RANCHO-CUCAMONGA, Calif.—When it comes to digital wallets, its their own wallets to which credit unions need to be giving the most attention.
That’s because with hundreds of companies now in the digital wallet space and deals happening quickly following the launch of Apple Pay, one analyst is cautioning credit unions on just how critical it is to pay attention to the revenue structure of the digital wallet solution.
In the wake of Apple Pay’s debut, Samsung purchased LoopPay and has introduced Samsung Pay. PayPal bought Paydiant. Google acquired technology from Softcard, and also struck a deal with three of the four major U.S. carriers that will result in Google Wallet being preloaded onto future Android smartphones.
“What we are seeing is all these different players are scooping up enablement technology, such as PayPal buying Paydiant,” said Caroline Willard, EVP, markets and strategy for CO-OP Financial Services, who added there are more than 200 companies with digital wallet technology.
“What we at CO-OP are watching closely is how these moves potentially change the economic model for these different wallets,” explained Willard. “For example, Paydiant up to this point has been a partner with MCX. But with PayPal acquiring Paydiant, I am sure there are some very interesting conversations going on regarding what the revenue for these transactions will look like.”
Caroline Willard, CO-OP FS
A CU Opportunity?
All the change could present an opportunity for credit unions, observed Willard. “We’re watching that piece carefully because it could become a very good time for credit unions to get into a wallet situation that allows them to have a more direct relationship with merchants—if the price is right.”
But again, Willard emphasized, no one can predict the future for the mobile payments economic model.
“We don’t think we’ll see cannibalizing of card volume, because we think there just will be more transaction volume overall, as this space grows,” said Willard. “It’s just adding another form factor.”
Willard passed on advice handed down by a number of analysts, saying that CUs, whether they are in Apple Pay or not, need to be engaged with more than one digital wallet.
“The takeaway is that the credit union’s card should be in all of the wallets, and CO-OP is making sure we protect credit unions’ right and ability to play in all of them,” said Willard, noting that CO-OP is engaged with all the major digital wallet players. “Let the best one win.”