CUs Expected To Sign On Quickly With Samsung Pay And Android Pay

09/13/2015 06:33 pm

DES MOINES Iowa—Credit unions may sign on with Samsung Pay and Android Pay faster than they enrolled with Apple Pay, predict several analysts about the new mobile payments solutions launching soon.

Navy FCU, Vienna, Va., is rolling out Android Pay to its six million members worldwide, making it one of the first financial institutions and the only credit union at the launch of Android Pay to add the mobile payments option.

Payments processors cite strong credit union interest in the new payments platforms for several reasons: a fear of failure to gain top-of-mobile-wallet status, as some CUs experienced when did not enroll early with Apple Pay; Visa and MasterCard creating programs that make it easier to enroll now in a digital wallet; and simply wanting to cater to members who do not carry iPhones.

Brian Day, director of digital payments strategy at The Members Group, says credit union interest is high in Samsung Pay and Android Pay, thanks largely to Apple Pay.

Brian Day, TMG

“Those credit unions that enrolled later in Apple Pay found out that the later you come to market the harder it is to get top-of-wallet status,” said Day.

Don't Jump In Late

Day reminded that Apple Pay rolled out late last year with about 11 major issuers.

“If you got into the market with Apple Pay late in 2014 or early 2015 you were battling those top 11 issuers,” said Day. “If you waited to the third quarter of 2015 you were battling a lot more competitors to be top of wallet with your members.”

Day added that while mobile payments users make up a small part of the payments market, they are vocal, especially on social media—giving CUs another reason to adopt the new offerings.

Cindy McGinness, manager of digital channels at PSCU, St. Petersburg, Fla., is seeing the same interest from credit unions, if not more, than was shown when Apple Pay was introduced.

“Our credit unions are excited to get on board with Android Pay and Samsung Pay just as they were with Apple Pay,” said McGinness. “PSCU is looking forward to enabling these additional mobile payments opportunities that will help our credit unions expand their relevance with what I consider is the other half of their mobile payments members—those that don’t have iPhones.”

Michelle Thornton, CO-OP FS

Michelle Thornton, manager of core products for CO-OP Financial Services, Rancho Cucamonga, Calif., thinks credit union interest in Samsung Pay and Android Pay will equal that shown for Apple Pay.

“But there may not be the initial flurry of interest,” she added, saying that Apple’s marketing created that initial rush, and that CUs have been hearing for some time about the launch of Android Pay and Samsung pay.

VDEP/MDES Will Speed Enrollment

But what may contribute to credit unions enrolling sooner with the latest digital wallets than they did with Apple Pay are programs from Visa and MasterCard that make it much easier for financial institutions to sign on with a mobile payments platform, explained Tom Davis, senior vice president of finance and technology at CSCU.

The Visa Digital Enablement Program (VDEP) and MasterCard Digital Enablement Service (MDES) eliminate the hassles many FIs experienced when they enrolled with Apple Pay.

With the programs, CUs avoid contract negotiations, the wait to go live with a digital wallet, and transaction fees that come with Apple Pay. (VDEP Streamlines Adding Digital Wallet To CU’s Portfolio)

Tom Davis, CSCU

“Instead, they enroll with VDEP and when a new digital wallet comes along, the credit union simply says, ‘Yes, I want to play,’ and with a click of a mouse through the VDEP platform they go live with the new payments solution,” said Davis. MDES is similar.

What will speed adoption of Samsung’s and Google’s mobile payment solutions, noted Davis, is Apple Pay being around for almost a year and getting a lot of media attention.

“The constant press . . . I expect Samsung Pay and Android Pay will enjoy quicker lift as a result,” said Davis.

With big-box retailers such as Best Buy and now possibly Target rumored to be pulling away from their exclusivity agreement with the Merchant Customer Exchange (MCX)—a payments channel being developed by merchants to disintermediate FIs from the payments process—Apple, Samsung, and Google payments solutions could get a big boost, Davis said.

“There just is a lot of activity in mobile payments now,” said Davis.

What impact will the new players have on Apple Pay? Experts don’t see them hurting Apple Pay as much as they see Android Pay and Samsung Pay expanding mobile payments.

“They won’t put a dent into Apple Pay because consumers will go with the device the love and carry. This is a device-specific choice,” said Thornton. “Someone who has an iPhone won’t switch to an Android device to use Android Pay, and vice versa.”

But Thornton agreed that with Apple Pay being NFC based that Samsung Pay currently has a greater chance for widespread merchant acceptance, since retailers won’t have to reterminalize to accept Samsung Pay, as they do now for Apple Pay if their terminals are not equipped with NFC.

McGinness said it’s too soon to tell how Apple could be affected, and that what might win greater acceptance for a mobile wallet solution in the long run is the consumer payment experience.

Day sees the new payment solutions giving Apple Pay a boost.

“All of this means a growing consumer segment and growing infrastructure for mobile payments,” said Day. “I think that helps all parties.”

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TMG Clients Ready To Implement Samsung Pay & Android Pay

DES MOINES, Iowa – The majority of The Members Group clients say they are planning to enroll in Samsung Pay and Android Pay.

TMG’s digital and product teams asked nearly 75 attendees of a recent client webinar if they plan to implement each solution. For both Samsung Pay and Android Pay, 86% of respondents said they plan to make the solution available to their cardholders. When asked which of the two solutions they believed would be more attractive to their cardholders, 54% said Samsung Pay, and 40% said Android Pay.

“TMG’s market-leader positioning with Apple Pay enablement has paved a quick and easy path to digital wallet access for our clients,” said TMG CEO Shazia Manus. “Today, more than half of TMG’s financial institution clients are live or have a project underway with Apple Pay. Because Samsung and Google’s rollout plans appear to follow a path similar to that of Apple’s, TMG anticipates a comparable enrollment experience.”

Google has announced the official U.S. release of Android Pay, the digital wallet available on all NFC-enabled Android devices running KitKat 4.4+. Android Pay is now available to consumers through the largest U.S. issuers. Active credit and debit cards previously loaded into Google Wallet will also function inside Android Pay today.

Android Pay is similar to Apple Pay and Samsung Pay (Samsung Pay will also work on many mag-stripe readers) in that it relies on near-field communication (NFC) terminals for use in-store. Android Pay will also allow for in-app purchases and use of some merchant loyalty cards and special offers.

Manus points to TMG’s experience with Google, both directly and through API technology. The processor began working directly with Google in 2011 to ready its clients for enrollment in the Google mobile payments solutions. In 2014, TMG built the wearable payments app See2Pay for use with Google Glass. The processor has also developed simple, affordable processes that make it easy for financial institutions to allow their cardholders access to innovative payment solutions. In October 2014, Apple brought mobile payments to the mainstream with its introduction of Apple Pay. Before the end of 2014, TMG became the first CUSO to take a client live with Apple Pay.

“We had to build out tokenization solutions before we could take clients live with Apple Pay,” said TMG Director of Digital Payments Strategy Brian Day. “Because we have established simple steps for taking both credit and debit portfolios through the tokenization process, and the majority of our clients are already set up, we anticipate an even faster implementation process for Android Pay and Samsung Pay.”

As a strategic partner for its financial institution clients, TMG works to educate its clients on the various digital payment options available and provide expert guidance to help clients choose which solutions will be the best fit for their cardholders, TMG said.

“With many digital payment tools entering the space, it can be difficult to keep track of the various features,” said Day.

Although Samsung Pay comes with its own set of complexities, there is one distinct, stand-out feature: Samsung Pay will work almost everywhere credit and debit cards are accepted. That’s because in addition to NFC, Samsung Pay uses Magnetic Secure Transmission (MST), which mimics the technology used by credit and debit cards today. Thus, it’s expected to work at 90% of the country’s terminals.

It’s important to consider, however, Verizon Wireless is not currently supporting Samsung Pay. “With Verizon being one of the largest carriers in the U.S., that’s a big problem for Samsung,” said Day. “However, a lot of people anticipate a deal will be made between Samsung and Verizon.”

Another key consideration is Samsung devices are powered by an Android operating system. “Consumers with the latest Samsung smartphones may soon find competing payment solutions pre-loaded on their devices,” said Day. “Which solution Samsung device owners choose is likely to be influenced by both merchants and issuers.”

“The long-term impact of Apple, Google and others like Samsung remains to be seen; today, however, it’s clear they are generating a great deal of momentum around digital payments. As more consumers carry handsets with mobile payment options and more merchants begin to accept them, the closer we get to widespread adoption of a new way to pay,” said Day. “All indications are the payments industry is seeing the beginning of enduring disruption.”

”As our financial institution clients face the unknowns presented by exponential technology, rapid innovation and an unprecedented pace of change, they are not alone,” said Manus. “With TMG as a partner, credit union and community bank leaders can clearly see and navigate entirely new possibilities for the future.”