WASHINGTON—If there was a gift to be found during the recent holiday shopping season it was in the removal of the wrapping around the need for credit unions to step up their attention to digital payments, says PSCU’s Chuck Fagan, who emphasized that the CUSO is partnering with CUs to ensure they stay on the leading edge of mobile.
“We have invested a great deal of time, effort and research to make sure credit unions are on top of mobile payments,” said the PSCU president and CEO.
It was those holidays, said Fagan, that really made clear how consumers’ holiday shopping habits markedly shifted last year.
“The 2015 holiday shopping season was very similar to 2014, in terms of volume and sales,” said Fagan, “But the dramatic shift came from how consumers bought their items.”
Fagan explained that while retails sales were flat compared to the previous year, mobile transactions were up 32%, and online sales moved up 11%.
“So you can see what is happening, we are seeing a dynamic shift toward the mobile phone,” said Fagan.
Rely On Partners
What that means for credit unions, Fagan told CUToday.info during CUNA’s Governmental Affairs Conference in Washington, is that due to payments technology evolving quickly and CU IT departments typically stretched thin, credit unions can rely on their payments partners to keep them current with all the change.
Fagan added that the CUSO model allows for close partnerships with credit unions that allows PSCU to deliver the right technology solutions for its members.
“Recently, with Samsung Pay, two of the first eight financial institutions up on the digital wallet were PSCU members,” said Fagan. “We have more than 150 of our credit unions on Apple Pay with many more enrollments in process. I think what this all says to credit unions is that there is no need for you to fall behind with mobile payments—lean on your CUSO partner and take full advantage of the new technologies that consumers want.”
Fagan noted that PSCU paved the way for its member credit unions to convert to EMV.
“Many of our credit unions were the first to convert,” said Fagan. “We managed that in a way that helped credit unions not only be one of the first out with EMV, we helped them better manage that transition financially.”
Chuck Fagan
Looking ahead to the remainder of 2016, Fagan contemplated how EMV may actually drive greater adoption of mobile wallets.
“The chip card transaction is slower than the mag-stripe swipe and it is certainly slower than the tap of the phone,” said Fagan. “This slow EMV transaction could accelerate the adoption of mobile wallets because those transactions are now so much easier than dipping a chip card.”
Fagan also encouraged credit unions to watch out for the increasing instances of card not present fraud, which is already increasing—as experts predicted—after last year’s EMV liability shift deadline.
“We know that crooks will always find the easiest avenues to get money,” said Fagan. “As we have seen in all other countries that migrated to EMV, card not present fraud substantially increases. So credit unions have to take more fraud prevention measures, such as alerts, and use other types of technology to try to keep those loses down. We are in a heightened period of fraud now, with some residual effects from previous data compromises and the shift to card not present fraud. We are putting a lot of our focus here.”
Collaborative Model
Fagan, who returned to PSCU last May, said business has never been stronger. He cited the collaborative model as one of the major reasons for the company’s success.
“Collaboration and working in the credit union industry is one of our greatest assets. PSCU was built and founded on that model and have stayed true to that in our 40-year history,” said Fagan, citing the CUSO established a new vision and mission last year. “We had a fantastic year in growth and service to our members in 2015.”