Improving Financial Literacy One Teacher at a Time

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Discover Grant Supports IBAT’s Teach the Teacher Program

The need for financial literacy has never been greater. And, the learning process begins with educating teachers as a necessary first step to helping young people acquire the financial knowledge and skills they need to prepare for successful futures.

To aid in that effort, Discover and PULSE are helping to expand a unique program designed to help teachers throughout Texas improve financial literacy. The Teach the Teacher Program provides Texas middle and high school teachers the knowledge and confidence to teach financial education effectively. It was designed by the Independent Bankers Association of Texas (IBAT) Education Foundation in collaboration with teachers.

Focus on Teachers

Studies indicate Texas has a financial literacy problem. The 2012 National Financial Capability Study conducted by FINRA Investor Education Foundation shows that when asked five questions about basic economic and financial concepts, 67 percent of Texas adults could not answer more than three questions correctly.

Educating teachers is a necessary first step to eliminating gaps in financial literacy among young people. In the 2013-2014 school year, the IBAT Education Foundation’s Teach the Teacher program reached an estimated 60,000 students through the approximately 300 Texas educators who attended the training.

The teachers participated in weekend workshops, where they learned instructional methods to help students grasp the basics of debit cards, credit scores, identity theft, savings and investment strategies and other topics. For 2014, PULSE was proud to help fund stipends for hundreds of teachers who attended the training. PULSE was the founding sponsor of Teach the Teacher and has been involved in the program since its inception.

Discover’s Commitment

The program will promote financial literacy to even more Texas students in 2015 thanks to a $75,000 grant from PULSE’s parent company, Discover Financial Services. The grant is part of Discover’s $10 million investment to further financial education in public high schools across the country. PULSE is contributing an additional $25,000 to support the program in 2015.

“We believe that it is impossible to eliminate gaps in financial literacy among young people without first educating teachers,” said Steve Sievert, PULSE Executive Vice President of Marketing and Communications. “Discover is proud to support this critical initiative to provide training to teachers so that their students can gain a greater understanding of personal finance to plan for a brighter financial future.”

These investments in Teach the Teacher are part of Discover’s Pathway to Financial Success program, which is committed to helping the next generation get the financial education they need to make informed decisions about money through grants designed to train teachers, raise awareness of the need for financial education, and by providing additional resources to parents and schools.

ABA Endorsement Strengthens Signature Debit Competition


Momentum Behind Discover Debit Means More Choice For Issuers

Competition and choice are essential to a healthy market, and the signature debit space is no exception. However, limited choice in a market traditionally dominated by two providers has exacerbated an already challenging debit environment for financial institutions.

Issuers benefit from increased competition in the signature debit market. That’s why the recent endorsement of Discover Debit by the American Bankers Association – through its subsidiary the Corporation for American Banking – as the signature debit brand of choice for its members is a positive development for all financial institutions.

The ABA endorsement shines a spotlight on this alternative to the status quo providers, one that offers superior value to issuers of all sizes.

“Our members are fast realizing that Discover Debit delivers the same acceptance as the other networks at a much lower cost to the issuer,” said William Kroll, executive vice president at the ABA. “The program’s straightforward billing, ease of use and lower network fees makes this a significant alternative for ABA members and is good for the banking industry as a whole.”

Continued Challenges

The ABA’s endorsement of Discover Debit as an option to the traditional signature networks comes at a time when changes occurring in debit are posing challenges for financial institutions and squeezing the profitability of their debit programs.

Regulations capping interchange fees for large institutions and mandating merchant control of transaction routing have led to reductions in interchange revenue for issuers large and small. In addition, new mandates by the traditional signature providers have resulted in the routing of PIN transactions to those networks rather than the issuer’s chosen PIN network. Because of these mandates, issuers are less able to optimize their network relationships.

In addition to regulatory pressures and anti-competitive mandates, recent high-profile data breaches and the cost of fraud to financial institutions have made payments security a top priority. And with financial institutions already contemplating card reissuance as they transition to EMV, there are more reasons than ever to reassess debit programs.

While issuers grapple with a changing payments landscape, consumer preference for paying with debit means this offering remains a strategic focus for banks and credit unions. As the primary customer touch point for financial institutions, debit is issuers’ doorway to growing relationships with account holders.

Issuer Choice

Addressing these challenges requires a competitive signature debit market where issuers get choices instead of mandates. In a space long overdue for disruption, the ABA’s high-profile endorsement of Discover Debit lends new prominence to the program – one that puts issuers’ needs first.

The Discover Debit approach is built on four principles:

  • Improved profitability through competitive interchange and lower fees
  • Simplified operating rules and fee transparency
  • Comprehensive fraud mitigation, featuring real-time alerting and authorization blocking
  • Unmatched program flexibility allowing issuers to feature their own brands

When a financial institution switches to Discover Debit, it gains an experienced provider that works to guide the implementation and reissue process, including marketing support designed to increase card activation and usage.

Plan Ahead for Fraud Incident Response


PULSE Fraud Expert Describes Six Essential Elements of a Fraud Incident Response Plan


Does your financial institution have a plan to guide its response to fraud incidents? A plan provides a framework for making critical business decisions in the midst of uncertainty and chaos, which are hallmarks of a fraud attack.

Six months after major retail holiday data breaches, Eric Lillard, PULSE Vice President, Fraud and Risk Management, says the time is right to put plans in place because additional attacks are inevitable.

“Over the next couple years, the risk of events like the recent data breaches is going to continue to be a challenge to the industry,” said Lillard.

Fraud Incident Response Plan

Lillard says every financial institution needs a Fraud Incident Response Plan to provide structure and rational thinking during the stress and anxiety that accompanies these events. Essential elements of a Fraud Incident Response Plan include:

  1. Profiles of your transaction-level activity to aid in the rule strategy development process;
  2. Contact information for all process participants, including internal and external departments, vendors, decision makers, approvers, etc.
  3. A clear understanding of your organization’s rule strategy approval process;
  4. An accurate inventory of all fraud strategies currently in place within your financial institution;
  5. An understanding of known gaps or risks that you may have in your fraud mitigation program to help reduce surprises during the heat of the battle, and, where possible, identify potential solutions to those gaps;
  6. Lastly, recognizing that fraud never sleeps, documentation of the hours of operation that your fraud service provider (internal or external) is available.

Communications Program

Lillard recommends establishing an effective communications program to keep cardholders informed about emerging threats.

“Having the ability to communicate effectively and quickly with your cardholders is invaluable,” he said. “Financial institutions should be diligent in their efforts in communicating with their customers about fraud.”

Recognizing that various forms of phishing attacks often follow breaches, Lillard recommends reinforcing the basics in communications to cardholders, such as your policy regarding disclosure of account information and PINs.

Finally, financial institutions need to assess their fraud mitigation tools, systems and resources. PULSE offers DebitProtect®, a sophisticated fraud mitigation service that evaluates debit card transactions in milliseconds, detects fraudulent behavior and can block suspected fraudulent activity before a transaction is approved. As of April 2014, the authorization blocking service had blocked more than 4,000 attempted fraud transactions, saving financial institutions more than $1 million. For more information, visit DebitProtect.

EMV’s Great Tipping Point


Data Breaches Make EMV Migration a Priority


We are on the cusp of entering the age of EMV implementation in the U.S., according to the 2014 Debit Issuer Study commissioned by PULSE. After years of uncertainty and delay, the vast majority of debit card issuers now say they plan to issue EMV cards in the next two years.

Migration to EMV debit cards will begin in earnest in early 2015 and will span approximately three years, with many issuers attempting to provide chip cards to their international travelers and heavy debit users in advance of the liability shift in October 2015.

This year’s Debit Issuer Study found tremendous impacts from merchant data breaches, including a collective acceptance that EMV migration will provide enhanced security.

  • Large banks are leading the way, with 96 percent planning to begin issuing EMV cards by the end of 2015.
  • Credit unions and community banks aren’t far behind, with 83 percent of credit unions and 78 percent of community banks targeting 2015 for EMV migration.
  • The 86 percent of respondents who said they expect to issue EMV cards in the next two years is a significant increase from 50 percent in 2012.

“This year’s study confirms the industry has come together to look for solutions to increase security and advance EMV implementation,” said Steve Sievert, Executive Vice President of Marketing and Communications for PULSE.

Fraud Trumps EMV Concerns

Concerns about EMV haven’t gone away. Prior to last year’s high-profile data breaches, many financial institutions were hesitant to commit to EMV. The concerns centered around matters of logistics and expense:

  • Uncertainty around merchant adoption of chip card point-of-sale terminals;
  • Questions about the viability of the business case for migrating from magnetic stripe to chip;
  • Issues related to regulation and support for merchant routing choice.

Today, there is greater urgency to resolve these issues because further delays in EMV migration may put issuers at greater risk. In addition, a series of agreements between signature and PIN debit networks has created a pathway for resolving the merchant routing issue.

At a tactical level, the most common approach among financial institutions is to provide account holders with an EMV debit card as part of their regular card reissuance cycle.

The Debit Issuer Study, conducted by Oliver Wyman, examines debit card issuer performance and expectations for the debit card business. This was the ninth installment in the study series. A total of 71 financial institutions participated, including large banks, credit unions and community banks. Collectively, study participants issue approximately 142 million debit cards, representing approximately 45 percent of total U.S. debit transactions.

PULSE participants can learn more about the study at www.pulsenetwork.com and listen to a PULSE Academy® webinar presenting key survey findings by accessing the “Webinars & Webcasts” page in the Knowledge area of our website.

PULSE Marketing Recognized for Helping Issuers Launch Debit Programs


AMA Houston names PULSE top financial services marketer

Standing by our participants as an advocate for their interests has always been a guiding principle for PULSE. Recently, that has included using the company’s expertise in marketing to help financial institutions convert their debit portfolios.

This commitment to advancing clients’ brands, rather than our own, earned recognition from the American Marketing Association Houston chapter (AMA) and PULSE was named 2013 Marketer of the Year in financial services.

PULSE’s winning program was designed to provide marketing support to financial institutions that convert to Discover® Debit. To assist in the transition, PULSE offers Discover Debit issuers marketing services and materials to support each stage of the program conversion. PULSE facilitates virtually all of the marketing campaign, from planning and design to execution and measurement.

In 2013, Cadence Bank was the first financial institution to launch the new Discover Debit program with PULSE marketing support. PULSE created a comprehensive marketing and communications campaign, including the new debit card design, product videos, call-center training, website content and a customized, dimensional card mailer to launch the employee pilot phase of the debit card rollout.

Marketing That Drives Results for Issuers

PULSE’s strategic, data-driven marketing effort on behalf of Cadence won the recognition of Houston’s marketing community, but more importantly, yielded bottom-line results for Cadence.

On key measures of activation and usage, the launch of Cadence’s new debit card program was a success—Cadence saw an increase in debit card volume and debit card activation was higher than the industry average.

This commitment to building the client’s brand earned the PULSE marketing team the top honors in the financial services category, presented at the AMA Houston’s annual award ceremony in March.

PULSE Expands Marketing Service

Now, PULSE’s marketing experts are branching out, offering their deep expertise in debit to other PULSE participants as part of a new consultancy called PULSE InSightsSM. Amid today’s landscape of debit regulation and squeezed margins, many issuers are finding it more challenging than ever to devote resources to marketing their debit card programs.

Yet, debit remains the most frequent touch point consumers have with their financial institution. To help issuers get the most out of their debit programs, PULSE InSights provides full-service marketing support—from formulating strategies to executing campaigns and tracking results.

Just as they are doing for Discover Debit issuers, the PULSE marketing team will devise a marketing plan tailored to the needs of each financial institution and implement campaigns that resonate with customers.

Marketing support is just one component of the suite of consultative services PULSE InSights provides, which also include Card Portfolio Optimization, Contact Center Optimization, Retail Branch Maximization and Customer Experience.

Fighting Debit Fraud by Harnessing Cutting-Edge Data


PULSE’s new Fraud Trends Report is a powerful weapon for Issuers

As debit fraud techniques become more sophisticated, financial institutions increasingly understand the value of advanced data analytics to spot new fraud schemes and flag – or even prevent – suspicious transactions.

That’s why PULSE’s DebitProtect® fraud mitigation service recently unveiled a new monthly Fraud Trends Report that aggregates fraud transaction data from across the network to give participating issuers unprecedented insight and detail.

Key findings from the inaugural report, and how FIs can use it to enhance their anti-fraud strategies, were discussed in the latest PULSE Academy® webinar, presented by Russell Brown, fraud data analytic intelligence consultant for PULSE.

The online interface allows users to see an overview of the previous month’s network-wide fraud activity by transaction segment, authentication method, merchant category and geographic location. Users can then drill down to increasing levels of granularity.

New Debit Fraud Patterns Emerging

Among the top-line findings in the first report, which covered fraud activity from December 2013 through February 2014:

  • Signature card fraud accounted for almost two-thirds of all fraudulent transactions
  • PIN fraud, while less common, was more severe, with an average $855 loss for each compromised PIN. This compares to $479 in fraudulent charges for cards on which PIN was not compromised
  • E-commerce was the most vulnerable usage point, with 50 percent of all fraudulent cards having signature card-not-present transactions
  • Among merchant categories, grocery stores and service stations comprised the bulk of fraud transactions

A closer look at the data by the DebitProtect team also revealed some emerging patterns that can help issuers adjust their fraud strategies.

For example, Brown points to a growing correlation between ATM fraud and PIN point-of-sale (POS) fraud. Fraudsters who obtain PIN data will first slam ATMs, but rather than ditching the card after running up against withdrawal limits or blocking rules, they will often hit the nearest big box store for fraudulent PIN POS transactions.

Using Data to Prevent Debit Fraud

For DebitProtect participants who use the authorization blocking service, these insights and data are vital in devising blocking rules to more aggressively target fraud without blocking legitimate transactions.

With fraudsters now shopping for stolen card numbers by zip code to circumvent geography-based transaction flagging, more nuanced blocking rules incorporating key variables like high-risk merchant types, compromised card lists and transaction velocity can be effective in preventing fraud.

The patterns and insights gleaned from the Fraud Trends Report also are coded into fraud alert rules, so even if DebitProtect participants aren’t using a blocking rule, issuers can reach out to cardholders as soon as a suspicious transaction is flagged.

Debit Fraud Mitigation Resources

Summaries of each monthly report will be posted to DebitProtect’s Fraud Forum to encourage peer-to-peer collaboration. The DebitProtect team also will hold quarterly webinars to keep participants abreast of the latest fraud patterns and tactics.

PULSE participants can learn more about the Fraud Trends Report and listen to the webinar and other PULSE Academy presentations by logging in to the “Webinars & Webcasts” page in the Knowledge area of our website.

Loyalty-Based Debit Rewards Catching On In Post-Reg II Landscape


Issuers, cardholders and merchants all benefit when consumers shop local

PULSE and Buzz Points

While the interchange restrictions of the Federal Reserve’s Regulation II forced many financial institutions to rethink their debit rewards and loyalty programs, competitive pressures on banks and credit unions to engage and retain cardholders are stronger than ever.

The result has been a shift away from issuer-funded debit rewards toward programs centered on merchant offers that create value for financial institutions and cardholders while driving business to participating local merchants.

This restructuring of the debit rewards landscape and how both issuers and merchants can benefit was the topic of the latest PULSE Academy® professional development webinar, presented by Jay Valanju, CEO, Buzz Points, and Jeff Trachtman, Director, PULSE Product Management.

Webinar participants not only gained insight into industry wide trends in debit rewards, they learned how one unique program is combining consumer data and analytics with a focus on Main Street to generate superior returns for issuers and merchants.

Cardholders Expect Debit Rewards

A recent article in American Banker underscored the competitive pressures driving issuers to reinvigorate their rewards programs, noting that “Consumers have come to expect rewards for using debit cards and small banks fear that if they don’t offer rewards they will lose customers to larger and regional banks that do.”

To fill the void and provide issuers with an affordable solution designed to keep their plastic “top of wallet” – PULSE joined with Buzz Points to offer a turn-key, customizable debit rewards program that stands out for its proven success in engaging both cardholders and local merchants.

The program delivers tangible results for all participants. Issuers see rising interchange revenue from an uptick in transaction volume, merchants experience a significant lift in sales and cardholders enjoy discounts on the goods they like to buy.

Simple, Proven Debit Rewards Solution

When a financial institution signs up for PULSE® Buzz Points™, it gains a partner that does most of the work of implementing and marketing the program and building a network of participating merchants.

As a data-driven platform, Buzz Points analyzes a cardholder’s transactions to offer targeted deals and discounts. For example, if a customer regularly buys coffee at a national chain, he or she will receive – via web or mobile app – a discount for a local coffee shop participating in the program.

For issuers using the Buzz Points platform, up to half of cardholders enroll in the rewards program, a much higher rate than competing rewards programs. And thanks to those discounts, enrolled cardholders swipe their debit cards much more often, with an average $8 per month boost in per card transaction revenue for issuers.

Because cardholders increase their spending at participating merchants, local businesses that sign up to offer discounts through Buzz Points tend to stay in the program.

PULSE participants can learn more about PULSE Buzz Points and listen to the webinar and other PULSE Academy presentations by logging in to the “Webinars & Webcasts” page in the Knowledge area of our website.

Answers to Everyday Questions about Debit Just a Click Away


Financial institutions can use DebitSavvy.org to increase understanding of debit basics

Answers to Debit Questions

DebitSavvy.org is a website designed to increase understanding of debit.

Where do your cardholders turn when they have questions about debit or to learn about other financial matters? Surveys show that parents are the most influential source of information on personal finance for U.S. adults. Even so, the 2013 Financial Literacy survey from Harris Interactive found this:

“Nearly four in five adults agree – and more than one in four strongly agree – that they could benefit from additional advice and answers to everyday financial questions from a professional.”

At PULSE, we recognize that consumers need answers to questions about debit, which is the purpose of DebitSavvy.org, a website designed to increase understanding of debit. It particularly targets millennials in their late teens to mid-20s who tend to be debit “super-users.”

DebitSavvy.org explains how debit cards work and how they differ from other payment choices. The site also highlights the role debit cards can play as a money-management tool, and it offers fraud-prevention tips, including how to protect personal information.

We encourage you to explore some of the recent posts on DebitSavvy.org to see how your financial institution can utilize this tool to deliver fast and accurate information about debit cards to your cardholders. Posts on the DebitSavvy.org blog tackle everyday interests and concerns among young cardholders, such as saving for college or buying their first car.

Here are links to some recent posts that answer questions about debit:

10 Perks of Living Frugally
Use Your Debit Card for Holiday Spending
Money Mistakes 20-Somethings Make – And How To Avoid Them
15 Tips for Debit Card Security
Avoid Back-to-College Budget Busters

The post that earned the most “thumbs up” from DebitSavvy.org visitors last year was, Five Financial Resolutions for 2014. The site offers easy-to-implement recommendations, such as track spending, pay down debt, bank smart, save smart and learn your credit score.

“Seeing what the readers respond to and like is a big help as we look for new and better ways to educate cardholders about the many benefits of debit and dispel myths surrounding debit cards,” said Steve Sievert, PULSE’s Executive Vice President of Marketing and Communications.

DebitSavvy.org also serves as a resource for teachers involved in the Independent Bankers Association of Texas (IBAT) Teach the Teacher program. The initiative is aimed at increasing financial literacy by giving middle and high school teachers more tools and information for getting students involved. We’ll have more on that program in an upcoming post.

With ATMs On the Rise, PULSE Offers Acquirers Growing Card Base and Favorable Economics


PULSE committed to being an ATM acquiring leader

PULSE ATM Acquiring

PULSE is continuing its commitment to being an ATM acquiring leader.

While there is no shortage of uncertainty in the financial services industry, there seems to be one subject on which all agree: the ATM’s future is secure. As ATMs grow in functionality and importance, PULSE is continuing its commitment to being an ATM acquiring leader.

ATM Marketplace recently tackled the question of the ATM’s future in its report, “6 questions about the future of the ATM,” by Suzanne Cluckey, from her presentation at Wincor World 2014. The story reports on the views of experts from around the world on matters ranging from self-service strategies, ATM services beyond cash provisioning and how ATMs are being used to cross-sell services. The one clear takeaway is that the world’s experts view the ATM as the future of in-person delivery of banking services as financial institutions reduce the number of branches.

If it all comes down to cardholders wanting and needing in-person access to banking services, PULSE has risen to the challenge.

PULSE links cardholders to more than 415,000 U.S. ATMs, as well as ATMs in Canada, Mexico and the Caribbean. Cardholders whose financial institutions are part of the PULSE Select® service, created through a strategic alliance between PULSE and the MoneyPass® network, can access 23,000 more ATMs across the U.S. surcharge-free. Additionally, through reciprocal ATM acceptance agreements with Armed Forces Financial Network and Accel, PULSE gives cardholders even more options.

Looking beyond the U.S., PULSE has pushed forward with a five-fold increase in the size of its global ATM footprint since 2007, providing worldwide cash access for Diners Club and Discover cardholders at 1.3 million ATM locations.

While access is one piece of the puzzle, the future of the ATM also depends in large part on ATM acquirers. PULSE has been working with other networks and card brands to compile a large card base, offering acquirers growing transaction volume and favorable economics.

For instance, PULSE serves approximately 6,000 financial institutions across the U.S., including nearly 4,000 issuers through direct relationships and another 2,000 issuers through agreements with other debit networks.

As for interchange and transaction fees, PULSE domestic ATM interchange is highly competitive compared to peer networks for both issuers and acquirers. Finally, nine global card brands are now accepted at PULSE’s U.S. ATMs. In addition to accepting PULSE, Discover and Diners Club cards, PULSE accepts BC Card (South Korea), UnionPay (China), DinaCard (Serbia), HDFC cards (India), JCB (Japan), RuPay (India) and Verve (Nigeria).

“Expanding domestic acceptance of international cards has been a priority for PULSE in recent years,” said Suril Patel, PULSE’s ATM product manager. “These partnerships with prominent foreign brands have grown our card base and increase incremental transaction revenue for ATM owners.”

Merchant-level Data Increases Value of PULSE Debit Dashboard®


Successful financial institutions know their cardholders’ habits

One of the first lessons in marketing is to know your customers. In today’s competitive markets, successful financial institutions are those that best know their cardholders’ habits, including how and where they use their debit cards.

During the past two years, the PULSE Debit Dashboard has become the go-to data resource for participating financial institutions seeking to know their customers by analyzing transaction metrics, identifying trends and benchmarking against their peers. Now with the latest enhancement, users can drill down to data at the specific merchant level.

“For Dollar Bank, the Dashboard has helped us get more people in the bank engaged in PIN debit,” Ben Benack, the bank’s vice president for marketing, said in the video interview below. “That means understanding the data…but also being in a position to ask questions, which I thrive on. The more people ask questions about this business, the more I’m able to try to bring meaningful answers to the bottom line.”

Knowing where cardholders use debit cards the most can be invaluable in creating new joint marketing programs, for example. In the past, financial institutions might have needed to purchase expensive research to identify which merchants to consider for joint marketing. Today, they can find this level of detail with just a few clicks in the PULSE Debit Dashboard.

“When users look at the merchant report in the PULSE PAY® area, they’ll notice a new ‘View All Merchants’ tool that lists merchant names, each of which links to a deeper dive of merchant-specific information,” said Susan Daker, marketing consultant and product manager for PULSE Debit Dashboard.

By clicking on the merchant name, the user can graph details of a merchant’s approved transactions, gross dollar value or average ticket for the time period selected.

Daker said the latest update resulted from feedback from Dashboard users. In reviewing the new enhancement during a recent PULSE Academy® webinar, Daker polled participants to learn more about how they use the Dashboard.

“We learned that participants overwhelmingly use the Dashboard for reports, but that may change with enhancements such as merchant detail,” she said.

Charts and graphs make the Dashboard invaluable for creating monthly and annual reports of their PULSE activity, Daker said. And financial institutions find the Dashboard easy to use and intuitive, as evidenced by the fact that few have found a need to download the user guide.

The web-based tool provides financial institutions with data on PULSE PAY, PULSE ATM, Discover Debit and Gateway activity. It also provides peer comparisons with financial institutions of similar sizes and types.

To view the recent PULSE Academy webinar on PULSE Debit Dashboard and its latest enhancement, click here. For more information, visit https://www.pulsenetwork.com/analytics.html, or contact your PULSE Account Executive.