A 2016 study Visa Consulting undertook into one of our client’s UK debit card programmes found unrealised revenues of a staggering £11million per annum. This discovery was not an isolated example.
Our work with over 50 banks globally has routinely revealed a high percentage of card issuers with untapped revenue streams of which they were previously unaware. The most common cause was usually as innocuous as card fees being charged incorrectly. The missed income potential can be substantial (on one project it reached as high as £17m p.a.) depending on the size of the portfolio, but typically it would be around £2-3m p.a. for a card programme of 1m cards.
While no business is averse to finding increased or additional revenue streams, news of unrealised revenue streams is particularly welcome in the banking sector as card issuers prepare to feel the full effects this year of the Interchange Fee Regulation (IFR) across Europe.
Think of a card programme as a car that a driver is determined to make faster. The driver tries adding new technologies or removing its heavier, yet most attractive parts. However, the driver discovers that the best results come from optimising the cars existing engineering. Just as fine-tuning the car releases substantial power performance, an audit can reveal substantial opportunities for a card programme. While some banks might concentrate on innovation, adding new features or marketing programmes, others cut costs. Yet as our determined driver goes faster by optimising existing internal capabilities, issuers can realise significant profit by taking advantage of the existing opportunities within their current card portfolio.
As mentioned above, one of the most frequent “quick wins” Visa Europe sees is usually correcting card fee errors which are almost always because of mismatches between system parameters and those specified in cardholder T&Cs. However other key areas to examine include:
- improving system alignment with cardholder terms and conditions to ensure that both cardholder and issuer have the correct details and that the system is streamlined
- improving pricing based on better understanding of transaction risks and cost
- reducing transaction and processing costs through thorough analysis of systems and parameters.
We’ve found that the great advantage of finding revenue in an existing portfolio with an in-depth review is the avoidance of unexpected shocks to banks’ valuable customers and the reduction in any risk to a banks’ reputation for fairness and consumer-centricity.
Regardless of industry, every business benefits from a fresh pair of eyes. We’ve found that an audit, while never an easy experience, can bring unrealised revenues, as well as operations that are smoother for the business, their partners and their customers.