CSCU’S Solutions Conference 2016: Digital Payments in the Spotlight

By Paul Castner, Managing Director and Editor of The Payments Review

With the dust settling a bit from CSCU’s Solutions Conference 2016, several overarching themes were front and center throughout the conference.  However, none were in the spotlight as much as the presentations and dialog regarding the need for credit unions to up their games when it comes to creating and deploying digital payments strategies.

During a key breakout session jointly hosted by CSCU’s Tom Davis, Senior VP Finance and Technology and Lou Grilli, Director of Payments Strategy, the main message for credit unions was to think of credit cards in terms of “top of phone” rather than the traditional “top of wallet.” Today, credit union members are already paying for goods and services using digital and mobile wallets.  If a credit union’s card is not enabled in these wallets, then members are using some other financial institution’s card. Grilli cites industry statistics to prove the magnitude of the opportunity including the fact that 3.5 percent of eligible purchase transactions are already made using Apple Pay.  More than 70 financial institutions in the U.S. now support Samsung Pay with that number increasing almost daily.  And, there are currently 11 million Visa Checkout users with 1.5 million new Android devices added each month. 

Start with mobile banking app and mobile website

Grilli says the highest priority for a credit union in the near term is to focus on the launch of a mobile banking app and mobile website, if your institution does not already offer these to members.   They must be easy to use while working seamlessly on tablets, phablets and smartphones.  Grilli points out that 51% of mobile banking users have deposited a check using a phone’s camera, otherwise known as remote deposit capture.  With 72% of U.S. adults now using smartphones and 26% of smartphone owners using mobile banking, offering remote deposit capture is now tablestakes in combination with push notifications for fraud alerts, new products, deposit status, and news, Grilli says.   He adds that mobile banking is taking the lead in behavioral change for mobile payments. 

Smartwatch apps…the time is now

By the end of 2016, 9% of U.S. population will own a smartwatch, according to data from NPO.  A few financial institutions, both large and small are taking advantage of banking watch apps.  As a result, credit unions will need to be on Android and iPhone and watches to stay competitive.

Keep an eye on biometric recognition

Grilli says one area where credit unions are on the leading edge of technology is in the use of biometrics such as fingerprints, retinal and facial recognition as well as geolocation.  Mountain America Credit Union of Utah is one of the first financial institutions to integrate retinal authentication into their mobile banking.  First Tech Federal Credit Union, Mountain View, California, partnered with MasterCard to pilot a facial recognition program dubbed “Selfie Pay.”

Mobile account opening a must

70 percent of likely applicants say they would rather submit a digital application using the mobile channel…12% of banking customers in the U.S. will switch financial institutions this year. 21% of millennials will switch FI’s in 2016.  Case studies published by Mitek show a mobile account opening results in a 50% increase in approvals.  Forms are filled out more accurately thus speeding the process.  Mobile account opening eliminates paper and, overall, shows a reduction in falsified applications versus traditional account opening paperwork.

Digital wallets and the Pays

Today, hundreds of thousands merchants offer Visa Checkout, which is open to any branded debit and credit card.  Along with MasterPass, Checkout is helping consumers gain greater familiarity with mobile banking and mobile payments thanks to its convenience and security features.  Grilli says the migration to digital wallets by members will not happen overnight and will be more evolutionary in nature.   However, if you are wondering if your credit union should you be in either Apple Pay, Android Pay, and/or Samsung Pay, Grilli says the answer is easy.  You need to be in all of them.   It would be impossible to pick just one since your members are users of a variety of devices today to make payments. iPhone users tend to spend more but there are far more Android users.  Samsung Pay is useable in many more retail locations.   And, the list of Pay options keeps growing with more on the horizon.  But, Grilli stresses, this is not a wait and see proposition.  Credit unions need to enroll and be enabled to in order to offer all the popular digital payment offerings to members.  

Considerations when enrolling in the Pays and Visa Checkout

CSCU’s Tom Davis says there are a number of cost and timing considerations for credit unions when enrolling into the Pays.  The process to get in the queue to be enabled can take 6-8 months through FIS with enablement cost for each Pay running between $10,000 and $13,000.  There are transactional costs associated with Apple Pay, 15 basis points and a half a penny on each transaction goes to Apple, but there are no transaction costs with Samsung Pay or Android Pay.  As EMV cards work to reduce card present fraud, online or card not present (CNP) fraud will become a bigger target for fraudsters.   Stopping CNP fraud, with the use of tokenization, is the underpinning of all the Pays.

Enrolling in Visa Checkout is simple, but a credit union cannot opt out of Visa Checkout by telling cardholders that they cannot use it, Davis explains.  You can only enroll to take advantage of added benefits.  The process for a credit union starts with an email ( or by contacting your Visa AE if you have one.  There is no fee from Visa to enroll but you can expect to pay a nominal fee to FIS to upload your card art.  And, the enrollment process happens quickly taking only 2-4 weeks from start to finish.  Davis says the key benefits of enrolling in Visa Checkout are the branding opportunity it presents for your institution as well as some reporting and ability to control and monitor token provisioning to Card On File merchants.  A returning cardholder will see your card art at least once but typically three times. 

Davis says we are heading toward a future of no more plastic cards thanks to recent advances such as mobile payments and cardless cash at the ATM which address most of the card related use cases.  He went on to say that eventually “instant issuance” and reissuance may become a relatively cheap electronic process.  Gone are the days of expensive card mailers and plastics.  Members can sign up for a new card through an app, the credit union will approve the application, and automatically, the digital card will go to their Visa Checkout and mobile wallets, and any other devices and accounts that need payment credentials.  The credit union will have the ability to utilize the relationship with the token service provider who can go ahead and enable the cardholder’s accounts.

Read the full story in The Payments Review.

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