By Denise Stevens
Creative thinking and quick problem-solving have allowed members to carry on their regular banking activities with few hiccups, even as COVID-19 upended our daily lives. At the same time, the unique demands brought about by the pandemic shed light on areas that required modernization – and prompted many financial institutions to accelerate their plans for digital transformation of products and services.
Digital issuance is the immediate creation of debit or credit card credentials from a user’s card management system that can then be push-provisioned into a cardholder’s universal payment wallet the bank or credit union supports, such as Apple Pay, Google Pay and Samsung Pay. Extremely beneficial in cases of new accounts and expired, lost, damaged or stolen cards, it allows cardholders to access their funds immediately. Once the card details are tokenized and securely provisioned within a wallet, the digital card can be used right away for purchases. It also provides cardholders with their card details within the issuer’s mobile app so they can enter it online, in card-on-file apps and in other wallets. A physical plastic card is also sent to the cardholder to be used at all merchant locations.
When considering how to best implement a digital issuance strategy, credit unions should consider the following:
Market Preparedness
When introducing digital issuance to members, timing is crucial. If a solution like this is introduced before the market is ready, the service will not be used to its fullest extent. But introduced too late, and the credit union will find itself at a serious competitive disadvantage.
Fortunately, there are currently a number of factors pointing to market readiness:
- The National Retail Federation conducted a study in late 2020 reporting the percentage of U.S. merchants that accept contactless, tap-and-go payments has grown to 58%, with 56% of those merchants reporting they accept mobile wallets.
- Mercator’s Small Business PaymentsInsights Survey, conducted in July 2021, found that more than half of small businesses are now accepting mobile wallets online and almost half (48%) accept them in-store. The survey also found 33% of those small businesses who do not currently accept mobile wallets expect to do so by the end of 2021.
- Mercator research indicates 52% of consumers believe mobile payments are more secure than card payments. In total, 33% of the U.S. population now uses a universal mobile wallet for payments, with 13% reporting they have used a mobile wallet since the onset of the pandemic. If we consider the important demographic of 18- to 44-year-olds, the percentage of mobile wallet ownership is greater than 50%.
Despite consumers returning to shopping in stores as the U.S. economy reopens, the rate of e-commerce remains high, and consumers are increasingly comfortable using digital payments. With the use of digital payments becoming more and more mainstream, the market is ready to embrace digital issuance.
Advantages of Digital Issuance
Digital issuance creates several advantages for credit unions, presenting the opportunity to solve an issue immediately while impressing cardholders with a superior service response. The below sample cardholder journey illustrates how digital issuance can result in increased loyalty and card usage:
- Sally loses her credit union-issued credit card and must order another.
- She plans on turning to another brand’s banking solution while she waits for her new credit union card, but she is pleasantly surprised to find out her credit union can issue a digital version of her new card immediately, eliminating the need for an additional banking solution.
- She uses her credit union digital card for numerous online transactions and in-store purchases, and she eventually receives her replacement physical card, too.
- Sally keeps her credit union top of mind and her credit union-issued card top of wallet.
Implementation Considerations
When implementing a digital issuance strategy, there are some practical considerations for financial institutions, including:
- Start by thinking about all the distinct use cases where digital issuance can be used. This includes detailed use cases falling under events that create new and replacement card scenarios, like when a card is reissued after expiring or replaced after fraudulent charges are reported.
- Consider all the different channels where the use cases can occur, including in-branch, through a contact center, automatically, online or through your mobile app.
- For each use case and each channel, list out all the systems where there is interaction. This can include your core processing system, card management platform, teller system, digital systems and user interfaces.
- Begin planning the progression of your digital issuance rollout. Typically, financial institutions use an iterative process, choosing a use case or two as a starting point, gaining insight and then progressing with the remaining scenarios.
‘Here to Stay’
There is no doubt the tech-forward progress made during the pandemic is here to stay, nor about the many ways this progress benefits financial institutions. With an ever-increasing number of cardholders trusting digital payments and the merchants accepting them, financial institutions find themselves at a prime time to introduce digital issuance, allowing them to create a great first impression and provide an excellent service response and member experience.
Mercator Advisory Group’s recently released white paper, “Digital Issuance: Key to Any Digital Transformation Strategy,” sponsored by PSCU, provides credit unions with the information needed to promote the launch of digital issuance within their own organization and a high-level understanding of how to approach its integration. The full white paper can be downloaded here.
Denise Stevens is responsible for product management, new product development, digital experience and innovation at PSCU. Before returning to PSCU in 2015, Denise spent two years deepening her field knowledge of credit unions as Executive Vice President at PSCU Member-Owner Vantage Credit Union in St. Louis. Prior to her tenure at the credit union, she spent seven years at PSCU, where she ultimately operated as the Vice President of Innovation & New Product Development. Denise’s career also includes roles as Business Leader at Mastercard, Paymentech and Equifax.