By Ray Birch
ST. PETERSBURG, Fla.—Contactless cards and security of payments should be two things credit union payments executives focus on in 2021, says PSCU.
The reason—the coronavirus pandemic has simply forced those issues at the top of cardholders’ concerns now, according to PSCU’s Tom Pierce, chief marketing officer, and Norm Patrick, vice president of Advisors Plus.
“The growth of contactless card usage has been great,” said Pierce. “We've been measuring that with our weekly reports on what we’re seeing from PSCU owner credit unions. What we have seen is contactless usage nearly double since the start of the pandemic.”
Pierce noted PSCU began seeing a big shift to contactless last summer as it reviewed the data from its Eye On Payments study.
“Since then we've seen a marked increase,” said Pierce. “We've had nearly twice as many credit union members reporting having a contactless card year over year, jumping from 24% to 47%. This year PSCU will issue almost 6.8 million contactless cards to our own credit unions. So there's truly a demand for contactless as members are looking for ways to safely transact at the point of sale.”
Tom Pierce
Patrick emphasized consumers are simply focused on staying safe during the pandemic, accelerating a movement toward digital payments that had been occurring prior to the health crisis.
Patrick concurred with other analysts who have observed the move to digital wallets had been slower than many had predicted years ago, but said contactless plastic has been making big strides in the last year and a half.
“There had been growth on the mobile wallet front, and as we know, consumers are now looking for the most physically safe way to transact at the point of sale,” said Patrick.
Merchants Start to Act
In addition to the pandemic’s effect in spurring greater interest in contactless payments among consumers, it has also moved many merchants to activate their contactless capabilities at their payments terminals, Patrick said.
“A lot of larger merchants were kind of on the edge about of whether they were going to fully deploy their mobile terminals. A lot of them had not turned them on.”
Pierce said it is very clear to PSCU that if a credit union has not planned for a contactless strategy in 2021, they should begin doing so.
“They need to have that as part of their planning for 2021, because consumer demand is clearly there and it's not going to go away,” said Pierce. “Our Eye on Payments study predicts consumers are going to use contactless cards even more after the pandemic is over. Behavior is changing and credit unions that don't have a plan for the natural reissuance to contactless will be behind. Credit unions also need to be thinking about education around contactless with their members. A lot of people don't understand how to use a contactless card or mobile wallet.”
Norm Patrick
Consumers Learning Quickly
What consumers are learning more about, and paying greater attention to, is protecting themselves from card fraud, said Patrick.
“In one of our recent payments studies, eight out of 10 credit union members replied that if they needed to make decisions around how to pay for something, they would do so based on the level of security the payment method offers,” explained Patrick. “You need to make sure that you have all the proper security protocols and services in place in terms of fraud monitoring, guarding yourself against breaches…But from an education perspective, you need to get the word out—essentially brag to the member base that your solutions are indeed secure.”
Credit unions, too, cannot be “myopically” focused on payments of the point of sale, he continued.
“There are so many other dynamics now with payments, aside from going to a brick and mortar store,” said Patrick. “It’s about getting your cards on file with different payments platforms, getting them into mobile wallets, even P2P services, such as Venmo, PayPal and others. It is in the credit union's best interest to have their card involved in as many platforms as possible so they're taking advantage of all of the interchange opportunities available.”
A Holly, Jolly Example
Pierce added credit unions need to look no further than this past holiday season’s payments data to see how focusing on brick and mortar transactions won’t be an effective strategy.
“The holidays clearly showed the shift in payment transactions moving away from the physical store,” Pierce said. “Purchases on Black Friday, which has been a big focus for consumers in the past, shifted to online. And we saw that continue on through November and December as well.”