MADISON, Wis.—COVID-19 is making a big impact on the payments space, including bridging generational gaps to change how spending behaviors are evaluated and wiping out a great deal of the fraud protections delivered by EMV, according to one payments expert.
The biggest thing the pandemic has done is drive payments change at a much faster pace, said Brian Scott, EVP and chief growth officer at PSCU.
“When you talk about the new normal in payments, you have to recognize change was happening, but that COVID-19 has just rapidly accelerated that change,” Scott told attendees During CUNA Mutual Group’s Discovery 2020 online conference.
What the pandemic has done, observed Scott, is bridge generations when it comes to using payments methods and banking tools.
“The Baby Boomers, and even older generations, are being forced to do new things,” said Scott. “All of the payments habits that you would typically associate with Millennials you can now associate with Boomers.”
Scott pointed out older generations, due to the health crisis, have been forced to buy necessities online and to use their phone for financial transactions when branches were closed or when they chose not to use them.
Through the Roof
“We have seen the use of digital and online services go through the roof and a key driver has been buying groceries online. It has really changed the demographics to where Boomers and older Americans, in their use of banking tools, now look no different than Millennials,” said Scott, adding that credit union should reevaluate how they segment their cardholders by usage patterns.
COVID-19, too, should have credit unions looking at new ways to protect cardholders with so many more transactions shifting to online, said Scott.
“Almost overnight, a lot of the fraud protections delivered by EMV and chip cards have gone away with all the card-not-present transactions today,” noted Scott. “That places a greater emphasis on the need to use more digital fraud detection technology, such as linked analysis, using more mobile alerts and being able to digitally provision a card into someone’s mobile wallet.”
What credit unions need to pay attention to, as well, said Scott, is the payments changes being brought on by the pandemic are likely here to stay.
‘Not Temporary’
“Everyone has been talking about the death of cash, and during the pandemic the usage of cash is down 20%,” said Scott. “Contactless plastic usage has gone up nearly 15%. Mobile wallet usage is up 83%. These kinds of changes are not going to be temporary, they will be lasting, permanent changes.”
All of the change, said Scott, requires that credit unions focus on creating an “end-to-end, unified mobile payments experience.”
“This mean wrapping inside that mobile experience not just credit and debit cards—getting those into the mobile wallet—it means loyalty, bill pay, P2P and more,” he said. “Omni-channel is no longer about just being across channels but achieving seamless connectivity and handoff between digital channels in the member journey.”
More Consumer Interest
Scott added the pandemic is creating more consumer interest in the overall payments experience, which has four key pieces: ease of use, convenience, personalization and security.
“So, how do you make your card easier to use, more convenient, personalized and more secure,” he said.