to a debit card. which is cool.
SPEAKER_03:Well, what's pretty cool is we had a CUSO meeting a couple of months ago, and one of the stats we shared is that we're giving on average around 7% on every transaction. That's 2.7 times more cash back than any of the big banks can give. That's on credit card, right? We're giving it for debit use, right? For checking account, right?
SPEAKER_04:And kids like debit cards. They don't like credit cards. Kids, I mean anybody under 30. Well,
SPEAKER_03:that's what's interesting is that like a lot, you know, when I first started working with credit unions, I didn't realize how much of the country just uses debit card. And then when you really dig in, it's not necessarily because they don't qualify. A lot of the people are just like, I don't want to get in trouble. So they're actually doing the right thing, right? They don't want to tempt themselves, but they're also, until we came along, weren't getting rewarded for that. So it's nice to be able to give not only some reward, but more reward than even the big banks can give for being smart about your money and spending through debit. So that's been an unintended benefit about all this, which is pretty cool.
SPEAKER_04:Now, what's to stop Chase from saying, hey, this David guy's doing something smart. Let's figure out what he's doing and let's do it ourselves too, but not involve you.
SPEAKER_03:That good luck. Big banks are like aircraft carriers. It takes days for them to turn or move or pivot. You know, the... One of the reasons that Amy and the other credit unions ended up investing in us is that they wanted to have more control, right? Like if you were going to build together, we don't want necessarily the next day like selling to Capital One or Bank of America or something like that, right? So it's usually at least my experience and from the stories I've heard, like credit unions are always like second or third adopting new technology. And now they're not only... adopting their leading, right? Like they're at the forefront of this, which is, which is pretty cool.
SPEAKER_01:Yeah.
SPEAKER_04:Owners in the Q zone. So they're not. Customers.
SPEAKER_01:Right. We wanted to give him a speed bump to at least think about us before he took a big check from somebody. Robert. So, I mean, I think, and David obviously is in charge and he can, he can make, you know, adjustments to his business as he needs, but we as a CUSO board, you know, give him some guidance on, and, you know, clearly there's quite a few people, as you know, in the marketplace from credit union side that we think should be using this. And so that's the, that's really the next step is getting more, more credit unions involved. But, you know, somebody like, I mean, in my and, you know, different QSOs over time, my worry was all of a sudden they get, it's not that Chase or B of A come up with their own product. They come and they buy his. Yeah. And then they kick us all out because they don't really want to run. They don't want us in it. They just want us. They want to take us out. Or somebody like Visa or MasterCard comes along and says, hey, wait a minute. Who is this guy? And why are they not using the Visa rails?
UNKNOWN:Right.
SPEAKER_01:Same thing. They come and they they try and take somebody like that out, which, again, David's in charge. But as a as the QSO, we we want to keep growing and, you know, helping him change this product so that he can see that it can be successful and and grow and, you know, the value of. continue to grow for not only him and the investors, because there are other investors besides credit unions included in this. But that's part of the process is to keep growing and building more value.
SPEAKER_04:The lead credit unions now and pay are multi-billion dollar credit unions. Amy, do you think, do smaller credit unions have a role in this? Can they get involved in this?
SPEAKER_01:I think we've, of course, leaned on the big credit unions up front, which I think is smart because we've got to get the volumes. We've got to get the people with the big shops. As this product matures, I think you can go down the line, but not right now. David's got to get, he had to get all the links built with all the home banking. So he had to get the big alchemies. He had to get the credit unions that had the value propositions to make, he's got Lumen, he's got Alchemy, he's got Q2, he's got DNC,
SPEAKER_05:NCR,
SPEAKER_01:Jack Henry, all those people had to be in. The small credit unions couldn't pull enough to get that to happen. Now, if we've got a Q2 credit union that comes along and just wants in, David can let them in.
SPEAKER_04:Right. Also, a credit union your size, you can peel off an experienced executive to be heavily involved in implementing this program. And a$500 million credit union, I don't think they have that person available right now. Now, if you have a compelling story which you're developing, don't make a person available.
SPEAKER_01:Well, I think the other thing though is, you know, a credit union my size, I also, so I don't run a big IT shop where somebody like MSU, they have a much bigger, you know, back office side. So they do things working with David that gives David a lot of experience working with that size credit union, where my credit union still can be a little more nimble and say, David, show us how you want this to go in. So I I think we both give David some advantages by doing it and having the different sizes of shops. And I think that's important for David, learning the space and learning the different credit unions that some of us can get things implemented very quickly because we don't have a lot of overhead to get it through. And others are like, no, they want to check and do different things inside their credit unions. both of which give David a clear insight into how he can grow the company even faster.
SPEAKER_04:Now, how did you persuade your members? I admit if you offer me 25% or something at Amazon, I don't need too much persuasion. How did you persuade them that there's some reality here?
SPEAKER_01:Well, I think the first thing, Robert, is getting the team. I mean, my team, it's understanding, and I've shared this story with others, We as credit unions have always focused on product and we sell product much better. How many times do you get a car loan in your lifetime? Four, five, six. How many times do you buy a house? You know, two, three times. Payments you're doing every day. So this particular product, we have to fight every day for payments. And the payments drive what? deposits. We're all in the market for low-cost deposits, and low-cost deposits are a finite resource. And what the big banks have the biggest share of is the low cost deposits. And that's what's going to have to keep growing our industry. And if we're not fighting for payments every day, we're going to lose low cost deposits. So not only is this a payment side where we're fighting for, you know, how is Amy Sink spending her money every day? Because Amy Sink used to just come to my branch, put in her direct deposit, get a debit card, maybe a credit card. And then we just let her go. We didn't talk to her at all unless she wanted a car loan or a mortgage loan. Now we have to talk to Amy Sink all the time. And we have to have things that are compelling for Amy Sink to have because Venmo is there and McDonald's app is there and Starbucks app is there. And guess what? They're taking my payments and they're now taking my deposits. So I have to fight every day. So why do I get, how do I get people? I give them a 25% Amazon and I say, you have to spend this with cash back plus. And guess what that means? It has to be in your entire account.
SPEAKER_04:Cool. Cool. David, merchant enrollment. How easy is that? I mean, you have experience at doing this, so.
SPEAKER_03:Before we even started working with credit unions, we worked in lots of different industries. So it's not like we had this idea and then we needed to get the merchants. In the other industries we worked in years before we started working with credit unions, we already built up a really big base. of merchants. So that was helpful to kind of hit the ground running. And then it's all about making sure we're integrated with the point of sales. So we're integrated with companies like Square and Shopify, WooCommerce. So like they have millions and millions of merchants. So instead of having to go one by one, you integrate with their point of sale and then you instantly get access to them. So that's kind of been our strategy to be able to scale up merchants.
SPEAKER_04:Now, what's the fee structure for a credit union that's involved in this?
SPEAKER_03:They only pay a SAS fee for the pay product, but the money that they make off of the rev share that we give them on every single purchase more than offsets that. So not only are they neutral in it, they end up making more money than there is cost.
SPEAKER_04:So why would a credit union say no?
SPEAKER_03:It's a good question.
SPEAKER_01:I think part of it is the understanding of, one, you have to get it past the term gift card, right? You have to get past that. Because other people just look at it like, I don't need gift cards. And it's way more than that.
SPEAKER_04:I give gift cards to relatives. to whom I don't know what to give a present. Okay, here's a gift card
SPEAKER_01:for you. You'll love it. You have to get into that payments world and you have to get it into the, it's going to impact your deposits. It's a rewards program for your debit card. It's a rewards program for your credit card. I think once we get it into that space, and that's really the space that I think David has, I mean, David and his team have, they've heard us, they've listened to the credit unions and said, we can do that. And that every single time I turn this on, I am every, I'm always shocked at the number of merchants that keep getting added. And I'm also shocked at, oh my gosh, that was like, I turned on the Amazon the other day and I was, I can't remember even how I got in there. And the little icon followed me. It just was there. And I would, I was able to hit that button and pay right away. And it's amazing how that stuff keeps changing all the time. And that's just David and his team. you know, hearing. So I think they've, once we get it to spots where the, you know, the credit unions that have been doing this have really been vested in getting this to work and work and work well and easy. And, you know, there's that, you know, like we, when we ran the Amazon, I had people, you know, like I told my, I told my chief experience officer, I said, do not listen to what anybody said that's negative. This was all good. Hear what they're saying a negative, give the negatives to David because they need to fix that. They need to work on those things. But for From my perspective, you do that all day long. Just let it go. Don't think, just do. Just let it happen. We have to let people get used to this. There will be people that are like, I couldn't get it to work, or I didn't like this, or this wasn't in there. It's like, who cares? I mean, every time I go to one of these vendors, there's always something that I get wrong with it. You know, some of it's, most of it's my fault. And other times it's the vendors. But I always tell David, like, he took out Taco Bell because Taco Bell was terrible. I'm like, Taco Bell's terrible. And he's like, yeah.
SPEAKER_04:The food or the payments process? I think the food's terrible.
SPEAKER_01:The food is terrible. The food is terrible. My family is a lover of Taco Bell. I am a terrible, I hate Taco Bell. But it was terrible vendor for David's group.
SPEAKER_03:Okay.
SPEAKER_01:Terrible for you. I agree with you. It's terrible.
SPEAKER_03:Robert, I was just thinking about something you said about why the big banks focusing on that. And I think the reason is because they don't care about debit card. Nobody cares about debit card. They're all fighting over credit card,
SPEAKER_04:right? But now the big banks are concerned, David, and you know this better than I do, that the rates will go down because merchants like Walmart are pushing a bill through Congress. Where it goes, I don't know. that would result
SPEAKER_03:in this. Interchange is a race to the bottom for sure.
SPEAKER_04:Yeah. And so if I'm a bank, I look at this and say, well, this is an interesting way to pump light into a debit card and get me some new revenues.
SPEAKER_03:I agree. But what's interesting is that the merchants and the banks are fighting, right, over interchange. Oh, viciously. And what's fascinating is in this system, both walk away happy. because the merchant views it as customer acquisition, not a toll that they have to pay regardless and they have no say. The merchants are setting what they pay for what type of person. So they actually have control over it. And then obviously the banks like it because they're still making revenue off of it and they're able to pass on a large portion of that to their members. So in this case, they're both happy. We're an interchange, they're both fighting to the death.
SPEAKER_04:Well, I have a Chase Amazon card. 5% back at Amazon and Whole Foods. I think I've never used it anyplace else. It's not 5% anyplace else. And Amazon, this is just 5%.
SPEAKER_03:They don't care. They're great. They'll shop a little more with us. You'll end up spending more money at Amazon because of that card.
SPEAKER_04:Oh, I do. I do. And they give me pretty much instant cash back to it. There's like a day delay or something. It was pretty quick.
SPEAKER_01:That's another reason. We have a credit union that's involved, Robert, that does have a cashback program with Amazon specifically. So they're like, oh, we don't really need Amazon in it because we've got our own. It's like, well, how the credit unions position this product throughout is up to them, right? But sometimes you hear those competing things within credit unions that say, yeah, we already have some things with vendors. It's like, okay. Yeah. I mean, I agree with you. I mean, once David gives the pitch and then they hear some of the people that are doing it, usually sells itself.
SPEAKER_04:Well, I think what's particularly exciting, and you've started by talking about this, Amy, is selling local merchants. And I know Michigan State Federal Credit Union is really into selling local merchants on a different program than this, but I'm sure that same energy would extend to this.
SPEAKER_03:And we're already working with them on that, which is exciting. Especially, you know, they have such a concentration, especially with their students and faculty. So there's huge opportunity there.
SPEAKER_04:Yeah, and that's exciting. I mean, it helps these local merchants survive in the age of Amazon and Walmart.
SPEAKER_03:Yeah, people want to support local, right? We just have to make it easy for them to do it and rewarding to do it as well.
SPEAKER_01:And when you got to know, the members have to know that it's there. Once the members know, they start looking for the different. And if you can then give that merchant, that local merchant, that Cash Pack Plus logo, and the member sees it and goes, I have that. then it starts to make sense. So I think we're, we're all kind of going for the same type of thing. It's just a matter of getting, we had to get our members. We didn't want the businesses to bear the burden of, Hey, do you have that entire cash back plus thing?
SPEAKER_04:Right.
SPEAKER_01:Hey, no,
SPEAKER_04:this, this product is so cool. And I see a lot of cool things. I'm almost tempted to look at that. The participating credit unions sign up with. Yeah.
SPEAKER_03:I would recommend, I know the CEO of Interra. We'd be glad
SPEAKER_01:to have you, Robert.
SPEAKER_04:I mean, it's, I just, my credit union affinity, I don't think is involved with you at all,
SPEAKER_03:David. Well, when we post this on LinkedIn, we'll make sure we tag them.
SPEAKER_01:You know, I think the other thing, Robert, is when we sign up as a CUSO, and this, I don't think a lot of credit union people understand this. And I think it goes to your point of why. So, As a CUSO and my credit union, what's my product? My product is cash. So if I can give David a million dollars to help build a tool that's gonna save me or give me access to more fee income, how much does somebody pay for a rewards product on a regular basis? The reason we all stopped doing cash back on debit cards is because it was costing us hundreds of thousands of dollars if not from like a suncoast, millions of dollars a month. On this product, I can give him and invest in the company for a million dollars or whatever the credit union's percentage is of where they're going. And then I pay that SAS fee. On top of this, I get fee income. I can't pay anybody for that kind of a product. Literally, I cannot pay anybody to do that, which is it's frustrating to me that when credit unions look at this, they'll go and pay Fiserv millions of dollars a month to do something horribly worse than what this is. Yet they can't look at past and say, I need to give a million dollars and invest it in this QSO. When you start looking at what we invest in and should invest in as credit unions, it's products like this that have a payback period that is incredibly easy to calculate. And my monthly expense for this type of a product, if I paid for it anywhere else, I'm way outstripping. Even if, which is not going to happen, even if all of the money were to be gone, I have gotten my million dollars back. The ROI is way past that. And that's not going to happen. But credit unions sometimes look at these things as an investment, like I need to get a certain ROI back just from that investment. They stop looking at what the expense savings is. And that's the real, the real economics is not only is David providing us service that I, the cashback plus that I don't have to pay for, like I have$700 sitting in my cashback plus account right now that I earned from the merchants. I didn't pay a nickel for that. They did. David didn't give me a nickel for that. I didn't pay a nickel for that. I love that. How much did I have to... I gave this as my investment into the CUSO. I've already gotten my money back. I think that's one of the downsides of people not understanding the CUSO model. That some people just get into these things as they're going to just get money back. If you're a user of the CUSO... and an investor, it's a huge advantage.
SPEAKER_04:Yeah, I've been saying to people, credit union people, who are all up in a frenzy about possibly losing federal tax exemption, that to me, CUSO is a vastly more important tool than the federal tax exemption.
SPEAKER_01:I agree with
SPEAKER_04:that. Banks just don't have anything like the CUSO system.
SPEAKER_01:Nope. No, it's very powerful. It's very
SPEAKER_04:powerful. I don't see Bank of America and Chase joining together to talk with a guy like David. I just don't see them in the same room. Unless they're having a free-for-all match, winner take all. Before we go, think hard about how you can help support this podcast so we can do more interviews with more thoughtful leaders in the credit union world. What we're trying to figure out here in these podcasts is what's next for credit unions. What can they do to really, really, really make a difference in the financial scene? Can't all be mega banks, can it? It's my hope it won't all be mega banks. It'll always be a place for credit unions. That's what we're discussing here. So figure out how you can help. Get in touch with me. This is rjmcgarvey at gmail.com. Robert McGarvey again. That's rjmcgarvey at gmail.com. Get in touch. We'll figure out a way that you can help. We need your support. We want your support. We thank you for your support. The CU2.0 Podcast.