How Discover® Helps Credit Unions Serve Their Members Better with Superior Card Programs (Webinar Handouts)
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Refresh Your Credit Card Program with Discover®
September 15, 2011
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 1
Agenda
• Discover® Overview
– Discover® Acceptance
• Industry Payment Trends
• Discover® Brand
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 2
• Program Overview
– Credit
– Debit
• Program Support and Benefits
Discover® Overview
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 3
Global Payments Provider
• Global brand known for service, rewards, and cardholder benefits
• In over 185 countries/territories
• Millions of premium
• Growing issuance business
• Comprehensive payments solution including credit, debit and prepaid
• Fast-growing PIN-based ATM/debit network with 4,500+ participating financial institutions
• All top national PIN debit retailers accept PULSE
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 4
1 STORES, Top100 retailers, 2007
2 Research conducted by PULSE sales dept
3 DFS Internal Data, includes North America
• Millions of premium consumer and corporate cardmembers many who travel to U.S
• Highest acceptance among top 100 merchants1
• Targeting domestic acceptance parity with leading payments networks by end of 2010
PULSE2
• Over 650K ATMs and cash access locations
• Robust global acceptance network for credit, debit, and ATM through direct
Discover® Global Acceptance Model
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 5
• Robust global acceptance network for credit, debit, and ATM through direct relationships and alliances
• Domestic Point-of-Sale Acceptance at 97% of Visa/MC1
• Domestic ATM coverage at more than 350,000 locations
• Global Acceptance Initiative
– Global cash access at more than 780,000 ATMs
– Coverage in over 80 countries
1. Internal DFS Reporting
Payment Industry Trends
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 6
Members Value Your Payment Products the Most
84%
94%
94%
92%
Overall
Credit Card
Debit
HELOC
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 7
92%
92%
89%
87%
83%
CD
Mortgage
Checking
Savings
Car
However, only
29% have a
credit card
through their
credit union
Source: Javelin Strategy & Research, 05/10, CU n=1,247
46%
48%
50%
52%
Transactor – always / almost always pay the entire balance
There has been a large shift
How Members Use Their Cards
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 8
36%
38%
40%
42%
44%
10/09-12/09 11/09-01/10 12/09-02/10 01/10-03/10 02/10-04/10
CU: Average Non-CU: Average CU Non-CU
a large shift among CU
members from revolvers to transactors,
making this an attractive, lower
risk portfolio.
Source: Millward Brown, Brand Tracking Study, 10/09-04/10, n=7,000
Application MotivatorsH
igh
Med
ium
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 9
Med
ium
Lo
w
Source: Javelin Strategy & Research, 05/10, CU n=1,247
Does your credit union offer a rewards program on your credit card program?
� Yes
Audience Polling Question
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 10
� Yes
� No
Penetration of Rewards Cards
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 11TNS, State of the Card Market Report, November 2010
What kind of rewards program does your credit union offer with your credit card program? (select all that apply)
� Cash Back
� Air Miles
Audience Polling Question
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 12
� Air Miles
� Bonus Points (Gift Certificates, Electronics, Merchandise
� Merchant Funded Discounts
� Rebates
Card Reward Preferences
Trend and Forecast by Types of Credit Card Rewards
(Among Rewards Cardholders)
2007 - 201266%
61% 63%62%57%
64%
40%41%42%42%46%45%
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 13
TNS, Winning Rewards in a Cautious Market, December 2010
23%
23% 23%
21%
24% 22%
16% 16%22%
21%
24%23%
10% 8%8%9%9%8%
2007 2008 2009 2010 2011 2012
Cash Back Air Miles Bonus Points Discounts Rebates
Credible and Trustworthy Brand Fit
Credit Union Discover Visa MC
Company that gives you a safe, secure feeling 70% 68% 66% 66%
Leader in the financial services industry 57% 66% 64% 64%
Card I trust 72% 74% 73% 73%
A large, stable, reliable institution 72% 71% 71% 71%
Provides a good value 67% 67% 64% 64%
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 14
Provides a good value 67% 67% 64% 64%
Best all around card 61% 61% 60% 60%
Rewards customers for using the card 47% 65% 57% 58%
Card is primary because it offers rewards (among primary cardholders of each brand)
23% 75% 39% 45%
Credit Union card members are looking for credible, trustworthy financial services brands.Perceptions of Discover are aligned with Credit Union members.
Source: State of the Card Market Report, 2010 - TNS Financial Services
Discover® Brand
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The Discover® Brand – Known for Rewards
9%
10%
15% Best Rewards Program in the Market
10%
15% Easiest to Earnand Redeem Rewards
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 16
Page Source: Commissioned Millward Brown 4Q’ 10 Brand Tracking Survey, 4Q’ 10, N=3,362, respondents drawn from the general population
3%
2%
7%
The Discover® Brand – Seen as Refreshing
Unique Carefree
52%
Non-Traditional
52%
Different
75%
70%
75%
82%
Independent
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 17
8%
13%
8%
28%20%
12%
21%
31%
28%
20%
47%
7%
21%
8%
Page Source: Landor Brand Asset Valuation Study, April 2011. Survey respondents=general population
Program Overview- Credit and Debit
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Discover® Comparable Consumer Credit Tiers
MasterCard® VISA®Discover®
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 19
World Elite/World High Value
World
Enhanced
Standard
Signature Preferred
Signature
Rewards
Traditional
Premium Plus
Premium
Rewards
Core
Discover® Debit
Highly competitive interchange pricing and low fee structure produce better economics
What’s In:
All Fees:�Published �Transparent �Correlate to monthly issuer invoice
“All-In Program Fee,” based on transaction volume, is:
What’s Out:
�No Sponsorship Fees�No Branding Fees�No Quarterly Fees
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 20
transaction volume, is:�“Pay-as-you-go”�Netted out of issuer interchange on monthly invoice
Program Support and Benefits
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 21
Unique Enhancements
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Discover Offers
Cash OverSpend Analyzer
Discover® Giving
Unique Enhancements
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 23
Turn-key, customizable materials to create attractive integrated campaigns
• Acquisition Programs
• Usage Programs
• Branch Communications
• Educational Materials
• Merchant Funded Offers
Discover® Turnkey Marketing Support
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 24
• Merchant Funded Offers
• AMPs
• Online Sales Training Tool
NAFCU Member Benefits
• Reduced Issuer Set Up Fee from $15,000 to $1,000
• Waived Issuer Processor Set Up Fee of $15,000
• 100% Transaction Authorization
• Higher Interchange Rates
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 25
• Higher Interchange Rates
• Straightforward Fees and Billing
• No Licensing or Membership Fees
Questions
Kristi Lockhart
Discover Financial Services
224-405-5939
kristilockhart@discover.com
©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute 26
kristilockhart@discover.com
www.nafcu.org/discover
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