SAN CARLOS Calif.—Is the rush by credit unions to enroll in Apple Pay as a play to keep and attract Millennials leading credit unions to take their eyes off the true costs of the new payments solution?
At least one analyst believes that may be the case.
To date, approximately 750 FIs have signed up for Apple Pay, with the majority being credit unions that were quick to sign on, according to Cupertino, Calif.-based Apple.
Richard Crone
“Credit unions know their members are of a higher average age than bank customers and that studies show Millennials will switch financial institutions for a mobile wallet solution,” said Richard Crone, principal of Crone Consulting LLC.
With Apple Pay, Crone emphasized a large concern among CUs should be the hard—and soft costs—of enrolling with the new payments platform.
Crone noted that to participate in Apple Pay, financial institutions pay Apple 15 BPs on credit and a half-cent per transaction on debit, in addition to ongoing interchange costs, while also providing the tier-one member service.
Soft Costs
“You can clearly see Apple Pay’s hard-dollar costs, but then there are those costs not all financial institutions may be paying attention to in their desire to be part of Apple Pay,” said Crone.
Moreover, said Crone, there is the potential for additional losses from the loss of branding within the Apple Pay user interface, and from the inability to interface with members before, during and post transaction.
Then there is the chance for reduced card spend among credit union members with Apple Pay, Crone said.
“There is not a statistically valid sample yet with Apple Pay transactions, but early numbers point to a reduction of card spend among credit union cardholders due to the competing cards within Apple Pay,” Crone said.
Read more from this Apple Pay series