Contactless payment use is on the rise. According to Allied Market Research, the mobile payment market size is expected to have a compound annual growth rate of nearly 34% between 2017 and 2023. Current concerns about the COVID-19 virus being shared through cash have many businesses and media outlets urging consumers to increase their use of contactless payment methods. Credit unions should be prepared with a good understanding of these newer forms of payment options so they can stay ahead of the curve.
What are Contactless Payment Options?
A variety of contactless payment methods are competing for adoption in the U.S. These include:
- Contactless cards using near-field communication (NFC) technology
- Payments through mobile apps
- A combination of both
Credit unions interested in joining the market have a few options.
- Invest in their own mobile payment apps with the help of their payment processing partners.
- Leave members to attach cards to their phones’ native digital wallets.
- Work with their payment processing partners to offer contactless NFC technology on current physical cards.
What Are Current Consumer Attitudes?
Consumer attitudes toward contactless payments are diverse, even among users. Below are some reasons behind both their use and lack of adoption.
Reasons for current and future use include:
- Contactless cards are faster, particularly for smaller transactions (U.S. News)
- Mobile payments are a convenient all-in-one option for smartphone users.
- COVID-19 is now a factor as more people and businesses are becoming conscious of viruses and germs.
Factors that hinder adoption are:
- Consumer questions about the security of these methods, particularly mobile payments. Pew Research shows 38% of people see mobile payments as having low security.
- Hold-outs are satisfied with their current payment methods and rewards programs and see no compelling reason to change. (Pew Research).
What Can Credit Unions Do?
- Credit unions can know their strengths. Good relationships with members give credit unions a strong starting place to offer contactless payment methods.
- Stay ahead of the curve. Credit unions should talk to their processors if they are not offering contactless cards.
- Enable tokenization for their cards on apps like ApplePay, Samsung Pay, and GooglePay.
- Communicate with members. Clearly informing members about the benefits and protections they can expect with contactless payment methods brings value to members and credit unions. It can help put credit unions at the top of members’ minds when they consider contactless payment options.
Contactless methods are important to the future of credit union service. While mobile options will add costs for credit unions, many people are already glued to their phones while shopping, making these options quite relevant. This is particularly true for younger adults who make up 74% of mobile payment users according to Pew.
With so many options and attitudes toward contactless payment methods out there, staying ahead of the curve can be difficult. Yet, remaining informed, helping members stay informed, and working to become a provider of these methods can give credit unions an edge as the contactless payment market continues to rise.