A recent CO-OP Financial Services white paper is debunking myths about Credit Union Shared Branching. Here is an exert from the white paper that address the sixth misconception: A Shared Branch Transaction is More Expensive Than a Proprietary Transaction.
Misconception Six: A Shared Branching Transaction Is More Expensive Than a Proprietary Transaction
Credit unions new to the shared branching concept are often faced with concerns regarding the cost per transaction. While the average proprietary teller visit is $4, the average guest member visit during a shared branching session normally consists of three transactions: authentication of the member, which includes all the account information, a deposit/payment and withdrawal. The average cost for this tiered transaction is estimated at $3.93.
From the acquirer perspective, CO‑OP Shared Branching’s Sarah Canepa Bang explained that the average cost per transaction at a branch is currently 87 cents, which covers employee overhead (i.e., salary and benefits). She cited statistics provided by Financial Management Solutions, Inc., which takes a monthly pulse of transactions at banks and credit unions. “The top 10 performers on their list are all credit unions with 71 cents per transaction,” she said.
The rate at which an acquirer per transaction will earn depends on the credit union’s network, she noted. “But roughly acquirer credit unions earn $1.00 to $1.20 per transaction. So if the average cost of a transaction at a branch is 87 cents, then doing a shared branch transaction becomes a profitable venture. Shared branching is maximizing excess capacity in brick and mortar and human resources. There are some organizations that will find reasons not to acquire shared branching transactions, such as required software, but from a transaction perspective, the money is there to be made.”
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