Bob Hackney
ORLANDO—Mobile payments adoption has gone slower than many expected, and a big reason is that digital wallets are not yet addressing a consumer pain point.
CSCU President and CEO Bob Hackney emphasized that message during the opening session of the company’s Solutions 2016 annual conference here, emphasizing to credit unions that the slow adoption is no reason to wait to begin formalizing a mobile payments strategy.
“You want to get into all of the wallets, because if you don’t you will lose transactions,” stressed Hackney. “Even if it’s an unbranded solution like Apple Pay or Samsung Pay, you still need to be in them, because that is revenue to the credit union.”
Hackney said he had just spoken with a leader of one credit union where 70% of its non-interest income is coming from credit and debit interchange.
Time To Plan
Hackney said it is easy to get into all of the wallets, but the real issue is developing that mobile payments strategy—“How will you get your members to enroll your cards in those wallets. That is the challenge and that takes planning,” he said.
Hackney addressed why the wallets are being adopted slowly by consumers, saying that outside of success cases such as Starbucks—which is doing a lot of things right—there has been a lack of a compelling reason to use the digital wallets over plastic. Also, digital payments are not universally accepted and they are not solving a consumer pain point.
“Does this mean mobile payments are a failure, absolutely not,” stated Hackney. “Mobile payments will over time gain the traction everyone has expected. So if they are not solving a consumer pain point today they need a compelling rewards proposition to change behavior,” he said.
Hackney emphasized that Starbucks success with mobile is a result of the company streamlining its mobile payments process and providing consumers with the right incentives.
CSCU is currently working on a new digital card application that Hackney said will offer credit unions a great deal of mobile payments flexibility. The app will provide innovative mobile wallet capabilities, extending the services cardholders value most, he said. The solution will provide credit unions the opportunity to offer their members an issuer-branded app providing cardholders on-the-go access to features such as balance alerts, transaction alerts, and easy card management. Beta testing begins this summer.
Hackney reiterated that adoption of mobile payments has gone slower than expected, citing recent statistics on Apple Pay. He said that a recent survey among those who have purchased an iPhone 6 or higher, that only 20% had tried Apple Pay. Among the 80% who did not try Apple Pay, 38% said they were satisfied with their current payment method, 34% said they were not familiar with Apple Pay, and the remainder had security concerns.
Reasons Consumers Not Using Apple Pay
Another study showed reasons for not using Apple Pay among iPhone users is that they forgot they could use the new payments method, they were not sure if the store accepted Apple Pay, and that they know with their plastic that they will get rewards, Hackney explained.
“But that is no reason to not have a digital payments strategy,” insisted Hackney, recognizing that smaller credit unions may be lagging the most due to a lack of resources. “You really have to focus on your digital strategy as over half of banking transactions are now being handled on mobile devices. You have to sit own, create a plan, set goals. Again, you have to change behavior, and that takes time. Yes, the plastic card is not going away any time soon. But once behavior is changed, and it is because of someone else’s actions and not yours, it will be much harder to flip that switch to get members to change back to using your card.”