FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--Velocity Solutions, Inc. recently launched an innovative program that allows community banks and credit unions to continue to offer free checking to their account holders by generating a new revenue stream – all at no cost to the financial institution.
Numerous regulatory changes are causing the loss of substantial overdraft and interchange revenue for many banks and credit unions. Velocity's program allows financial institutions to generate new, non-interest income with the potential to grow to the amount they earn from overdraft and interchange fees. The new revenue stream will allow institutions to keep no-fee checking accounts as an offering, which Velocity’s research has shown is important in marketing to prospective account holders.
The revenue source is the My Rewards™ Premium Debit Card, an upgrade to an account holder's basic debit card. The product is priced at $9.95 per month for a Gold Debit Card or $14.95 per month for a Platinum Debit Card. The Gold and Platinum cards offer the type of rich benefits and services normally associated with elite credit cards. Velocity Solutions provides marketing support and all the underlying products and services, as well as a very significant revenue share to the financial institution.
"Consumers have demonstrated that they don't want to be charged for just having a checking account," said Mike Triggiano, Velocity Solutions' executive vice president of product management. "But, we also know that many are willing to pay a fee for benefits and services that provide value and convenience. And the savvy consumers who upgrade to a Platinum or Gold card understand that they easily can get hundreds or thousands of dollars of value from the card."
Cardholders enjoy benefits such as emergency roadside assistance, medical evacuation, prescription savings, extended warranty, local discounts and the ability to earn bonus cash back or points that can be redeemed for numerous rewards, including electronics, household items, vacations or even a new car. Platinum Card holders also have access to convenient, short-term loans, buyers’ protection and exclusive rewards or vacation packages.
Velocity Solutions rolled out the program in late 2013 to seven pilot institutions. During the pilot phase, the program generated hundreds of thousands of dollars in net income for the participating institutions, and 5% penetration of the eligible checking account base (approximately 1% per month), rapidly growing toward an expected 30% of the total accounts paying the fees.
"The pilot stage of the My Rewards™ Premium Card program has been very positive and promising, and we estimate that an institution with 50,000 checking accounts can generate a new revenue stream of $1 million to $2 million annually," Triggiano continued.
In support of the program, Velocity Solutions unveiled a new website and will be hosting a series of webinars to present the opportunity to prospective financial institutions. Interested parties can register at www.KeepCheckingFree.com.
"We are excited about the future of this program, and we are proud to introduce one of the few products that presents a truly win-win scenario for financial institutions and their account holders," said Christopher Leonard, president of Velocity Solutions.
About Velocity Solutions, Inc.
Founded in 1995 and managing nearly 15 million transaction accounts, Velocity Solutions® is the leading provider of revenue enhancement solutions to regional and community banks and credit unions. Velocity’s solutions are designed to drive new accounts, increase transactional activity in existing accounts, generate additional fee income, increase account holder retention and address regulatory scrutiny. For more information, please visit www.myvelocity.com.