DALLAS—With threats to credit union card income piling up—from interchange fights and late-fee caps to rate pressure and shifting payment habits—Brian Scott of RAI Partners says the biggest mistake many institutions can make right now is chasing the next flashy payments technology instead of fixing the basics that actually drive portfolio performance.
In comments focused on the growing uncertainty around card economics, including the threat of a 10% credit card rate cap, the co-founder of RAI Partners argued the real issue for credit unions is not whether stablecoins, new wallets or other emerging payment rails gain traction, but whether members continue to use the credit union’s products no matter how the technology changes.
He said payments remain a “habit” business, and that institutions should be far more focused on building repeat behavior—such as getting members to pay cards from every paycheck, activate cards quickly, place them in digital wallets and make them easier to use—than on trying to match every new trend.
Scott said too many credit unions are getting distracted by “the new flashy thing that’s going around” when the real work is far more basic.
Nuts And Bolts
“It’s not about the technology,” he said. “It’s really about the nuts and bolts.”
Whether members eventually pay with cards, stablecoins or some other tool, he said the priority is the same: “Making sure that your members are paying with your products whatever it is … is super important.”
Scott said credit unions should be thinking less about novelty and more about how to create stickier behaviors around payment use, from faster activation to easier repayment and stronger wallet placement.
That includes rethinking some long-standing assumptions about how members use credit. Scott pointed to the industry’s default monthly payment cycle as an example of a habit that may not make sense anymore.
“Why do we have that? It’s just arbitrary that it’s once a month,” he said, arguing credit unions should make it easier for members to pay when they get paid—such as every two weeks—so repayment becomes part of the paycheck routine.
Brian Scott
Scott said the same logic applies to getting cards into wallets and removing friction from the payment process: “All of those things create those habits that tie people in to your payment mechanisms.”
Scott said that back-to-basics focus is becoming more urgent because the economics of payments are under mounting pressure. He pointed to the Credit Card Competition Act, Illinois and other state efforts to strip interchange from taxes and tips, and proposed caps on late fees and interest rates as evidence that credit unions should expect continued pressure on card income even if not every proposal becomes law.
“Forget about which ones actually pass,” he said. “The focus here is there’s downward pressure on the economics around payments.”
In Scott’s view, that means the better response is to drive more payments and deepen usage, because institutions can still adjust other levers over time.
“If late fees get pushed down, well you can raise interest rates on the credit card. If interest rates get pushed down, you can charge annual fees … there’s always going to be levers to move around the economics,” Scott said.
Next Bullet?
He added that today’s environment has become harder to manage because institutions do not know “where the next bullet per se is coming from,” making flexibility more important than ever.
But Scott warned against reacting by relying too heavily on a single tactic such as rewards or by concluding that scale alone will solve the problem.
“Size doesn’t determine your destiny, your strategy does,” he said.
Scott also pushed back on the idea that credit unions should simply shed unprofitable card relationships, calling that inconsistent with the cooperative mission. Instead, he said the better strategy is to use data to understand what the most profitable members do and replicate those habits among less-profitable members.
“It’s not about jettisoning unprofitable members,” Scott said. “How do we make the unprofitable members profitable?
RAI Partners works with credit unions to build and expand their credit card programs, including programs for members who fall below traditional underwriting thresholds. The credit union retains the member relationship, while the card relationship—the credit risk and card support—operate behind the scenes at RAI.