The number of payment options available to consumers continues to increase, and consumers continue to choose credit and debit cards as their preferred methods of payment. This is good news for credit unions: Not only do cards strengthen the overall member relationship, but they also provide a significant source of non-interest income.
Staying Top of Wallet
Now is a good time to reflect on how your credit union can keep its card at the top of your member’s wallet. That coveted top-of-wallet status and what it takes to get there has evolved and changed over time. Contactless plastic is a good example of those changes. What once was a competitive differentiator for many issuers has quickly become table stakes, becoming much more noticeable when the contactless feature is not there.
Shifts in Card Payments
It was not too long ago that the U.S. card industry made the shift from magnetic stripes to EMV chips. The introduction of chip cards provided for a more secure card-present transaction, decreasing the amount of card-present fraud. However, even with the benefits of additional security, inserting the card led to longer transaction times and the increased risk of leaving the card behind in the terminal. Using wireless technology, the newer EMV contactless chip provides the same enhanced security while providing a faster, more seamless transaction experience.
Once consumers were introduced to the speed, security, and convenience of tapping to pay, their preference for using a contactless card accelerated. Fiserv’s quarterly consumer trend research shows contactless cards are preferred by 22% of the respondents (up from 19% in 2020), while those preferring to insert their card is down 3% from 2020. And, according to Visa, “today nearly one out of every 10 Visa card transactions in the U.S. at the POS (point of sale) are conducted with a tap and the majority is with a contactless card.”
Improving the Member Experience
Contactless payments improve the experience at the POS by reducing the time it takes to complete a transaction, in turn increasing overall transaction volume, especially for low-ticket items. This helps the credit union’s card remain top of wallet and grow interchange income through increased member card usage. Even if a merchant does not offer contactless cards, the contactless enabled chip is dual interface and the card can still be dipped or swiped, adding to your member’s pay options.
Making the Move to Contactless
Not only can contactless help keep your credit union’s card top of wallet, but the dual interfaced chips are more widely available than the single interface (contact only) chip. Migrating to contactless plastics can help avoid any impact from existing chip shortages.
If your credit union is on the fence about contactless cards, now is the time to think about when and how to make the move. Before reordering another large batch of plastics, take some time to research the costs and benefits of contactless, and learn more about the implementation process. Moving to contactless does not require a mass reissue: credit unions can use their existing stock of plastics and implement contactless cards when new inventory is needed. Contact us today to schedule a conversation about making the move to contactless.