ST. PETERSBURG, Fla.—Credit unions should look for mobile wallets to finally gain traction this year, while keeping another sharp eye out for crooks finding ways to exploit same-day payments.
Those are two developments that PSCU President and CEO Chuck Fagan said should be top of mind with credit unions in 2017, along with a third–moving to an omni-channel experience for their members.
While same-day payments is appealing to consumers, it opens a new door for fraudsters, cautioned Fagan.
“This is a direct feed into the checking account,” he said. “Whenever you have direct access to the DDA account you can expect fraud attempts. And, this being a somewhat new development, crooks will find ways to take advantage of it.”
White Paper
Fagan said PSCU is developing a white paper on same-day payments that will be introduced early this year.
“I think this is an emerging area of payments that credit unions need to have a good understanding of,” said Fagan.
Protecting member data from all types of fraud will continue to be a growing––and more expensive––concern for credit unions, said Fagan, adding that CUs must spend the time and money on fraud prevention, detection and resolution.
“It takes dollars, time investment and smart partners,” said Fagan, reminding that NCUA examiners will begin zeroing in on cybersecurity this year. “It’s time now that cyber security is a strong focus at all credit unions.”
Fagan acknowledged that smaller credit unions struggle with finding the resources and money to ward off cyber crooks and also address growing compliance demands in this area. But he said that money and time cannot be roadblocks to upgrading cyber defenses, as the cost is greater for not correctly addressing this threat.
“Small credit unions struggle here because IT for many small CUs is a part-time job, and the staff, in general, wear so many different hats. I empathize with them. I think it is critical that they choose the right partners here,” Fagan said.
Chuck Fagan
EMV Impact
Fagan said that EMV has been making an impact in the U.S., reducing fraud by 20% or more, according to reports.
Within PSCU, for those credit unions that have converted their card base the CUSO reported it has been able to charge back more than $6 million to merchants on counterfeit transactions, Fagan explained.
“This is money that credit unions, had they not converted their card base, would have had to eat,” Fagan explained.
But fraudsters are turning to new channels, particularly card not present fraud. They are also attacking call centers and committing identity theft, Fagan pointed out.
“Cyber defense is broad based, and there is no silver bullet,” Fagan said.
Fagan sees demand for omni-channel service delivery growing, warning that in 2017 credit unions that don’t pay attention to providing members with a seamless, easy-to-use experience across all delivery channels could see members turn to FIs that do. He added that PSCU is developing tools to assist CUs with omni-channel, as well as the growing mobile market.
Digital Wallets
Turing back to payments, this year may finally be the year of the digital wallet, predicted Fagan.
He said that while there have been predictions in recent years that digital wallet usage would take off, that has not happened simply because not enough merchants offer tap and go.
“I think the consumer interest is there, because smartphones are top of mind with them. But what has happened, I believe, is that consumers sign up with one of the digital wallets, they use it once, they like the experience, but then the next merchant does not accept this form of payment. So consumers forget about it,” he said.
But expect many more merchants this year to offer tap and go, said Fagan.
“The phone is just becoming too big a part of people’s lives, and I think more of the big banks this year will introduce their own digital wallets,” said Fagan. “There will be more visibility for this form of payments, leading to many more merchants accepting digital wallets. 2017 could be big year for this technology.”