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.
Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_04 (00:00):
Welcome to the CU2.0 podcast.
SPEAKER_00 (00:05):
Hi, and welcome to the CU2.0 podcast with big new
ideas about credit unions andconversations about innovative
technology with credit union andfintech leaders.
This podcast is brought to youby Quillo, the real-time loan
syndication network for creditunions, and by your host,
longtime credit union andfinancial technology journalist,
(00:27):
Robert McGarvey.
And now, the CU2.0 podcast withRobert McGarvey.
SPEAKER_04 (00:33):
25% cash back on an Amazon purchase.
35% Mac at Kroger.
Now do I have your attention?
And this is cash back on a debitcard.
You thought debit card cash backvanished a decade ago?
It had.
But now it just may be comingback.
(00:53):
Coming back big time.
On the show are David Metz, CEOof PrizeOut, an innovator in ad
tech, and he is here to talkabout a new product, Cashback
Plus Pay.
Also on the show is Amy Sink,CEO of Interra Credit Union, an
Indiana institution with assetsaround$2 billion that is an
(01:15):
investor in the PrizeOut CUSO.
As for those eye-poppingcashback purchases, they're
real, and both were enjoyed byInterra members who had signed
up for Cashback Plus Pay RelateSync.
They were short-term, too.
They were real.
According to Priceout, the firstgroup of credit unions now live
with Cashback Plus Pay,including Interra, Michigan
(01:38):
State Federal Credit Union,United Financial Credit Union,
Golden One Credit Union, andPeople Driven Credit Union.
Cashback rates vary sometimes byday, often by a member's
particular demographic.
But, says Metz, the usual ratenow is averaging 6.8%.
Rewards are instant, too.
(01:59):
Metz tells about the mechanicsof cashback plus pay in the
show, and Sink is the articulateevangelist.
Also on the show is, in a cameo,is Andrea Holland, who handles
communications for Price App.
It's a good show, and itpersuaded me that There is
future for cash back on a debitcard.
Listen up.
(02:20):
Good.
I always like talking to you.
In college, I majored inphilosophy, and one of the core
philosophical principles is exnihilo nihil fit, out of
nothing, nothing comes.
And along comes David Metz, andhe says, wow, I can make
something come out of nothing.
I find that intriguing.
I'm not saying, therefore, youcan't do it.
SPEAKER_03 (02:41):
And look where we are today.
We've evolved.
SPEAKER_01 (02:43):
Now it's rewards programs for debit cards, soon
to be credit cards.
It's members being able to earnmoney on things that they would
buy.
Anyway, it's going to be a buylocal strategy here in my credit
union shortly, eventually.
SPEAKER_04 (03:00):
How are you going to make that happen?
SPEAKER_01 (03:04):
Well, I think the big thing, Robert, is...
we have to get the members usedto the product.
So we have to get them in usingthe 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 ofcommercial, small commercial
loans here.
We are a very, and so, and Iwould love for my Main Street
(03:27):
people to be able to put thisinto their, into their product
line and us to be able to helpthem subsidize it with some of
our, you know, no different thanwe do with other things that we
give them, you know, a betterrate here, a part of a triangle
of use our card, come to the AceHardware store, and, you know,
(03:49):
be an Interim member.
And, you know, so that buy localstrategy.
We had to start, though, withthe members being used to the
product.
We couldn't start with thebusinesses using it to that
degree.
But eventually, that is a goalof ours, mine, to get that into
the hands of that buy local.
Because I think, I mean, anybodycan be put into this product,
(04:10):
anybody.
So it's not just for the big boxstores.
It can be a local hot dogvendor.
It can be a local, we had a baitand tackle shop that used it.
It can be an AIDS hardwarestore.
It can be, you know, clothingstores on our main street.
So I think it can be part of ourtreasury management offering.
It's just, I think that's it.
We needed to get it into thehands of our members to show
(04:33):
them how to use it first,instead of having the businesses
being burdened with show themhow to use it.
SPEAKER_04 (04:39):
I remember I was one of them.
first people to sign up forandroid pay years ago and it was
the only place that took it waswhole foods the only place i
shopped at and it rarely workedthere and no one at the store
knew how to talk about a problemnobody right and i was i was
more interested in tech so iplayed with it but no sane
(05:01):
person would have done that
SPEAKER_01 (05:03):
right i mean this one this one for them it
shouldn't be that difficult.
It looks like a Facebook ad, youknow, kind of advert, you know,
you're putting it together andvery, should be very easy for a
business.
It's just, we did, we need toget, we needed to start with the
member instead of starting withthe businesses.
And I think that's what we'vedone.
And I, I mean, our members arenow, what are we close to 2%
(05:23):
now, David?
SPEAKER_03 (05:26):
Yeah.
Especially since we launchedpay.
It's really, it's really takingoff.
It's funny.
I did a, I, Vision Day, right?
Amy does a once a year VisionDay and I was one of the
presenters.
And one of the things we talkedabout was just the adoption of
new payments over the years.
And it was interesting in myresearch that, you know, debit
(05:48):
cards came out in like 1969, butby like 1985, less than 2% of
people actually used it, right?
So it's interesting how slowlypeople are new technologies,
that's moving faster justbecause technology is moving
faster, it's becoming easier.
But the fact that we've madethis inroads this quickly has
(06:10):
been really encouraging.
But when you're giving peoplecash back where they normally
have never gotten it before,it's a lot easier, right?
Because use your debit card, getnothing, use pay and get cash
back on average around 7%, whichis pretty cool.
SPEAKER_02 (06:25):
I'll just chime in right now because I don't know
when you want to officiallystart it, but I know obviously
you've covered our initial QSO.
You're familiar with theannouncement.
You spoke to Suncoast back atthe time.
You've covered the launch ofCashback Plus initially, and
then in addition, the QSOexpansion.
So we've kind of kept you up todate as we've gone here along
our own journey and roadmap ofthe company and the product and
(06:45):
the partners that we brought on.
So this latest announcement thatwe're going to be going out with
next week is the called Pay.
And so it's really an expansionof our current ecosystem, which
both of them are here to talk toyou about today, what it is,
what it looks like, and then Amyspecifically, how it's been with
their members so far and alsowithin the credit
SPEAKER_04 (07:05):
union.
The tape was rolling.
So, you know, debit rewardsbasically vanished around 2015.
So talking six, 7% today, that'sa pretty big deal.
It's a big number.
That said, I looked up Amazonmarketing budget for last year
and an estimate was$24 billionand change.
(07:26):
So they got a few bucks to throwat something like this.
Is Amazon involved in this, bythe way?
SPEAKER_01 (07:31):
They gave us 25% for one day on a Saturday for all of
my members.
SPEAKER_04 (07:36):
That is cool.
That is really cool.
I wish I wish I'd been in India.
SPEAKER_01 (07:41):
Exactly.
It was a surprise thing.
And we throw up and see, that'sthe cool thing about a product
like this is, you know, workingwith David, working with his
team, we can run, you know, kindof these these types of surprise
events or things that areunplanned and give, you know,
give it now, you know, takemoney.
I mean, basically taking moneyfrom Amazon.
(08:02):
Right.
But I mean, who doesn't want totake money from Amazon?
I mean, my
SPEAKER_04 (08:06):
point is that if they're spending twenty four
billion on marketing.
This is just another part ofthat marketing.
So we don't buy that hat onFacebook.
Okay, fine.
We'll throw the money into this.
That's
SPEAKER_01 (08:18):
right.
And I think that our members,you know, once they got the, you
know, once they get that andyeah, it was getting, so that
was part of the cashback plusrollout, right?
For us was throwing that kind ofa surprise, you know, ad for our
members and sending it through afew different things and trying
to let it go viral with someother, you know, some of our
(08:39):
employees and some of ourmembers saying, oh my gosh,
Interra's got, you know, thisgreat product.
You should download this thing.
And people are like, I can'tfind it.
I don't know where it is.
Show me how to find it.
And, you know, I was evensending it to my, I sent it to
my board members and they'relike, how do I get it?
How do I find it?
And, you know, because everybodywanted, you know, who doesn't
want to get 25% from Amazon?
So it is one of those funthings.
(09:02):
That's what we need to make itbe like.
Payments need to be fun infinancial services and, you
know, get them to, you know,somewhat how to game it so that
then they start to use it evenon a regular basis.
And I think that was part of it.
So Amazon, what other one did wedo, David?
We did another one.
SPEAKER_05 (09:18):
Okay.
SPEAKER_01 (09:19):
Kroger.
Oh, yeah.
I missed the Kroger one.
I waited too long.
We did it for 24 hours withKroger.
And that one was 25, 35% atKroger.
SPEAKER_04 (09:28):
At a grocery store where the margin is paper thin.
SPEAKER_01 (09:32):
I know.
And again, people were like, Imean, who doesn't want 35% off
of their groceries?
SPEAKER_04 (09:40):
No, that's, I would have run down there too.
I never shop at Kroger.
SPEAKER_01 (09:44):
I never shop at Kroger.
But I mean, how many of myemployees and my members need
that type of, you know, boost?
It's phenomenal.
And if we can run things likethat and give people access to
things, that's what we're herefor.
And I love it.
I love that mentality of being,and no, is it there every day?
(10:04):
No, but Kroger's on the list
SPEAKER_04 (10:06):
every day.
Oh, you're getting me used tousing it.
That's it.
Yeah, so what Discover Card doesis every quarter they have a 5%
category.
And I only use that card in onequarter of the year.
Their training hasn't worked forme.
But yes, I'm attracted to that5%.
David, do any of your othercredit unions, are they doing
(10:30):
things this ambitious?
SPEAKER_03 (10:33):
Yeah, so we went live with Interra first.
Just recently went live withMSU.
A week ago, we went live withGolden One.
And we have Langley and Suncoastup next.
We're moving pretty quickly.
Would it be helpful if I kind ofjust walk you through what Pay
is?
Yeah, sure.
Sure.
Pay is actually a standalone appthat we built.
(10:57):
We've walked through a couple oftimes the core product where
members can log on to theironline banking and buy digital
gift cards.
What started to happen is...
Power users started to emergeand they wanted to use gift
cards for more and more everydayspend.
But the issue was like, how do Iget it faster?
Because a lot of times they'restanding in line at Kroger or
(11:19):
Walmart.
And a lot of times you'rereliant on online banking or
core and like, it just, itwasn't fast enough.
So we work with our creditunion, like how do we build a
standalone app where it's a muchmore consistent and fast
process?
Because if we want people tochange their their spending
habits, they need to get thegift card instantly.
(11:39):
So we built a standalone app andthis app members from any credit
union, as long as they're partof a prize out partner can
download the app and they'll seetheir credit union on there.
They'll click on the creditunion and they'll actually log
on and connect their checkingaccount to the app.
So whenever they go in store,they just click on the merchant
(12:00):
and they type in the exactamount.
So if they're at Walmart andit's$97 and 23 cents, They just
type it in and within a second,the gift card appears.
Now they're earning cash back onaverage 7% on every transaction.
And because they're paying withtheir checking account, it's the
same thing as if them payingwith their debit card.
The only difference is nowthey're paying through this app
(12:23):
and they're earning cash back onall their purchases.
And for debit card users for along, long time, like you said,
since 2015, they haven't beenrewarded.
And now they're getting rewardedon things like groceries and
everyday spend And people thathave downloaded it made a
purchase with one of thosemerchants.
So let's say they purchasedOnPay Kroger.
(12:44):
What happens now is 60% of theirprevious debit spend on Kroger
now goes entirely through theapp.
So it's basically replacingtheir debit card altogether,
which is pretty cool.
It's great because the member'snow getting cash back and the
credit union's making morenon-interest income off of it
than if they just swipe theirdebit card and gotten on it and
(13:06):
got interchange off of it.
So everyone's walking away awinner.
SPEAKER_04 (13:10):
So you're dismantling the traditional
debit rails though, right?
Yes.
And I'm sure that overjoys thefolks at Visa and MasterCard.
SPEAKER_03 (13:21):
Well, when I say everyone walks away a winner,
not everyone exactly.
SPEAKER_04 (13:25):
Yeah.
Yeah.
And how do you work this magic?
I mean, these rails, the VisaMasterCard rails, they're
reliable, well-established,blah, blah, blah.
SPEAKER_03 (13:36):
It's interesting because gift cards is the only
thing in the world that'suniversally accepted everywhere,
but doesn't live on the Visa andMasterCard rails, right?
You can walk into any merchantonline or offline and you can
pay with a gift card.
So it is a form of currency, butit doesn't live on the Visa and
MasterCard rail.
So we're just levering thatbehavior and allowing consumers
(14:00):
to pay that way.
It just has never been thoughtof that way.
It's always been thought of megiving Amy a gift card for her
birthday.
It's really never been thoughtof as self-use.
So we just took something thathas always existed and just
really redefined it.
SPEAKER_01 (14:16):
Well, and I think that's where David's team has
been so good at listening to howour members need it to work.
And instead of it being, youknow, like he added this
cashback plus because they sawthe need of the speed at the
membership being at the locationand being like it.
(14:37):
I needed it sooner.
I couldn't wait for it to hit myaccount and then open it and do
all of these steps.
This is more seamless and itmakes 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 thehang of that, they know that
(14:59):
they're saving money.
And It was so easy.
I just looked to make sure thatthe vendor that I'm at is on
there.
And then that's all you do.
So I think David's team, we'veevolved this as credit unions
because David's team haslistened and helped us as a
partner build these tools.
SPEAKER_04 (15:18):
Are there any caps on how much reward a member can
get?
I'm thinking about, I have anAmex 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 (15:39):
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 inone day at Kroger.
So that's the only cap is whatthe gift card laws are.
(16:01):
But$5,000 on one merchant a dayis pretty reasonable.
What if
SPEAKER_04 (16:07):
I go to the Apple store and my bill is$7,000?
What happens then?
SPEAKER_03 (16:12):
In that case, you would do$5,000 on pay and then
you'd pay the rest with your...
So
SPEAKER_04 (16:20):
have them bring it up in two transactions.
Yes.
SPEAKER_03 (16:22):
The only time we get those kind of numbers really is
we've kind of dominated travelin the credit union, especially
in the cruise space, becausewe'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'sreal money back.
So that's the only time wereally see it in any single day
(16:45):
transaction.
Do
SPEAKER_04 (16:46):
you have Carnival and Royal Caribbean?
We do.
Wow.
that's uh silversea which is arough ribbing cruise a couple
can easily spend 10 grand
SPEAKER_01 (16:58):
oh yeah
SPEAKER_04 (16:59):
oh for
SPEAKER_01 (17:00):
sure oh yeah we've had we've had employees that are
like we can't even believe howmuch money we saved just putting
that on there um the one theother one is uh airbnb people
buy airbnb money all the time
SPEAKER_04 (17:14):
how much how much back on airbnb
SPEAKER_01 (17:16):
You're
SPEAKER_04 (17:17):
going to hurt me on this because I've recently spent
like three or four grand on
SPEAKER_03 (17:22):
Airbnb.
It's been as high as 20%.
Let
SPEAKER_01 (17:27):
me check.
I'll check today.
I'll give you, because itchanges all the time.
That's the other thing.
You got to check all the time.
SPEAKER_03 (17:34):
Robert, April Clobus at the CEO of MSU told me
recently that They've had a fewnew members join because they
heard about the cashback ontravel, specifically cruises.
So they've gotten new membersbecause word got out of the kind
of cashback you're able to geton it, which is pretty cool.
SPEAKER_01 (17:53):
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 demographicsand your your market.
So like my son lives in Chicagoand, you know, sometimes my
Instacart for getting me givingMike is like 10, 11, 12 percent.
(18:16):
But when he opens his up, it'slike eight.
And so I will buy it becausethey're trying to get me as a
consumer on Instacart and hisdemographics, not as much.
Right.
So it kind of just depends onwhere 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.
(18:36):
We like the fact that it'sdifferent for different people.
SPEAKER_04 (18:40):
It's interesting.
Yeah.
Cruise lines, I'm sure part oftheir motivations, they'd love
to disintermediate travel agentswho are getting 10 percent.
So if I give 10% to a consumerwho's buying directly, it's a
wash in my mind if I'm a cruiseexecutive.
SPEAKER_03 (18:55):
Yeah.
Also, Robert, remember themerchant's not paying
interchange as well.
So they're saving on that aswell.
So why do you only have ahandful of credit unions, David?
Come on, man.
No, no,
SPEAKER_04 (19:05):
no.
You're giving away money.
You have a little money printingpress downstairs.
SPEAKER_03 (19:09):
We have about 35 credit unions live.
We're just now rolling out thepay feature.
SPEAKER_04 (19:16):
I'm talking about, this is the most exciting thing.
Every time we've talked, youcome up with a new wrinkle.
It's more exciting, but you'rekind of outdoing yourself this
time.
SPEAKER_03 (19:25):
I know.
I got to go on a pilgrimage andthink about what's next, right?
We're not going to, we try notto bother you unless we have
exciting news, Robert.
SPEAKER_04 (19:34):
No, Andrew is very good about that.
If she gets in touch, sheusually has something that
interests me.
This is free money.
And it's adding some life to adebit card.
which is cool.
SPEAKER_03 (19:47):
Well, what's pretty cool is we had a CUSO meeting a
couple of months ago, and one ofthe stats we shared is that
we're giving on average around7% on every transaction.
That's 2.7 times more cash backthan any of the big banks can
give.
That's on credit card, right?
We're giving it for debit use,right?
(20:08):
For checking account, right?
SPEAKER_04 (20:10):
And kids like debit cards.
They don't like credit cards.
Kids, I mean anybody under 30.
Well,
SPEAKER_03 (20:16):
that's what's interesting is that like a lot,
you know, when I first startedworking with credit unions, I
didn't realize how much of thecountry 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 justlike, I don't want to get in
trouble.
So they're actually doing theright thing, right?
They don't want to temptthemselves, but they're also,
(20:37):
until we came along, weren'tgetting rewarded for that.
So it's nice to be able to givenot only some reward, but more
reward than even the big bankscan give for being smart about
your money and spending throughdebit.
So that's been an unintendedbenefit about all this, which is
pretty cool.
SPEAKER_04 (20:54):
Now, what's to stop Chase from saying, hey, this
David guy's doing somethingsmart.
Let's figure out what he's doingand let's do it ourselves too,
but not involve you.
SPEAKER_03 (21:04):
That good luck.
Big banks are like aircraftcarriers.
It takes days for them to turnor move or pivot.
You know, the...
One of the reasons that Amy andthe other credit unions ended up
investing in us is that theywanted to have more control,
right?
Like if you were going to buildtogether, we don't want
(21:26):
necessarily the next day likeselling to Capital One or Bank
of America or something likethat, right?
So it's usually at least myexperience and from the stories
I've heard, like credit unionsare always like second or third
adopting new technology.
And now they're not only...
adopting their leading, right?
Like they're at the forefront ofthis, which is, which is pretty
(21:48):
cool.
SPEAKER_01 (21:49):
Yeah.
SPEAKER_04 (21:49):
Owners in the Q zone.
So they're not.
Customers.
SPEAKER_01 (21:54):
Right.
We wanted to give him a speedbump to at least think about us
before he took a big check fromsomebody.
Robert.
So, I mean, I think, and Davidobviously is in charge and he
can, he can make, you know,adjustments to his business as
he needs, but we as a CUSOboard, you know, give him some
guidance on, and, you know,clearly there's quite a few
people, as you know, in themarketplace from credit union
(22:16):
side that we think should beusing this.
And so that's the, that's reallythe next step is getting more,
more credit unions involved.
But, you know, somebody like, Imean, in my and, you know,
different QSOs over time, myworry was all of a sudden they
get, it's not that Chase or B ofA come up with their own
product.
They come and they buy his.
(22:37):
Yeah.
And then they kick us all outbecause 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 orMasterCard comes along and says,
hey, wait a minute.
Who is this guy?
And why are they not using theVisa rails?
UNKNOWN (22:53):
Right.
SPEAKER_01 (22:53):
Same thing.
They come and they they try andtake somebody like that out,
which, again, David's in charge.
But as a as the QSO, we we wantto keep growing and, you know,
helping him change this productso that he can see that it can
be successful and and grow and,you know, the value of.
(23:15):
continue to grow for not onlyhim and the investors, because
there are other investorsbesides credit unions included
in this.
But that's part of the processis to keep growing and building
more value.
SPEAKER_04 (23:28):
The lead credit unions now and pay are
multi-billion dollar creditunions.
Amy, do you think, do smallercredit unions have a role in
this?
Can they get involved in this?
SPEAKER_01 (23:39):
I think we've, of course, leaned on the big credit
unions up front, which I thinkis smart because we've got to
get the volumes.
We've got to get the people withthe big shops.
As this product matures, I thinkyou can go down the line, but
not right now.
David's got to get, he had toget all the links built with all
(24:02):
the home banking.
So he had to get the bigalchemies.
He had to get the credit unionsthat had the value propositions
to make, he's got Lumen, he'sgot Alchemy, he's got Q2, he's
got DNC,
SPEAKER_05 (24:17):
NCR,
SPEAKER_01 (24:19):
Jack Henry, all those people had to be in.
The small credit unions couldn'tpull enough to get that to
happen.
Now, if we've got a Q2 creditunion that comes along and just
wants in, David can let them in.
SPEAKER_04 (24:33):
Right.
Also, a credit union your size,you can peel off an experienced
executive to be heavily involvedin 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 compellingstory which you're developing,
(24:53):
don't make a person available.
SPEAKER_01 (24:55):
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, theyhave a much bigger, you know,
back office side.
So they do things working withDavid that gives David a lot of
experience working with thatsize credit union, where my
(25:16):
credit union still can be alittle more nimble and say,
David, show us how you want thisto go in.
So I I think we both give Davidsome advantages by doing it and
having the different sizes ofshops.
And I think that's important forDavid, learning the space and
learning the different creditunions that some of us can get
(25:37):
things implemented very quicklybecause we don't have a lot of
overhead to get it through.
And others are like, no, theywant to check and do different
things inside their creditunions.
both of which give David a clearinsight into how he can grow the
company even faster.
SPEAKER_04 (25:54):
Now, how did you persuade your members?
I admit if you offer me 25% orsomething at Amazon, I don't
need too much persuasion.
How did you persuade them thatthere's some reality here?
SPEAKER_01 (26:06):
Well, I think the first thing, Robert, is getting
the team.
I mean, my team, it'sunderstanding, and I've shared
this story with others, We ascredit unions have always
focused on product and we sellproduct much better.
How many times do you get a carloan in your lifetime?
Four, five, six.
(26:27):
How many times do you buy ahouse?
You know, two, three times.
Payments you're doing every day.
So this particular product, wehave to fight every day for
payments.
And the payments drive what?
deposits.
We're all in the market forlow-cost deposits, and low-cost
deposits are a finite resource.
(26:50):
And what the big banks have thebiggest share of is the low cost
deposits.
And that's what's going to haveto keep growing our industry.
And if we're not fighting forpayments every day, we're going
to lose low cost deposits.
So not only is this a paymentside where we're fighting for,
you know, how is Amy Sinkspending her money every day?
(27:13):
Because Amy Sink used to justcome to my branch, put in her
direct deposit, get a debitcard, maybe a credit card.
And then we just let her go.
We didn't talk to her at allunless she wanted a car loan or
a mortgage loan.
Now we have to talk to Amy Sinkall the time.
And we have to have things thatare compelling for Amy Sink to
(27:36):
have because Venmo is there andMcDonald's app is there and
Starbucks app is there.
And guess what?
They're taking my payments andthey're now taking my deposits.
So I have to fight every day.
So why do I get, how do I getpeople?
I give them a 25% Amazon and Isay, you have to spend this with
(27:57):
cash back plus.
And guess what that means?
It has to be in your entireaccount.
SPEAKER_04 (28:03):
Cool.
Cool.
David, merchant enrollment.
How easy is that?
I mean, you have experience atdoing this, so.
SPEAKER_03 (28:12):
Before we even started working with credit
unions, we worked in lots ofdifferent industries.
So it's not like we had thisidea and then we needed to get
the merchants.
In the other industries weworked in years before we
started working with creditunions, we already built up a
really big base.
of merchants.
So that was helpful to kind ofhit the ground running.
(28:33):
And then it's all about makingsure we're integrated with the
point of sales.
So we're integrated withcompanies like Square and
Shopify, WooCommerce.
So like they have millions andmillions of merchants.
So instead of having to go oneby one, you integrate with their
point of sale and then youinstantly get access to them.
So that's kind of been ourstrategy to be able to scale up
(28:54):
merchants.
SPEAKER_04 (28:57):
Now, what's the fee structure for a credit union
that's involved in this?
SPEAKER_03 (29:01):
They only pay a SAS fee for the pay product, but the
money that they make off of therev share that we give them on
every single purchase more thanoffsets that.
So not only are they neutral init, they end up making more
money than there is cost.
SPEAKER_04 (29:20):
So why would a credit union say no?
SPEAKER_03 (29:23):
It's a good question.
SPEAKER_01 (29:24):
I think part of it is the understanding of, one,
you have to get it past the termgift card, right?
You have to get past that.
Because other people just lookat it like, I don't need gift
cards.
And it's way more than that.
SPEAKER_04 (29:40):
I give gift cards to relatives.
to whom I don't know what togive a present.
Okay, here's a gift card
SPEAKER_01 (29:47):
for you.
You'll love it.
You have to get into thatpayments world and you have to
get it into the, it's going toimpact your deposits.
It's a rewards program for yourdebit card.
It's a rewards program for yourcredit card.
I think once we get it into thatspace, and that's really the
space that I think David has, Imean, David and his team have,
they've heard us, they'velistened to the credit unions
(30:10):
and said, we can do that.
And that every single time Iturn this on, I am every, I'm
always shocked at the number ofmerchants that keep getting
added.
And I'm also shocked at, oh mygosh, that was like, I turned on
the Amazon the other day and Iwas, 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 hitthat button and pay right away.
(30:33):
And it's amazing how that stuffkeeps changing all the time.
And that's just David and histeam.
you know, hearing.
So I think they've, once we getit to spots where the, you know,
the credit unions that have beendoing this have really been
vested in getting this to workand work and work well and easy.
And, you know, there's that, youknow, like we, when we ran the
(30:55):
Amazon, I had people, you know,like I told my, I told my chief
experience officer, I said, donot listen to what anybody said
that's negative.
This was all good.
Hear what they're saying anegative, give the negatives to
David because they need to fixthat.
They need to work on thosethings.
But for From my perspective, youdo that all day long.
Just let it go.
Don't think, just do.
(31:15):
Just let it happen.
We have to let people get usedto this.
There will be people that arelike, I couldn't get it to work,
or I didn't like this, or thiswasn't in there.
It's like, who cares?
I mean, every time I go to oneof these vendors, there's always
something that I get wrong withit.
You know, some of it's, most ofit's my fault.
And other times it's thevendors.
(31:37):
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 (31:44):
The food or the payments process?
I think the food's terrible.
SPEAKER_01 (31:48):
The food is terrible.
The food is terrible.
My family is a lover of TacoBell.
I am a terrible, I hate TacoBell.
But it was terrible vendor forDavid's group.
SPEAKER_03 (31:58):
Okay.
SPEAKER_01 (31:59):
Terrible for you.
I agree with you.
It's terrible.
SPEAKER_03 (32:01):
Robert, I was just thinking about something you
said about why the big banksfocusing on that.
And I think the reason isbecause they don't care about
debit card.
Nobody cares about debit card.
They're all fighting over creditcard,
SPEAKER_04 (32:14):
right?
But now the big banks areconcerned, David, and you know
this better than I do, that therates will go down because
merchants like Walmart arepushing a bill through Congress.
Where it goes, I don't know.
that would result
SPEAKER_03 (32:29):
in this.
Interchange is a race to thebottom for sure.
SPEAKER_04 (32:31):
Yeah.
And so if I'm a bank, I look atthis and say, well, this is an
interesting way to pump lightinto a debit card and get me
some new revenues.
SPEAKER_03 (32:42):
I agree.
But what's interesting is thatthe merchants and the banks are
fighting, right, overinterchange.
Oh, viciously.
And what's fascinating is inthis system, both walk away
happy.
because the merchant views it ascustomer acquisition, not a toll
that they have to pay regardlessand they have no say.
(33:03):
The merchants are setting whatthey pay for what type of
person.
So they actually have controlover it.
And then obviously the bankslike it because they're still
making revenue off of it andthey're able to pass on a large
portion of that to theirmembers.
So in this case, they're bothhappy.
We're an interchange, they'reboth fighting to the death.
SPEAKER_04 (33:25):
Well, I have a Chase Amazon card.
5% back at Amazon and WholeFoods.
I think I've never used itanyplace else.
It's not 5% anyplace else.
And Amazon, this is just 5%.
SPEAKER_03 (33:39):
They don't care.
They're great.
They'll shop a little more withus.
You'll end up spending moremoney at Amazon because of that
card.
SPEAKER_04 (33:45):
Oh, I do.
I do.
And they give me pretty muchinstant cash back to it.
There's like a day delay orsomething.
It was pretty quick.
SPEAKER_01 (33:52):
That's another reason.
We have a credit union that'sinvolved, Robert, that does have
a cashback program with Amazonspecifically.
So they're like, oh, we don'treally need Amazon in it because
we've got our own.
It's like, well, how the creditunions position this product
throughout is up to them, right?
But sometimes you hear thosecompeting things within credit
(34:15):
unions that say, yeah, wealready have some things with
vendors.
It's like, okay.
Yeah.
I mean, I agree with you.
I mean, once David gives thepitch and then they hear some of
the people that are doing it,usually sells itself.
SPEAKER_04 (34:29):
Well, I think what's particularly exciting, and
you've started by talking aboutthis, Amy, is selling local
merchants.
And I know Michigan StateFederal Credit Union is really
into selling local merchants ona different program than this,
but I'm sure that same energywould extend to this.
SPEAKER_03 (34:46):
And we're already working with them on that, which
is exciting.
Especially, you know, they havesuch a concentration, especially
with their students and faculty.
So there's huge opportunitythere.
SPEAKER_04 (34:56):
Yeah, and that's exciting.
I mean, it helps these localmerchants survive in the age of
Amazon and Walmart.
SPEAKER_03 (35:04):
Yeah, people want to support local, right?
We just have to make it easy forthem to do it and rewarding to
do it as well.
SPEAKER_01 (35:11):
And when you got to know, the members have to know
that it's there.
Once the members know, theystart looking for the different.
And if you can then give thatmerchant, that local merchant,
that Cash Pack Plus logo, andthe member sees it and goes, I
have that.
then it starts to make sense.
So I think we're, we're all kindof going for the same type of
(35:32):
thing.
It's just a matter of getting,we had to get our members.
We didn't want the businesses tobear the burden of, Hey, do you
have that entire cash back plusthing?
SPEAKER_04 (35:42):
Right.
SPEAKER_01 (35:42):
Hey, no,
SPEAKER_04 (35:43):
this, this product is so cool.
And I see a lot of cool things.
I'm almost tempted to look atthat.
The participating credit unionssign up with.
Yeah.
SPEAKER_03 (35:53):
I would recommend, I know the CEO of Interra.
We'd be glad
SPEAKER_01 (35:58):
to have you, Robert.
SPEAKER_04 (35:59):
I mean, it's, I just, my credit union affinity,
I don't think is involved withyou at all,
SPEAKER_03 (36:05):
David.
Well, when we post this onLinkedIn, we'll make sure we tag
them.
SPEAKER_01 (36:09):
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 yourpoint of why.
So, As a CUSO and my creditunion, what's my product?
My product is cash.
So if I can give David a milliondollars to help build a tool
(36:33):
that's gonna save me or give meaccess to more fee income, how
much does somebody pay for arewards product on a regular
basis?
The reason we all stopped doingcash back on debit cards is
because it was costing ushundreds of thousands of dollars
if not from like a suncoast,millions of dollars a month.
(36:56):
On this product, I can give himand invest in the company for a
million dollars or whatever thecredit union's percentage is of
where they're going.
And then I pay that SAS fee.
On top of this, I get feeincome.
I can't pay anybody for thatkind of a product.
(37:17):
Literally, I cannot pay anybodyto do that, which is it's
frustrating to me that whencredit unions look at this,
they'll go and pay Fiservmillions of dollars a month to
do something horribly worse thanwhat this is.
Yet they can't look at past andsay, I need to give a million
(37:38):
dollars and invest it in thisQSO.
When you start looking at whatwe invest in and should invest
in as credit unions, it'sproducts like this that have a
payback period that isincredibly easy to calculate.
And my monthly expense for thistype of a product, if I paid for
it anywhere else, I'm wayoutstripping.
(37:58):
Even if, which is not going tohappen, even if all of the money
were to be gone, I have gottenmy million dollars back.
The ROI is way past that.
And that's not going to happen.
But credit unions sometimes lookat these things as an
investment, like I need to get acertain ROI back just from that
(38:19):
investment.
They stop looking at what theexpense savings is.
And that's the real, the realeconomics is not only is David
providing us service that I, thecashback plus that I don't have
to pay for, like I have$700sitting in my cashback plus
account right now that I earnedfrom the merchants.
(38:40):
I didn't pay a nickel for that.
They did.
David didn't give me a nickelfor that.
I didn't pay a nickel for that.
I love that.
How much did I have to...
I gave this as my investmentinto the CUSO.
I've already gotten my moneyback.
I think that's one of thedownsides of people not
understanding the CUSO model.
(39:02):
That some people just get intothese things as they're going to
just get money back.
If you're a user of the CUSO...
and an investor, it's a hugeadvantage.
SPEAKER_04 (39:13):
Yeah, I've been saying to people, credit union
people, who are all up in afrenzy about possibly losing
federal tax exemption, that tome, CUSO is a vastly more
important tool than the federaltax exemption.
SPEAKER_01 (39:26):
I agree with
SPEAKER_04 (39:27):
that.
Banks just don't have anythinglike the CUSO system.
SPEAKER_01 (39:32):
Nope.
No, it's very powerful.
It's very
SPEAKER_04 (39:35):
powerful.
I don't see Bank of America andChase joining together to talk
with a guy like David.
I just don't see them in thesame room.
Unless they're having afree-for-all match, winner take
all.
Before we go, think hard abouthow you can help support this
podcast so we can do moreinterviews with more thoughtful
(39:57):
leaders in the credit unionworld.
What we're trying to figure outhere 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 bemega banks.
It'll always be a place forcredit unions.
That's what we're discussinghere.
(40:17):
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 youcan help.
We need your support.
We want your support.
We thank you for your support.
The CU2.0 Podcast.
Welcome to the CU2.0 podcast.
SPEAKER_00 (00:05):
Hi, and welcome to the CU2.0 podcast with big new
ideas about credit unions andconversations about innovative
technology with credit union andfintech leaders.
This podcast is brought to youby Quillo, the real-time loan
syndication network for creditunions, and by your host,
longtime credit union andfinancial technology journalist,
(00:27):
Robert McGarvey.
And now, the CU2.0 podcast withRobert McGarvey.
SPEAKER_04 (00:33):
25% cash back on an Amazon purchase.
35% Mac at Kroger.
Now do I have your attention?
And this is cash back on a debitcard.
You thought debit card cash backvanished a decade ago?
It had.
But now it just may be comingback.
(00:53):
Coming back big time.
On the show are David Metz, CEOof PrizeOut, an innovator in ad
tech, and he is here to talkabout a new product, Cashback
Plus Pay.
Also on the show is Amy Sink,CEO of Interra Credit Union, an
Indiana institution with assetsaround$2 billion that is an
(01:15):
investor in the PrizeOut CUSO.
As for those eye-poppingcashback purchases, they're
real, and both were enjoyed byInterra members who had signed
up for Cashback Plus Pay RelateSync.
They were short-term, too.
They were real.
According to Priceout, the firstgroup of credit unions now live
with Cashback Plus Pay,including Interra, Michigan
(01:38):
State Federal Credit Union,United Financial Credit Union,
Golden One Credit Union, andPeople Driven Credit Union.
Cashback rates vary sometimes byday, often by a member's
particular demographic.
But, says Metz, the usual ratenow is averaging 6.8%.
Rewards are instant, too.
(01:59):
Metz tells about the mechanicsof cashback plus pay in the
show, and Sink is the articulateevangelist.
Also on the show is, in a cameo,is Andrea Holland, who handles
communications for Price App.
It's a good show, and itpersuaded me that There is
future for cash back on a debitcard.
Listen up.
(02:20):
Good.
I always like talking to you.
In college, I majored inphilosophy, and one of the core
philosophical principles is exnihilo nihil fit, out of
nothing, nothing comes.
And along comes David Metz, andhe says, wow, I can make
something come out of nothing.
I find that intriguing.
I'm not saying, therefore, youcan't do it.
SPEAKER_03 (02:41):
And look where we are today.
We've evolved.
SPEAKER_01 (02:43):
Now it's rewards programs for debit cards, soon
to be credit cards.
It's members being able to earnmoney on things that they would
buy.
Anyway, it's going to be a buylocal strategy here in my credit
union shortly, eventually.
SPEAKER_04 (03:00):
How are you going to make that happen?
SPEAKER_01 (03:04):
Well, I think the big thing, Robert, is...
we have to get the members usedto the product.
So we have to get them in usingthe 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 ofcommercial, small commercial
loans here.
We are a very, and so, and Iwould love for my Main Street
(03:27):
people to be able to put thisinto their, into their product
line and us to be able to helpthem subsidize it with some of
our, you know, no different thanwe do with other things that we
give them, you know, a betterrate here, a part of a triangle
of use our card, come to the AceHardware store, and, you know,
(03:49):
be an Interim member.
And, you know, so that buy localstrategy.
We had to start, though, withthe members being used to the
product.
We couldn't start with thebusinesses using it to that
degree.
But eventually, that is a goalof ours, mine, to get that into
the hands of that buy local.
Because I think, I mean, anybodycan be put into this product,
(04:10):
anybody.
So it's not just for the big boxstores.
It can be a local hot dogvendor.
It can be a local, we had a baitand tackle shop that used it.
It can be an AIDS hardwarestore.
It can be, you know, clothingstores on our main street.
So I think it can be part of ourtreasury management offering.
It's just, I think that's it.
We needed to get it into thehands of our members to show
(04:33):
them how to use it first,instead of having the businesses
being burdened with show themhow to use it.
SPEAKER_04 (04:39):
I remember I was one of them.
first people to sign up forandroid pay years ago and it was
the only place that took it waswhole foods the only place i
shopped at and it rarely workedthere and no one at the store
knew how to talk about a problemnobody right and i was i was
more interested in tech so iplayed with it but no sane
(05:01):
person would have done that
SPEAKER_01 (05:03):
right i mean this one this one for them it
shouldn't be that difficult.
It looks like a Facebook ad, youknow, kind of advert, you know,
you're putting it together andvery, should be very easy for a
business.
It's just, we did, we need toget, we needed to start with the
member instead of starting withthe businesses.
And I think that's what we'vedone.
And I, I mean, our members arenow, what are we close to 2%
(05:23):
now, David?
SPEAKER_03 (05:26):
Yeah.
Especially since we launchedpay.
It's really, it's really takingoff.
It's funny.
I did a, I, Vision Day, right?
Amy does a once a year VisionDay and I was one of the
presenters.
And one of the things we talkedabout was just the adoption of
new payments over the years.
And it was interesting in myresearch that, you know, debit
(05:48):
cards came out in like 1969, butby like 1985, less than 2% of
people actually used it, right?
So it's interesting how slowlypeople are new technologies,
that's moving faster justbecause technology is moving
faster, it's becoming easier.
But the fact that we've madethis inroads this quickly has
(06:10):
been really encouraging.
But when you're giving peoplecash back where they normally
have never gotten it before,it's a lot easier, right?
Because use your debit card, getnothing, use pay and get cash
back on average around 7%, whichis pretty cool.
SPEAKER_02 (06:25):
I'll just chime in right now because I don't know
when you want to officiallystart it, but I know obviously
you've covered our initial QSO.
You're familiar with theannouncement.
You spoke to Suncoast back atthe time.
You've covered the launch ofCashback Plus initially, and
then in addition, the QSOexpansion.
So we've kind of kept you up todate as we've gone here along
our own journey and roadmap ofthe company and the product and
(06:45):
the partners that we brought on.
So this latest announcement thatwe're going to be going out with
next week is the called Pay.
And so it's really an expansionof our current ecosystem, which
both of them are here to talk toyou about today, what it is,
what it looks like, and then Amyspecifically, how it's been with
their members so far and alsowithin the credit
SPEAKER_04 (07:05):
union.
The tape was rolling.
So, you know, debit rewardsbasically vanished around 2015.
So talking six, 7% today, that'sa pretty big deal.
It's a big number.
That said, I looked up Amazonmarketing budget for last year
and an estimate was$24 billionand change.
(07:26):
So they got a few bucks to throwat something like this.
Is Amazon involved in this, bythe way?
SPEAKER_01 (07:31):
They gave us 25% for one day on a Saturday for all of
my members.
SPEAKER_04 (07:36):
That is cool.
That is really cool.
I wish I wish I'd been in India.
SPEAKER_01 (07:41):
Exactly.
It was a surprise thing.
And we throw up and see, that'sthe cool thing about a product
like this is, you know, workingwith David, working with his
team, we can run, you know, kindof these these types of surprise
events or things that areunplanned and give, you know,
give it now, you know, takemoney.
I mean, basically taking moneyfrom Amazon.
(08:02):
Right.
But I mean, who doesn't want totake money from Amazon?
I mean, my
SPEAKER_04 (08:06):
point is that if they're spending twenty four
billion on marketing.
This is just another part ofthat marketing.
So we don't buy that hat onFacebook.
Okay, fine.
We'll throw the money into this.
That's
SPEAKER_01 (08:18):
right.
And I think that our members,you know, once they got the, you
know, once they get that andyeah, it was getting, so that
was part of the cashback plusrollout, right?
For us was throwing that kind ofa surprise, you know, ad for our
members and sending it through afew different things and trying
to let it go viral with someother, you know, some of our
(08:39):
employees and some of ourmembers saying, oh my gosh,
Interra's got, you know, thisgreat product.
You should download this thing.
And people are like, I can'tfind it.
I don't know where it is.
Show me how to find it.
And, you know, I was evensending it to my, I sent it to
my board members and they'relike, how do I get it?
How do I find it?
And, you know, because everybodywanted, you know, who doesn't
want to get 25% from Amazon?
So it is one of those funthings.
(09:02):
That's what we need to make itbe like.
Payments need to be fun infinancial services and, you
know, get them to, you know,somewhat how to game it so that
then they start to use it evenon a regular basis.
And I think that was part of it.
So Amazon, what other one did wedo, David?
We did another one.
SPEAKER_05 (09:18):
Okay.
SPEAKER_01 (09:19):
Kroger.
Oh, yeah.
I missed the Kroger one.
I waited too long.
We did it for 24 hours withKroger.
And that one was 25, 35% atKroger.
SPEAKER_04 (09:28):
At a grocery store where the margin is paper thin.
SPEAKER_01 (09:32):
I know.
And again, people were like, Imean, who doesn't want 35% off
of their groceries?
SPEAKER_04 (09:40):
No, that's, I would have run down there too.
I never shop at Kroger.
SPEAKER_01 (09:44):
I never shop at Kroger.
But I mean, how many of myemployees and my members need
that type of, you know, boost?
It's phenomenal.
And if we can run things likethat and give people access to
things, that's what we're herefor.
And I love it.
I love that mentality of being,and no, is it there every day?
(10:04):
No, but Kroger's on the list
SPEAKER_04 (10:06):
every day.
Oh, you're getting me used tousing it.
That's it.
Yeah, so what Discover Card doesis every quarter they have a 5%
category.
And I only use that card in onequarter of the year.
Their training hasn't worked forme.
But yes, I'm attracted to that5%.
David, do any of your othercredit unions, are they doing
(10:30):
things this ambitious?
SPEAKER_03 (10:33):
Yeah, so we went live with Interra first.
Just recently went live withMSU.
A week ago, we went live withGolden One.
And we have Langley and Suncoastup next.
We're moving pretty quickly.
Would it be helpful if I kind ofjust walk you through what Pay
is?
Yeah, sure.
Sure.
Pay is actually a standalone appthat we built.
(10:57):
We've walked through a couple oftimes the core product where
members can log on to theironline banking and buy digital
gift cards.
What started to happen is...
Power users started to emergeand they wanted to use gift
cards for more and more everydayspend.
But the issue was like, how do Iget it faster?
Because a lot of times they'restanding in line at Kroger or
(11:19):
Walmart.
And a lot of times you'rereliant on online banking or
core and like, it just, itwasn't fast enough.
So we work with our creditunion, like how do we build a
standalone app where it's a muchmore consistent and fast
process?
Because if we want people tochange their their spending
habits, they need to get thegift card instantly.
(11:39):
So we built a standalone app andthis app members from any credit
union, as long as they're partof a prize out partner can
download the app and they'll seetheir credit union on there.
They'll click on the creditunion and they'll actually log
on and connect their checkingaccount to the app.
So whenever they go in store,they just click on the merchant
(12:00):
and they type in the exactamount.
So if they're at Walmart andit's$97 and 23 cents, They just
type it in and within a second,the gift card appears.
Now they're earning cash back onaverage 7% on every transaction.
And because they're paying withtheir checking account, it's the
same thing as if them payingwith their debit card.
The only difference is nowthey're paying through this app
(12:23):
and they're earning cash back onall their purchases.
And for debit card users for along, long time, like you said,
since 2015, they haven't beenrewarded.
And now they're getting rewardedon things like groceries and
everyday spend And people thathave downloaded it made a
purchase with one of thosemerchants.
So let's say they purchasedOnPay Kroger.
(12:44):
What happens now is 60% of theirprevious debit spend on Kroger
now goes entirely through theapp.
So it's basically replacingtheir debit card altogether,
which is pretty cool.
It's great because the member'snow getting cash back and the
credit union's making morenon-interest income off of it
than if they just swipe theirdebit card and gotten on it and
(13:06):
got interchange off of it.
So everyone's walking away awinner.
SPEAKER_04 (13:10):
So you're dismantling the traditional
debit rails though, right?
Yes.
And I'm sure that overjoys thefolks at Visa and MasterCard.
SPEAKER_03 (13:21):
Well, when I say everyone walks away a winner,
not everyone exactly.
SPEAKER_04 (13:25):
Yeah.
Yeah.
And how do you work this magic?
I mean, these rails, the VisaMasterCard rails, they're
reliable, well-established,blah, blah, blah.
SPEAKER_03 (13:36):
It's interesting because gift cards is the only
thing in the world that'suniversally accepted everywhere,
but doesn't live on the Visa andMasterCard rails, right?
You can walk into any merchantonline or offline and you can
pay with a gift card.
So it is a form of currency, butit doesn't live on the Visa and
MasterCard rail.
So we're just levering thatbehavior and allowing consumers
(14:00):
to pay that way.
It just has never been thoughtof that way.
It's always been thought of megiving Amy a gift card for her
birthday.
It's really never been thoughtof as self-use.
So we just took something thathas always existed and just
really redefined it.
SPEAKER_01 (14:16):
Well, and I think that's where David's team has
been so good at listening to howour members need it to work.
And instead of it being, youknow, like he added this
cashback plus because they sawthe need of the speed at the
membership being at the locationand being like it.
(14:37):
I needed it sooner.
I couldn't wait for it to hit myaccount and then open it and do
all of these steps.
This is more seamless and itmakes 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 thehang of that, they know that
(14:59):
they're saving money.
And It was so easy.
I just looked to make sure thatthe vendor that I'm at is on
there.
And then that's all you do.
So I think David's team, we'veevolved this as credit unions
because David's team haslistened and helped us as a
partner build these tools.
SPEAKER_04 (15:18):
Are there any caps on how much reward a member can
get?
I'm thinking about, I have anAmex 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 (15:39):
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 inone day at Kroger.
So that's the only cap is whatthe gift card laws are.
(16:01):
But$5,000 on one merchant a dayis pretty reasonable.
What if
SPEAKER_04 (16:07):
I go to the Apple store and my bill is$7,000?
What happens then?
SPEAKER_03 (16:12):
In that case, you would do$5,000 on pay and then
you'd pay the rest with your...
So
SPEAKER_04 (16:20):
have them bring it up in two transactions.
Yes.
SPEAKER_03 (16:22):
The only time we get those kind of numbers really is
we've kind of dominated travelin the credit union, especially
in the cruise space, becausewe'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'sreal money back.
So that's the only time wereally see it in any single day
(16:45):
transaction.
Do
SPEAKER_04 (16:46):
you have Carnival and Royal Caribbean?
We do.
Wow.
that's uh silversea which is arough ribbing cruise a couple
can easily spend 10 grand
SPEAKER_01 (16:58):
oh yeah
SPEAKER_04 (16:59):
oh for
SPEAKER_01 (17:00):
sure oh yeah we've had we've had employees that are
like we can't even believe howmuch money we saved just putting
that on there um the one theother one is uh airbnb people
buy airbnb money all the time
SPEAKER_04 (17:14):
how much how much back on airbnb
SPEAKER_01 (17:16):
You're
SPEAKER_04 (17:17):
going to hurt me on this because I've recently spent
like three or four grand on
SPEAKER_03 (17:22):
Airbnb.
It's been as high as 20%.
Let
SPEAKER_01 (17:27):
me check.
I'll check today.
I'll give you, because itchanges all the time.
That's the other thing.
You got to check all the time.
SPEAKER_03 (17:34):
Robert, April Clobus at the CEO of MSU told me
recently that They've had a fewnew members join because they
heard about the cashback ontravel, specifically cruises.
So they've gotten new membersbecause word got out of the kind
of cashback you're able to geton it, which is pretty cool.
SPEAKER_01 (17:53):
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 demographicsand your your market.
So like my son lives in Chicagoand, you know, sometimes my
Instacart for getting me givingMike is like 10, 11, 12 percent.
(18:16):
But when he opens his up, it'slike eight.
And so I will buy it becausethey're trying to get me as a
consumer on Instacart and hisdemographics, not as much.
Right.
So it kind of just depends onwhere 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.
(18:36):
We like the fact that it'sdifferent for different people.
SPEAKER_04 (18:40):
It's interesting.
Yeah.
Cruise lines, I'm sure part oftheir motivations, they'd love
to disintermediate travel agentswho are getting 10 percent.
So if I give 10% to a consumerwho's buying directly, it's a
wash in my mind if I'm a cruiseexecutive.
SPEAKER_03 (18:55):
Yeah.
Also, Robert, remember themerchant's not paying
interchange as well.
So they're saving on that aswell.
So why do you only have ahandful of credit unions, David?
Come on, man.
No, no,
SPEAKER_04 (19:05):
no.
You're giving away money.
You have a little money printingpress downstairs.
SPEAKER_03 (19:09):
We have about 35 credit unions live.
We're just now rolling out thepay feature.
SPEAKER_04 (19:16):
I'm talking about, this is the most exciting thing.
Every time we've talked, youcome up with a new wrinkle.
It's more exciting, but you'rekind of outdoing yourself this
time.
SPEAKER_03 (19:25):
I know.
I got to go on a pilgrimage andthink about what's next, right?
We're not going to, we try notto bother you unless we have
exciting news, Robert.
SPEAKER_04 (19:34):
No, Andrew is very good about that.
If she gets in touch, sheusually has something that
interests me.
This is free money.
And it's adding some life to adebit card.
which is cool.
SPEAKER_03 (19:47):
Well, what's pretty cool is we had a CUSO meeting a
couple of months ago, and one ofthe stats we shared is that
we're giving on average around7% on every transaction.
That's 2.7 times more cash backthan any of the big banks can
give.
That's on credit card, right?
We're giving it for debit use,right?
(20:08):
For checking account, right?
SPEAKER_04 (20:10):
And kids like debit cards.
They don't like credit cards.
Kids, I mean anybody under 30.
Well,
SPEAKER_03 (20:16):
that's what's interesting is that like a lot,
you know, when I first startedworking with credit unions, I
didn't realize how much of thecountry 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 justlike, I don't want to get in
trouble.
So they're actually doing theright thing, right?
They don't want to temptthemselves, but they're also,
(20:37):
until we came along, weren'tgetting rewarded for that.
So it's nice to be able to givenot only some reward, but more
reward than even the big bankscan give for being smart about
your money and spending throughdebit.
So that's been an unintendedbenefit about all this, which is
pretty cool.
SPEAKER_04 (20:54):
Now, what's to stop Chase from saying, hey, this
David guy's doing somethingsmart.
Let's figure out what he's doingand let's do it ourselves too,
but not involve you.
SPEAKER_03 (21:04):
That good luck.
Big banks are like aircraftcarriers.
It takes days for them to turnor move or pivot.
You know, the...
One of the reasons that Amy andthe other credit unions ended up
investing in us is that theywanted to have more control,
right?
Like if you were going to buildtogether, we don't want
(21:26):
necessarily the next day likeselling to Capital One or Bank
of America or something likethat, right?
So it's usually at least myexperience and from the stories
I've heard, like credit unionsare always like second or third
adopting new technology.
And now they're not only...
adopting their leading, right?
Like they're at the forefront ofthis, which is, which is pretty
(21:48):
cool.
SPEAKER_01 (21:49):
Yeah.
SPEAKER_04 (21:49):
Owners in the Q zone.
So they're not.
Customers.
SPEAKER_01 (21:54):
Right.
We wanted to give him a speedbump to at least think about us
before he took a big check fromsomebody.
Robert.
So, I mean, I think, and Davidobviously is in charge and he
can, he can make, you know,adjustments to his business as
he needs, but we as a CUSOboard, you know, give him some
guidance on, and, you know,clearly there's quite a few
people, as you know, in themarketplace from credit union
(22:16):
side that we think should beusing this.
And so that's the, that's reallythe next step is getting more,
more credit unions involved.
But, you know, somebody like, Imean, in my and, you know,
different QSOs over time, myworry was all of a sudden they
get, it's not that Chase or B ofA come up with their own
product.
They come and they buy his.
(22:37):
Yeah.
And then they kick us all outbecause 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 orMasterCard comes along and says,
hey, wait a minute.
Who is this guy?
And why are they not using theVisa rails?
UNKNOWN (22:53):
Right.
SPEAKER_01 (22:53):
Same thing.
They come and they they try andtake somebody like that out,
which, again, David's in charge.
But as a as the QSO, we we wantto keep growing and, you know,
helping him change this productso that he can see that it can
be successful and and grow and,you know, the value of.
(23:15):
continue to grow for not onlyhim and the investors, because
there are other investorsbesides credit unions included
in this.
But that's part of the processis to keep growing and building
more value.
SPEAKER_04 (23:28):
The lead credit unions now and pay are
multi-billion dollar creditunions.
Amy, do you think, do smallercredit unions have a role in
this?
Can they get involved in this?
SPEAKER_01 (23:39):
I think we've, of course, leaned on the big credit
unions up front, which I thinkis smart because we've got to
get the volumes.
We've got to get the people withthe big shops.
As this product matures, I thinkyou can go down the line, but
not right now.
David's got to get, he had toget all the links built with all
(24:02):
the home banking.
So he had to get the bigalchemies.
He had to get the credit unionsthat had the value propositions
to make, he's got Lumen, he'sgot Alchemy, he's got Q2, he's
got DNC,
SPEAKER_05 (24:17):
NCR,
SPEAKER_01 (24:19):
Jack Henry, all those people had to be in.
The small credit unions couldn'tpull enough to get that to
happen.
Now, if we've got a Q2 creditunion that comes along and just
wants in, David can let them in.
SPEAKER_04 (24:33):
Right.
Also, a credit union your size,you can peel off an experienced
executive to be heavily involvedin 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 compellingstory which you're developing,
(24:53):
don't make a person available.
SPEAKER_01 (24:55):
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, theyhave a much bigger, you know,
back office side.
So they do things working withDavid that gives David a lot of
experience working with thatsize credit union, where my
(25:16):
credit union still can be alittle more nimble and say,
David, show us how you want thisto go in.
So I I think we both give Davidsome advantages by doing it and
having the different sizes ofshops.
And I think that's important forDavid, learning the space and
learning the different creditunions that some of us can get
(25:37):
things implemented very quicklybecause we don't have a lot of
overhead to get it through.
And others are like, no, theywant to check and do different
things inside their creditunions.
both of which give David a clearinsight into how he can grow the
company even faster.
SPEAKER_04 (25:54):
Now, how did you persuade your members?
I admit if you offer me 25% orsomething at Amazon, I don't
need too much persuasion.
How did you persuade them thatthere's some reality here?
SPEAKER_01 (26:06):
Well, I think the first thing, Robert, is getting
the team.
I mean, my team, it'sunderstanding, and I've shared
this story with others, We ascredit unions have always
focused on product and we sellproduct much better.
How many times do you get a carloan in your lifetime?
Four, five, six.
(26:27):
How many times do you buy ahouse?
You know, two, three times.
Payments you're doing every day.
So this particular product, wehave to fight every day for
payments.
And the payments drive what?
deposits.
We're all in the market forlow-cost deposits, and low-cost
deposits are a finite resource.
(26:50):
And what the big banks have thebiggest share of is the low cost
deposits.
And that's what's going to haveto keep growing our industry.
And if we're not fighting forpayments every day, we're going
to lose low cost deposits.
So not only is this a paymentside where we're fighting for,
you know, how is Amy Sinkspending her money every day?
(27:13):
Because Amy Sink used to justcome to my branch, put in her
direct deposit, get a debitcard, maybe a credit card.
And then we just let her go.
We didn't talk to her at allunless she wanted a car loan or
a mortgage loan.
Now we have to talk to Amy Sinkall the time.
And we have to have things thatare compelling for Amy Sink to
(27:36):
have because Venmo is there andMcDonald's app is there and
Starbucks app is there.
And guess what?
They're taking my payments andthey're now taking my deposits.
So I have to fight every day.
So why do I get, how do I getpeople?
I give them a 25% Amazon and Isay, you have to spend this with
(27:57):
cash back plus.
And guess what that means?
It has to be in your entireaccount.
SPEAKER_04 (28:03):
Cool.
Cool.
David, merchant enrollment.
How easy is that?
I mean, you have experience atdoing this, so.
SPEAKER_03 (28:12):
Before we even started working with credit
unions, we worked in lots ofdifferent industries.
So it's not like we had thisidea and then we needed to get
the merchants.
In the other industries weworked in years before we
started working with creditunions, we already built up a
really big base.
of merchants.
So that was helpful to kind ofhit the ground running.
(28:33):
And then it's all about makingsure we're integrated with the
point of sales.
So we're integrated withcompanies like Square and
Shopify, WooCommerce.
So like they have millions andmillions of merchants.
So instead of having to go oneby one, you integrate with their
point of sale and then youinstantly get access to them.
So that's kind of been ourstrategy to be able to scale up
(28:54):
merchants.
SPEAKER_04 (28:57):
Now, what's the fee structure for a credit union
that's involved in this?
SPEAKER_03 (29:01):
They only pay a SAS fee for the pay product, but the
money that they make off of therev share that we give them on
every single purchase more thanoffsets that.
So not only are they neutral init, they end up making more
money than there is cost.
SPEAKER_04 (29:20):
So why would a credit union say no?
SPEAKER_03 (29:23):
It's a good question.
SPEAKER_01 (29:24):
I think part of it is the understanding of, one,
you have to get it past the termgift card, right?
You have to get past that.
Because other people just lookat it like, I don't need gift
cards.
And it's way more than that.
SPEAKER_04 (29:40):
I give gift cards to relatives.
to whom I don't know what togive a present.
Okay, here's a gift card
SPEAKER_01 (29:47):
for you.
You'll love it.
You have to get into thatpayments world and you have to
get it into the, it's going toimpact your deposits.
It's a rewards program for yourdebit card.
It's a rewards program for yourcredit card.
I think once we get it into thatspace, and that's really the
space that I think David has, Imean, David and his team have,
they've heard us, they'velistened to the credit unions
(30:10):
and said, we can do that.
And that every single time Iturn this on, I am every, I'm
always shocked at the number ofmerchants that keep getting
added.
And I'm also shocked at, oh mygosh, that was like, I turned on
the Amazon the other day and Iwas, 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 hitthat button and pay right away.
(30:33):
And it's amazing how that stuffkeeps changing all the time.
And that's just David and histeam.
you know, hearing.
So I think they've, once we getit to spots where the, you know,
the credit unions that have beendoing this have really been
vested in getting this to workand work and work well and easy.
And, you know, there's that, youknow, like we, when we ran the
(30:55):
Amazon, I had people, you know,like I told my, I told my chief
experience officer, I said, donot listen to what anybody said
that's negative.
This was all good.
Hear what they're saying anegative, give the negatives to
David because they need to fixthat.
They need to work on thosethings.
But for From my perspective, youdo that all day long.
Just let it go.
Don't think, just do.
(31:15):
Just let it happen.
We have to let people get usedto this.
There will be people that arelike, I couldn't get it to work,
or I didn't like this, or thiswasn't in there.
It's like, who cares?
I mean, every time I go to oneof these vendors, there's always
something that I get wrong withit.
You know, some of it's, most ofit's my fault.
And other times it's thevendors.
(31:37):
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 (31:44):
The food or the payments process?
I think the food's terrible.
SPEAKER_01 (31:48):
The food is terrible.
The food is terrible.
My family is a lover of TacoBell.
I am a terrible, I hate TacoBell.
But it was terrible vendor forDavid's group.
SPEAKER_03 (31:58):
Okay.
SPEAKER_01 (31:59):
Terrible for you.
I agree with you.
It's terrible.
SPEAKER_03 (32:01):
Robert, I was just thinking about something you
said about why the big banksfocusing on that.
And I think the reason isbecause they don't care about
debit card.
Nobody cares about debit card.
They're all fighting over creditcard,
SPEAKER_04 (32:14):
right?
But now the big banks areconcerned, David, and you know
this better than I do, that therates will go down because
merchants like Walmart arepushing a bill through Congress.
Where it goes, I don't know.
that would result
SPEAKER_03 (32:29):
in this.
Interchange is a race to thebottom for sure.
SPEAKER_04 (32:31):
Yeah.
And so if I'm a bank, I look atthis and say, well, this is an
interesting way to pump lightinto a debit card and get me
some new revenues.
SPEAKER_03 (32:42):
I agree.
But what's interesting is thatthe merchants and the banks are
fighting, right, overinterchange.
Oh, viciously.
And what's fascinating is inthis system, both walk away
happy.
because the merchant views it ascustomer acquisition, not a toll
that they have to pay regardlessand they have no say.
(33:03):
The merchants are setting whatthey pay for what type of
person.
So they actually have controlover it.
And then obviously the bankslike it because they're still
making revenue off of it andthey're able to pass on a large
portion of that to theirmembers.
So in this case, they're bothhappy.
We're an interchange, they'reboth fighting to the death.
SPEAKER_04 (33:25):
Well, I have a Chase Amazon card.
5% back at Amazon and WholeFoods.
I think I've never used itanyplace else.
It's not 5% anyplace else.
And Amazon, this is just 5%.
SPEAKER_03 (33:39):
They don't care.
They're great.
They'll shop a little more withus.
You'll end up spending moremoney at Amazon because of that
card.
SPEAKER_04 (33:45):
Oh, I do.
I do.
And they give me pretty muchinstant cash back to it.
There's like a day delay orsomething.
It was pretty quick.
SPEAKER_01 (33:52):
That's another reason.
We have a credit union that'sinvolved, Robert, that does have
a cashback program with Amazonspecifically.
So they're like, oh, we don'treally need Amazon in it because
we've got our own.
It's like, well, how the creditunions position this product
throughout is up to them, right?
But sometimes you hear thosecompeting things within credit
(34:15):
unions that say, yeah, wealready have some things with
vendors.
It's like, okay.
Yeah.
I mean, I agree with you.
I mean, once David gives thepitch and then they hear some of
the people that are doing it,usually sells itself.
SPEAKER_04 (34:29):
Well, I think what's particularly exciting, and
you've started by talking aboutthis, Amy, is selling local
merchants.
And I know Michigan StateFederal Credit Union is really
into selling local merchants ona different program than this,
but I'm sure that same energywould extend to this.
SPEAKER_03 (34:46):
And we're already working with them on that, which
is exciting.
Especially, you know, they havesuch a concentration, especially
with their students and faculty.
So there's huge opportunitythere.
SPEAKER_04 (34:56):
Yeah, and that's exciting.
I mean, it helps these localmerchants survive in the age of
Amazon and Walmart.
SPEAKER_03 (35:04):
Yeah, people want to support local, right?
We just have to make it easy forthem to do it and rewarding to
do it as well.
SPEAKER_01 (35:11):
And when you got to know, the members have to know
that it's there.
Once the members know, theystart looking for the different.
And if you can then give thatmerchant, that local merchant,
that Cash Pack Plus logo, andthe member sees it and goes, I
have that.
then it starts to make sense.
So I think we're, we're all kindof going for the same type of
(35:32):
thing.
It's just a matter of getting,we had to get our members.
We didn't want the businesses tobear the burden of, Hey, do you
have that entire cash back plusthing?
SPEAKER_04 (35:42):
Right.
SPEAKER_01 (35:42):
Hey, no,
SPEAKER_04 (35:43):
this, this product is so cool.
And I see a lot of cool things.
I'm almost tempted to look atthat.
The participating credit unionssign up with.
Yeah.
SPEAKER_03 (35:53):
I would recommend, I know the CEO of Interra.
We'd be glad
SPEAKER_01 (35:58):
to have you, Robert.
SPEAKER_04 (35:59):
I mean, it's, I just, my credit union affinity,
I don't think is involved withyou at all,
SPEAKER_03 (36:05):
David.
Well, when we post this onLinkedIn, we'll make sure we tag
them.
SPEAKER_01 (36:09):
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 yourpoint of why.
So, As a CUSO and my creditunion, what's my product?
My product is cash.
So if I can give David a milliondollars to help build a tool
(36:33):
that's gonna save me or give meaccess to more fee income, how
much does somebody pay for arewards product on a regular
basis?
The reason we all stopped doingcash back on debit cards is
because it was costing ushundreds of thousands of dollars
if not from like a suncoast,millions of dollars a month.
(36:56):
On this product, I can give himand invest in the company for a
million dollars or whatever thecredit union's percentage is of
where they're going.
And then I pay that SAS fee.
On top of this, I get feeincome.
I can't pay anybody for thatkind of a product.
(37:17):
Literally, I cannot pay anybodyto do that, which is it's
frustrating to me that whencredit unions look at this,
they'll go and pay Fiservmillions of dollars a month to
do something horribly worse thanwhat this is.
Yet they can't look at past andsay, I need to give a million
(37:38):
dollars and invest it in thisQSO.
When you start looking at whatwe invest in and should invest
in as credit unions, it'sproducts like this that have a
payback period that isincredibly easy to calculate.
And my monthly expense for thistype of a product, if I paid for
it anywhere else, I'm wayoutstripping.
(37:58):
Even if, which is not going tohappen, even if all of the money
were to be gone, I have gottenmy million dollars back.
The ROI is way past that.
And that's not going to happen.
But credit unions sometimes lookat these things as an
investment, like I need to get acertain ROI back just from that
(38:19):
investment.
They stop looking at what theexpense savings is.
And that's the real, the realeconomics is not only is David
providing us service that I, thecashback plus that I don't have
to pay for, like I have$700sitting in my cashback plus
account right now that I earnedfrom the merchants.
(38:40):
I didn't pay a nickel for that.
They did.
David didn't give me a nickelfor that.
I didn't pay a nickel for that.
I love that.
How much did I have to...
I gave this as my investmentinto the CUSO.
I've already gotten my moneyback.
I think that's one of thedownsides of people not
understanding the CUSO model.
(39:02):
That some people just get intothese things as they're going to
just get money back.
If you're a user of the CUSO...
and an investor, it's a hugeadvantage.
SPEAKER_04 (39:13):
Yeah, I've been saying to people, credit union
people, who are all up in afrenzy about possibly losing
federal tax exemption, that tome, CUSO is a vastly more
important tool than the federaltax exemption.
SPEAKER_01 (39:26):
I agree with
SPEAKER_04 (39:27):
that.
Banks just don't have anythinglike the CUSO system.
SPEAKER_01 (39:32):
Nope.
No, it's very powerful.
It's very
SPEAKER_04 (39:35):
powerful.
I don't see Bank of America andChase joining together to talk
with a guy like David.
I just don't see them in thesame room.
Unless they're having afree-for-all match, winner take
all.
Before we go, think hard abouthow you can help support this
podcast so we can do moreinterviews with more thoughtful
(39:57):
leaders in the credit unionworld.
What we're trying to figure outhere 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 bemega banks.
It'll always be a place forcredit unions.
That's what we're discussinghere.
(40:17):
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 youcan help.
We need your support.
We want your support.
We thank you for your support.
The CU2.0 Podcast.
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