ORLANDO—The need for cardless ATMs and the future of digital wallets were two important questions raised by attendees at CSCU’s 2017 Annual Conference here.
A panel of payments experts—Tom Davis, SVP of finance and technology at CSCU; Jim McCarthy, global head of innovation and strategic partnerships with Visa; and Bob Letgers, chief product office at FIS—spoke frankly about both, noting that the future of e-wallets should not be quickly measured by current actively levels.
Pointing to a recent study that showed digital wallet transactions have leveled off and that some of the “pays” have actually seen a slight decline in usage, one audience member asked if digital wallets might be a “fad.”
But panelists explained that the growth of mobile wallets is significant, noting that Apple Pay started from zero and has grown to 21.9% of potential users having at least tried the service today. Still, the numbers are not where many within the payments business expected them to be in 2017.
Not A Fad
McCarthy pointed to the digital wallets that are really being used today as a wallet.
“Consumers are not storing much more than one card in their digital wallets,” he said.
Letgers also reminded that large and aggressive companies such as Apple and Google rarely invest in a fad.
“They don’t allow something to trickle off and go away,” he said.
What experts are forecasting is that more reasons to use mobile wallets will be provided to consumers. At present, they said, there is just not enough motivating cardholders to put away their plastic.
“You ask, then, why has not digital wallet usage taken off?,” said Letgers. “Why have consumers yet to adopt this method of payment as we thought they would? The reason is changing behavior is always incentive-based.”
Another attendee, citing Wells Fargo’s recent launch of cardless ATMs, asked the panel about the future of this technology and if CUs needed to be bigger players in the space.
“I don’t see a dramatic impact on how this technology will bring more people to the ATM to get cash,” said Letgers. “The cardless ATM is more of a security benefit than anything else. Now, consumers who have been touched by fraud may likely see more value in this form of ATM. But for those who have not been impacted by fraud, I think they are pretty apathetic about getting involved in the fraud fight. So again, I don’t think this will affect the number of times people go to the ATM for cash.”
With tokenization, mobile wallets, cards on file all growing, one attendee said stays up at night with concerns about how the plastic card is being “circumvented.”
Plastic Sticking Around
But McCarthy said that plastic is not going away any time soon.
“Cards will be with us for very long time—checks are still with us and people said they were going away years ago,” said McCarthy.
Nevertheless, McCarthy urged credit unions to play closer attention to contactless cards such as tap-and-go NFC-enabled EMV plastic. Recognizing that these cards are a bigger investment, McCarthy stressed that contactless cards can be very appealing to members. He also encouraged credit unions to look for ways to “push” card credentials into more card-on-file uses, such as with Amazon and Netflix. Card-on-file applications, he reminded, demand greater cardholder authentication means, such as biometrics, and that crooks are beginning to target this growing area of transactions.
McCarthy further emphasized that credit unions need a strategy around P2P.
“Consumers like to send money to each other, but there has not been an easy way to do that online. So as a result, third parties, primarily messaging systems like Facebook Messenger and Venmo have stepped in,” said McCarthy. “Now the financial services industry has stepped up with the Zelle Network. That gets us into this space to provide this capability to our customers. These transactions are not very economical, and as an industry we need to look at the margins and solve this customer pain point—because if we don’t others will.