ARLINGTON, Va.—As more payment options become available to consumers, credit unions' products and services must keep up, one compliance expert is stating.
"Knowing which payment methods your members prefer can help a credit union predict member behavior, allowing it to better assess the risks associated with that behavior and allocate the resources necessary to manage the associated fraud and compliance risks," said Jennifer Aguilar, NAFCU senior regulatory compliance counsel.
PSCU recently released its second "Eye on Payments" study, which provides insights into consumers' usage of various payment methods and desire for certain products and services.
The Key Findings
Among the key findings highlighted by Aguilar:
- Convenience and ease: This was the top reason members choose a payment method, though security also remains an important factor, Aguilar noted. Added security features such as enhanced authentication and mobile alerts helps credit unions "[mitigate] fraud costs, including fraud losses and staff time to properly investigate and resolve unauthorized use claims."
- Debit cards preferred: The percentage of credit union members' who prefer to use a debit card rose from 32% in 2018 to 48% this year. "For credit unions, this shift in preference towards debit cards and away from credit cards can mean more time and resources for complying with Regulation E's error resolution procedures as these rule are significantly more complex than the error resolution procedures for credit cards under Regulation Z," Aguilar explained.
- Cash-back rewards not king: Although this is the most common type of reward offered on credit and debit cards, Aguilar highlights that three-fifths of members want other rewards, such as lower interest rates, waived fees, or points for other purchases. "Credit unions seeking to modernize their rewards programs may want to consult counsel as these programs are largely governed by contract," Aguilar said. "Also, keep in mind that certain changes to credit card rewards programs may implicate the rules surrounding substitute and replacement accounts."