Technological innovation and consumer preferences are rapidly changing the payments landscape. Amid this evolution, the tried-and-true debit card continues to remain popular, making up thirty percent of payments in the USA (The Federal Reserve). Still, credit unions need to embrace both the challenges and opportunities of digital technology to ensure their debit card program continues to thrive in this dynamic environment.
Digital wallets
Digital wallets are reaching the zenith of their popularity. Consumers appreciate the seamless convenience, strong security features, and the ability to make contactless payments. The long-term growth of digital wallets was boosted by the pandemic, and in 2023, half of online sales and thirty percent of in-person transactions were made using digital wallets, a trend that is expected to increase, according to a 2024 report by WorldPay. The same report shows that U.S. consumers are adding their favorite cards to these wallets for purchases.
Challenge: Credit unions have the challenge of competing to make their issued debit cards top of these new digital wallets. Investment in technology like tokenization is necessary to make traditional cards compatible with these platforms.
Opportunity: Credit unions can build member relationships and loyalty by supporting them in adopting digital wallets. This can be done by educating members how to load and use their credit union debit cards in a digital wallet, while reminding them of the benefits of using your issued card. To address the technical challenge, credit unions can work with a CUSO or fintech to add tokenization to their card offerings if not already included.
The growing sophistication of fraud
Fraud is not only becoming more sophisticated, but also more collaborative. Scammers use digital tools like bots and online forums to exchange tips for more effective campaigns, including enumeration attacks that involve systematically guessing valid card data. These brute force attacks are one of the most common seen by our own Envisant fraud team along with phishing and imposter scams.
Challenge: To safeguard member data in an environment of constantly evolving fraud attacks, credit unions need to have a proactive, responsive strategy that includes implementing technology like two-factor authentication, artificial intelligence algorithms, and real-time monitoring. It also requires educating members and staff so they won’t be tricked into giving account information to scammers who reach out via phone calls, texts, social apps, and email.
Opportunity: Credit unions can apply their collaboration strength to fight fraud. A key part of this collaboration is sharing knowledge such as updates on scam trends and suggestions for tools and tactics successfully used in addressing fraud activity.
Seamless member experience is key
The evolution of the payments landscape is ultimately about eliminating friction and creating a more seamless consumer experience.
Challenge: This goal can present challenges such as implementing streamlined payment processes and making them more intuitive, adding more support channels, and personalizing both solutions and messaging to fit individual needs.
Opportunity: Digital technology provides the opportunity to achieve these goals. Digital banking platforms give members 24/7 access to their accounts, as well as services like loan applications. Data analytics from a credit union’s website or a specialized app can help credit unions glean insights into what services are most relevant to their members overall and on an individual basis. This can help determine strategies for product and service growth as well as messaging that resonates with each member.
CUSOs and fintech partners can help credit unions implement digital tools that help credit unions create these seamless member experiences. Tools like AI take traditional phone calls and texts to the next level, allowing personalization while saving staff time. Also, credit unions can take advantage of chatbots and social apps to provide more ways to reach members and potential members.
Conclusion
Digital innovation and integration are the future of debit payments, creating both challenges and opportunities for credit unions. By proactively embracing emerging technologies, credit unions can better protect members against sophisticated fraud as well as enhance the value proposition of their offerings. This strategic approach is vital to maintaining service excellence and strong member relationships in a changing payments environment.
Envisant, a NACUSO award-winning CUSO, is here to help! We offer credit unions a forward-thinking debit program along with opportunities to partner with innovative fintech companies. Want to learn how Envisant can help your credit union become an agile, member service champion? Check out our website at www.envisant.com.