MONTREAL, Quebec—Saying the payment space is undergoing a period of disruption and innovation not seen since plastic cards were introduced, one MasterCard executive encouraged CUs to stay abreast of all the change and get involved in digital wallets that are emerging.
Tim Murphy, general counsel and chief franchise officer for MasterCard, also encouraged CUs at NAFCU’s annual meeting here to actively move forward with EMV, saying about 50% of merchant terminals and 50% of all cards will be EMV compliant by the end of the year.
“This is one of the most extraordinary times in the last 50 years of payments—one of great innovation and disruption,” said Murphy. “An extraordinary shift in payments and in consumer payment behavior is happening now. You need to remain relevant with consumers in all this, so you have to get engaged.”
Murphy said the biggest bottom-line reason to stay on top of payments now is that MasterCard believes consumer payments, including checks and ACH, account for 25% of CU net income.
“So think about how payments are changing. Think about the mix of payments and how you segment cardholders. And then find ways to stay central in the lives of your members and their payments needs,” said Murphy. “Have a strategy.”
Developing that strategy may seem daunting, said Murphy, who said there are companies now “peddling complexity. I suggest that a consumer payments strategy can be simple. And a lot of the folks you work with, like payment processors, CUSOs, can help you with that strategy.”
Murphy said that credit unions, with the great deal of trust they have with members, have an advantage in developing a payments strategy in an environment in which consumers are losing trust with their FI’s ability to protect their data.
Sizing up the impact of data breaches on consumers, Murphy pointed out that in the last two years FIs have re-issued more cards than there are Americans.
Murphy encouraged CUs to play in as many digital wallets they feel comfortable working with and cited MasterCard research that outlines what consumers want form e-wallets. Murphy said consumers want to see the card logo on the phone when they pay. They also want the credit union to validate the fact their payment credentials have in fact been embedded in the phone.
“You have the right to play in these digital wallet solutions and you have a lot of value to provide in this space to members, who trust you more than others,” said Murphy.
In closing Murphy addressed the recent failed MasterCard settlement with Target for costs related to the retailer’s massive data breach, saying MasterCard continues to move forward with Target for a solution.
“Going forward, too, you will see us rethink and revamp our account data compromise program and give you richer recoveries in the future,” Murphy said.