“Don’t touch that!” No other parental warning from our childhood is as relevant to 21st century payments as a universally recognized “do nothing” warning. Only this time it’s not about your brother’s hockey gear, your sister’s makeup, or even Daddy’s holy railroad collection.
Now it’s about ATMs, cash, point-of-sale keypads in stores – you name it. Don’t touch it.
In the credit union (CU) industry, as in all other areas of the commercial card, contactless payments have grown from a novelty to something that cannot be done without so quickly that it has had to be measured. . PYMNTS ‘March 2021 Innovation Handbook for Credit Unions, a PSCU collaboration, does just that, by measuring CU members’ demand for new types of payments with a “Look, Mom!” “No hands” quality.
By interviewing a balanced census panel of more than 4,800 U.S. consumers, the Game book fate balanced, noting that “48% of all CU members say their interest in contactless payment technologies has increased since the start of the pandemic,” and adding that “54% and 59% of the generation Y and Gen Z CU, respectively, say they’re more interested in using contactless payments for in-store purchases now than they were before March 2020. “
If only it was as easy as offering a one-stop contactless product. The payment preference is now calling the tune, and contactless is no exception. CU members, like other consumers, want choice, with the Playbook saying that “interest in contactless credit and debit cards is unmatched. Thirty-nine percent of all CU members are either “very” or “extremely” interested in using contactless credit cards, “while 35% said the same about contactless debit cards.
This makes contactless cards the first and second most requested contactless options among CU members. And it doesn’t stop there, because the Innovation Handbook for Credit Unions proves.
FinTech are coming
Of all the revealing discoveries of the month of March Innovation Handbook for Credit Unions, perhaps none is more striking – or alarming – than this: two in three FinTechs would bypass UCs and FIs to sell contactless payment options directly to consumers, if given the opportunity. given. It’s worrying.
“Credit unions could lose their members if they don’t start investing in contactless payment innovations. Our research shows that 15% of all members of credit unions would be “very” or “extremely” likely to leave their current CUs in the bank with competitors if those competitors were able to offer them contactless payment options. ” , according to Game book. “We also found that 21% of members would be ‘quite’ likely to switch FIs for contactless payments. “
This troubling trend for UC is worth paying attention. As the Game book adds, “Many FinTechs are innovating in these contactless payments to steal members from CUs,” the researchers finding that 64% of FinTechs “say they would bypass their UCs and partner banks if it meant selling directly to end users. CUs are therefore in a race to roll out contactless payment innovations before their FinTech competitors beat them to the knuckles. “
While everything is fair in love and at war, many UCs are right to fear FinTechs simply because the UCs themselves are lagging behind in contactless technology – and members just don’t have it. .
According to Innovation Handbook for Credit Unions, “Only 31% of CU members use contactless credit cards as they would like to use them, and only 33% of CU members use contactless debit cards as would like to use them. A similar model can be found for mobile wallets, card-on-file options, CNP options, and QR codes. There are many more UC members who would like to use each of these technologies than they are currently using. Closing this gap through innovation will be key to meeting the payment needs of credit union members in the future.
Poaching customers (without touching anything)
Contactless payments are now a battleground and the window is closing. CUs investing in accordance with the payment preferences of their members can ensure the success of the struggle.
“Fifteen percent of all CU members would be ‘very or’ extremely ‘likely to leave their CUs in the bank with competitors if those competitors could offer contactless payment options, and 21% would be’ somewhat ‘ likely to do the same, ”according to the New Game book.
The Playbook further notes: “The majority of FinTechs are interested in deploying contactless payment innovations that could put them in direct competition with credit unions. Seventy-six percent of FinTechs are “very” or “extremely” interested in the development of contactless credit cards, and 68% are equally interested in the innovation of contactless debit cards. In addition, 84% are interested in new mobile wallets and 86% are interested in payment possibilities more compatible with QR codes.
When it comes to FinTech poachers, keep this important conclusion in mind: “Banking and FinTech customers are much more willing than CU members to switch primary FIs to contactless payment options, because 24% are “very” or “extremely” likely to do so. therefore. Another 22% of bank and FinTech customers are “somewhat” likely to do the same.
In other words, customer poaching works both ways, and CUs are realizing this fact.