Mobile’s surge into payments drew lots of attention in 2014, headlined late in the year by Apple Pay. The rumors, announcement, and launch of the mobile payments play gave us all something to write about.
At CreditUnions.com, our longtime forte, of course, is examining how a credit union does something well and then sharing with other credit unions actionable advice on how to do the same. We also bring to you what we learned at industry trade shows and other gatherings.
Here’s my choice for the top nine pieces on payments we wrote this past year.
9. Wescom Powers P2P With PayPal
Our researcher/writer Erik Payne examined the PayPal-powered person-to-person offering at Wescom Credit Union ($2.5B, Pasadena, Calif.) and found that the familiar service was an effective option for adoption by members as a mobile offering. Now in place for three years, the app has been used to send money approximately 6,000 times so far this year. Not huge numbers for a credit union that size, but Wescom says it’s a good way to position its services for the future as more members expect to transact through that channel.
8. The Mighty Mobile Opportunity
Erik Payne also examined how three big credit unions — Kinecta ($3.5B, Manhattan Beach, CA), Workers’ ($1.1B Fitchburg, MA), and America First ($6.3B, Ogden, UT) — are using mobile wallets, loan applications, and location-based offers to expand the user experience in one small device. These devices have changed the way the public banks and have introduced a wider set of uses that are growing by the day. Here are three evolving capabilities that credit unions should consider right now — mobile payments, mobile loan applications, and location-based offers — as well as an exploration of their benefits for members and the cooperative.
7. EMV: The Flip Phone Of Payments Systems
We also took on another hot topic in payments in 2014: EMV cards and the liability shift that’s coming in October 2015. Chris Howard, our vice president of research, laid out why he thought EMV was a waste of time and money when the idea first came up 20 years ago and why he still feels that way. At best, Howard argues, EMV is a transitional technology that has been superseded by more sophisticated, more capable, and less expensive alternatives.
6. No Rush Needed On EMV Liability Shift
We also shared the in-depth opinion of a CO-OP executive who says credit unions don’t need to be in a hurry but will probably have to make the move away from magnetic stripes eventually. In fact, core products manager Michelle Thornton thinks it will be at least 10 years before a majority of Americans are using the EMV cards with embedded chips.
5. Credit Unions Get Payments Foothold In Apple Pay
As for Apple Pay itself, although hundreds of credit unions have signed up already, it’s too soon for a credit union case study. We’ll get to that next year. But we did give some cyber ink to the Apple Pay launch itself, in the form of Off the CUff and News in Context blogs on our own site. We began immediately following the Sept. 9 announcement by noting that Navy Federal would be part of the initial rollout, that Visa and MasterCard were opening up the tokenization standards for near-field communications technology, and that although Apple says it was not becoming a payments processor, CO-OP CEO Stan Hollen had his concerns.
4. The Battle Begins Between Apple Pay And MCX
Next up is our credit unions-focused take on Apple Pay’s rapid signups and the unofficial war declared by Wal-Mart, Target, Best Buy, Rite Aid, CVS, and other retail heavyweights backing the competing Merchant Customer Exchange (MCX) CurrentC point-of-sale payments system. MCX uses ACH to avoid card interchange fees. Meanwhile, credit union insiders say Apple will take a 15-basis-point cut per credit transaction and about one-third of that for debit transactions. And that’s non-negotiable.
3. Apple Pay, Millennials Channel Day Two At Money 20/20
Then it was off the shows. We covered Money 20/20 in Las Vegas, where Apple Pay was a hot topic. Presenters offered perspectives on its potential threats and positives, including saving the day for what some say is foundering NFC payments technology overall. We also learned that PayPal is a bigger competitor and that Androids outnumber iPhones.
2. A Five-Year Knife Fight
Erik Payne headed off to BAI Retail Delivery in Chicago, where a digital marketing guru held forth on what his research was showing about mobile wallets. He (the guru, not Payne) promised a “five-year knife fight” between Apple, PayPal, and Google. Payne also notes that along with security and terminal availability, one of the largest challenges Apple Pay faces is turning so-called prospects — those with the app installed — into users.
1. Get Off My Lawn!
Then the holidays arrived and the pundits (not us, but it’s certainly interesting reading) proceeded to pound on the payments play, based on its first Black Friday. The percentage of users who could have used it, turns out, was quite low, according to InfoScout. That prompted one well-read blogger to explain why Apple Pay is fizzling, and another to reply, “Not so fast.” The former was David Evans of Market Platform Dynamics. The latter was Aite Group’s Ron Shevlin, whose Snarketing 2.0 piece on marketing to millennials provided the backdrop for my favorite blog so far in my first few months with Callahan & Associates: “Get Off My Lawn!"