CSC’s webinar on Moving Debit Card Processing In-House Draws a Crowd

CSC and SourceMedia, one of the nation’s largest publishers of trade publications, co-sponsored a Web seminar on a compelling topic for the cards industry on 15 May, drawing nearly 300 registrants, one of the largest responses SourceMedia has seen for an event of this nature. Entitled “Take Control with In-House Debit Card Processing,” the one-hour webinar was headlined by Ted Iacobuzio, managing director and practice leader at TowerGroup, the leading research and advisory services firm focused exclusively on the global financial services industry. Dan Burkhart, principal consultant and product manager for CSC’s CAMS II® Cards & Payments system, spoke on winning strategies for moving processing in-house, and Jeff Green, editor of Cards & Payments magazine, moderated.

Card Issuers and Debit Card Products

Nothing has changed the face of the payments industry quite like the debit card. With 18 percent growth in the United States from 2005 to 2006 and transaction volumes projected to surpass credit cards, debit cards have found their niche as a preferred payment method for consumers.

The webinar highlighted how top U.S. banks and financial institutions worldwide are taking greater control of products, costs and time to market by bringing debit card processing in house. With in-house processing, new card products can be launched with greater control in a shorter time. New loyalty and reward programs linked to newly developed card products can help to increase customer retention.

In-House Versus Outsource

In his review of current trends and metrics in the cards industry, Iacobuzio took no position on whether in-house processing was superior to third-party processing. However, his many metrics on U.S. issuer credit card spend over the past four years indicated that third-party processing of payment cards has become a less popular option.

Stating that “IT spend is the most accurate barometer for such a change in the weather,” Iacobuzio then discussed new challenges and nontraditional factors depressing credit card profitability in the United States. Some challenges were customer-related, some economic, and some were internal situations issuers had to overcome, such as already pared-down expenses and a saturated credit card market. Iacobuzio recommended ways to manage the customer relationship, harvest and react to data, and protect the asset. “Profitability is now measured by relationship rather than by product,” he said. “Banks are interested in the customers they already have.”

Key Considerations for Moving to In-House Processing

Drawing on his more than 23 years focused on design, delivery, marketing and consulting in the global payment systems industry, CSC’s Burkhart offered a list of best practices for converting to an in-house processing system. “Walk before you run,” was one of his suggestions. “In a phased approach, you can bring debit card processing in house first, then credit cards, followed by business or corporate cards.” He recommended later bringing merchant acquiring processing in house too to reduce risk.

An evaluation strategy to ensure in house is the right approach is an important first step, he emphasized. Outsourcing may be a right option for some. He stressed in-house processing as a strategic initiative which should not be used as a fast-track reaction to a short-term problem. However, Burkhart also offered the “Top 10 Good Things about In-House Cards Processing,” which included increased product innovation, increased synergies between deposit and lending businesses, and improved strategic positioning for profitability, growth and expansion.

For Further Information

More information about CSC’s CAMS II Cards & Payments System is available online at www.csc.com/cards or contact us by phone or email. Only CSC will use the information you provide.