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1st Ed Credit Union

Situation: Debit and Credit Card Security Breaches Cause Credit Union to Rethink Card Vendor Contract

Following the security breach of debit and credit cards at multiple national retail outlets in 2013 and 2014, the leadership of 1st Ed Credit Union of Chambersburg, PA, became concerned regarding the lack of support it was receiving from its current card processing vendor. According to 1st Ed Credit Union CEO Kelly Childress, “We didn’t feel that we were getting the assistance we needed from our services provider to address important security issues as a result of the latest breaches – like identifying cards that had been compromised and providing assistance to the card holders.” The vendor also had been uncooperative with the credit union regarding other problems related to its debit and credit card services.

Contract and negotiations expertise benefits small institution
So credit union management decided that something had to be done to address their concerns. While they had discussed the possibility of changing vendors, they knew this would be difficult to handle as a small asset credit union. “With a staff of just 18 employees, we felt it would have been impossible to have conducted an in-depth contract review and a thorough search to find a replacement on our own,” commented Childress.

To access the expertise she believed would be required to get the credit union’s desired outcomes, Childress contacted JMFA for a review of the existing card processor contract. Institution management met with JMFA to discuss their security concerns, along with their objectives to improve overall support and contract terms, reduce costs and increase the quality of member services.

With those goals in mind, JMFA completed a thorough contract review and presented the credit union with a list of potential new vendors for consideration. Included on JMFA’s list were a few companies that the credit union had asked to be considered, along with others they didn’t know. Surprisingly, JMFA also presented the name of the company the credit union was already using for its ATM services. Until this point, institution leadership were unaware this company provided card processing services.

Solution: Substantial savings, better contract terms, improved member service and even increased security can result from renegotiating credit and debit card vendor contracts.

According to Childress, it was extremely helpful that JMFA’s contract experts kept her apprised throughout the process and provided recommendations – based on their industry knowledge and contract expertise – that were very beneficial to the credit union, including:

  • a thorough review of the existing credit and debit card vendor contract;
  • a list of alternative vendor options that met all product and service needs;
  • a new provider contract that included substantial savings in processing costs;
  • additional services that will greatly benefit members; and
  • access to technology that will help the institution provide its members with greater card security in the future.
A full understanding of the options leads to benefits for the credit union and its members

With the information JMFA provided, Childress was able to make an informed decision when determining how to get better overall card processing results. Based on JMFA’s contract negotiations with the new vendor, the credit union will benefit from an annual saving of $48,000. And although the current vendor contract runs until December 2015, credit union employees are very excited about working with the new card processing provider.

The new vendor has already included credit union personnel in webinars to help them get up-to-speed on EMV technology requirements, which will be effective in October 2015. In addition, the company will help the credit union with a marketing portal and provide new card features for members such as the ability to use their smart phones to manage features as well as monitor spending habits. Members will also greatly benefit from other great promotions and a robust rewards program that their previous vendor did not offer. 

“The marketing portal will save us a lot of time and effort since we don’t have an internal marketing department,” Childress explained. “Plus, they offer after-hours support to provide members with immediate access to information about account balances and recent transactions that we don’t have with our current provider,” she added.
Satisfying results lead to additional contract review partnership
Childress is grateful for the time JMFA consultants spent explaining the different provider proposals to help the institution get the best possible contract for its card processing service. ”It would have been overwhelming to have had to review all of the different vendor information, since we’re not accustomed to looking at those types of documents,” she said.

In fact, based on the successful experience of negotiating the new card processing contract, the credit union has begun working with JMFA on a core conversion project.

About JMFA

JMFA is a leading provider of profitability and performance-improvement consulting. For more than 35 years, JMFA has been recognized as one of the most trusted names in the industry, helping financial institutions reach their goals. JMFA is recognized for earnings enhancement and expense control programs, executive placement, as well as product, service, pricing and technology-improvement consulting. Simply stated, JMFA’s programs and services are designed to increase income or reduce expenses. JMFA is proud to be a preferred provider for performance-enhancement consulting services among many industry groups.

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