According to one recent industry report, fees outpaced interest as a source of income for credit card issuers in 2011. Upon closer examination of the report, one can see that while it’s true that fees beat out interest income, it was by a pretty narrow margin.

In fact, over the past two years, the report has shown that the two revenue streams have run nearly parallel, with fees making up 52 percent of the income and interest making up 48 percent.

Another interesting note with regard to this report – it places interchange income in the fee column. Depending on your perspective, interchange could be an entirely separate revenue source. If the preparers of this report removed the interchange component from the fees, it’s likely that interest income would indeed be the leading contributor to the profitability of a credit card program.

And this is the way it should be. For smart issuers, finance charges do make up the largest income component because those issuers are focused on increasing transactions and keeping healthy balances – not increasing cardholder fees. 

It’s also important to consider that for most credit card issuers, the CARD Act has had a significant impact on their ability to earn interest income. For smaller issuers, like those clients of TMG, the CARD Act has had less bearing on the profitability of their programs.

For nearly every one of our clients, the credit card product is the highest-yielding asset.   Community-based issuers are beginning to realize just how profitable credit cards are, especially with lower loan demand. As a result, they are calling us to get back into the issuing business.

Taking industry data with a grain of salt is nothing new for credit unions and community banks. But this recent example goes to show that you must dig a little deeper to get the full picture – at least as it relates to your financial institution.

A lot of lip service is given to underserved outreach. The chatter leads to plenty of great discussions, but not a lot of action. That’s why it’s so exciting to be part of a true outreach with forward-thinking credit unions.

Partnering with sister company, Coopera, TMG has developed a payment tool designed specifically for Hispanic consumers. The reloadable prepaid card is aptly named, Coopera Card. We are so excited to have announced that eight credit unions have signed on to market the card in 2012. They are:

• Amarillo Community Federal Credit Union
• Beacon Federal Credit Union
• Des Moines Metro Credit Union
• EECU
• Greater Iowa Credit Union
• Guardian Credit Union
• KEE Federal Credit Union
• United Services Credit Union

The Coopera Card fits precisely the mantra that Coopera’s emerging market experts have been repeating for years: Financial institutions must adapt to their new consumers, instead of forcing them to adapt to the financial institution.

Kudos to the above credit unions for making a strong investment in the sustainable growth of their Hispanic memberships.

Just when the questions and online conversations about Visa’s August 2011 announcement surrounding EMV support had died down, Visa resurrected the conversation by posting more details about its recommendations.

In the post, Visa’s head of authentication clarified that Visa’s August 2011 recommendations surrounding merchant compliance and fraud liability don’t require what the industry commonly refers to as a full-on “chip-and-PIN” integration.

Rather, Visa is aiming to encourage the full-scale adoption of chip or “smart” cards themselves, rather than requiring a sweeping change in the ways merchants authenticate their cardholders. According to Visa, the traditional cardholder authentication methods will still apply – signature, online PIN and no signature for low-value transactions.

If you’ve been following Visa’s conversation with the industry about their guidance, the post is a good read and contains links to all the background information surrounding the August announcement.

Even more important than the clarifications Visa provided is the fact that they wrote the post at all. Visa is clearly committed to seeing EMV technology adopted in the United States, and this latest post is by no means the last. We can expect to see even more from Visa in the future surrounding EMV.

You can expect to see more from TMG, as well, surrounding EMV in the future. If your financial institution is considering an EMV offering (and I believe you ought to be!) we’d love to talk with you more about what an EMV-enabled card could look like for your cardholders.

No worries, you don’t need to have 3D glasses to read this post.

While fraudsters aren’t out committing fraud in those fashionable, red-and-blue 3D glasses, they are using some pretty sophisticated methods to steal your cardholders’ information. 3D printers are one of the newest ways these criminals are up to no good. Here are a few photos and a story about one device that authorities found on an ATM in California.

According to a recent online article:

These hi-tech and costly machines take two dimensional computer images and build them into three dimensional models by laying down successive layers of powder that are heated, shaped and hardened.

Now if that doesn’t sound like some 007 stuff, I don’t know what does.

I’ve talked in previous posts about fraudsters getting more and more sophisticated. While their main goal is, of course, to steal and to profit, it’s equally important for them to stay under the radar. Technology like 3D printers is helping them do exactly that.

If you’re unfamiliar with the term “hacktivism,” you’re not alone. Only recently coined, hacktivism refers to the use of technology for the means of protesting. And it’s predicted to gain a major following over the next 12 months.

According to this Help Net Security article:

McAfee Labs predicts that in 2012, either the “true” Anonymous group will reinvent itself, or die out. Additionally, those leading the digital disruptions will join forces with physical demonstrators, and will target public figures such as politicians, industry leaders, judges and law enforcement, more than ever before.

Industry leaders certainly include those in the financial sector. As groups like Occupy Wall Street continue to have a beef with banking tycoons, they may very well consider turning to this 21st century type of activism.

Hiding behind another new term, “cyberpatriots,” these hacktivists could get up to some real trouble in 2012.

A big congratulations is in order for TMG client Purdue Federal Credit Union. That’s because Visa has named the CU one of the top issuers in the country!

Purdue Federal’s credit card program was ranked 94th out of 1,400 Visa members that issue consumer credit cards.

A steadily growing portfolio is to credit for the ranking. According to a recent article in the CU Times, the CU’s program has grown to more than 26,800 accounts worth more than $52 million.

Great job to all our friends at Purdue Federal. Our entire team is thrilled to be one of your trusted partners!

Read more about Purdue Federal’s program here.

Just before we turned the corner into 2012, I came across an article discussing the biggest fraud threats for the upcoming year, according to McAfee Labs. No surprise, mobile banking was among the 10 or so dangers predicted to victimize consumers over the next 12 months.

What was surprising though – and frankly refreshing – was the angle the article took on mobile threats. Instead of insinuating that mobile banking is any more vulnerable than “old fashioned” online banking, the article did the exact opposite by explaining that the methods fraudsters will use with apps is the same they have used with laptops.

Techniques previously dedicated for online banking, such as stealing from victims while they are still logged on while making it appear that transactions are coming from the legitimate user, will now target mobile banking users. McAfee Labs expects attackers will bypass PCs and go straight after mobile banking apps, as more and more users handle their finances on mobile devices.

Indeed, the security measures embedded in mobile banking applications are nearly identical to those in online banking systems. Both, however, continue to be vulnerable when users do not heed warnings about simply steps like logging off and not sharing passwords and PINs.

Consistent reminders from the financial institutions offering this technology are essential to protect users from these mistakes.

Here in Iowa, we received our first measurable snowfall of 2012 last week. After weeks of unseasonably warm temperatures, it was quite a shock to walk out to my car after work in a whirling snowstorm. So now, weeks after the holiday season ended, it finally looks like Christmas outside!

Even though we’ve closed the books on the holiday season of 2011, here at TMG we never stop looking for ways to help our issuers reward their cardholders and bring increased value to their card programs. That’s why we’re excited to tell you about the latest changes to our cardholder loyalty offerings.

This spring, we’re working to revamp our current Choice Rewards program to include the full suite of loyalty and incentive options for one affordable price. That means you’ll be able to offer all our existing loyalty programs without paying separate fees, and you’ll have access to our newest exciting rewards offering – merchant funded rewards.

Our new merchant funded program offers extraordinary point bonuses to your cardholders for using your card at selected merchants. Those bonus points are funded entirely by the merchant, giving your cardholders faster points accumulation at no cost to you. And that’s a gift everyone can enjoy!

We’ll be rolling out our revamped rewards offerings to our clients very soon. Watch for more information!

In addition to celebrating the one-year anniversary of its national rollout last month, Dwolla, the online, location-based, social and mobile payment platform supported by TMG also announced the availability of a new feature called Instant.

The feature was, ironically, an “instant” hit, garnering national media attention and drawing a launch-party crowd the Des Moines Register classified as “rock-star.”

So, if you haven’t already heard, here is what Instant is all about:

An opt-in feature, Instant gives Dwolla users access to cash instantly, avoiding the two- to three-day waiting period for transfer of funds. Dwolla founder Ben Milne describes it best as “an ATM-like feature inside the pocket of our users.”

Before Instant, immediate transfers were only possible if users had enough money in their Dwolla accounts. Now, users have a second option for transferring funds immediately.

Here’s how it works:

When a user chooses Instant, Dwolla will extend a line of credit up to $500 to the user. No additional fees are charged for the first 30 days following the Instant transfer.

If the Instant balance is not paid back in 30 days, only then will the user pay a $5 fee per month for every month he carries an Instant balance. Dwolla also offers Instant users the option to initiate repayment from a linked account immediately following the Instant transfer.

Read more about how TMG Financial Services, a sister company to TMG, has played an instrumental role in bringing Instant to market.

Anyone who works with me can tell you that I’m a fan of the infographic – a visual way to share stats, news and information with all kinds of audiences.

I’m also a fan of online videos. Sure the funny ones are great, but the informational ones have a tremendous value to me, as well.

Imagine my excitement when I discovered the video infographic! Tremendous.

Here’s a recent example of a video infographic that breaks down some of the more interesting statistics surrounding social media. (Helped me learn a few fun facts like the one in the title of this post).

If you are having trouble capturing the eyeballs of short-attention-span customers and prospects, give infographics a try. It may give your marketing just the boost it needs in 2012.