A Year Later: What’s Here To Stay And What’s Next In Payments

Now’s the time to make sure all payments channels work together as a “new normal” emerges.

 

By PSCU

 

Approximately one year ago, the COVID-19 virus was declared a global pandemic. Major sporting events and seasons were curtailed or cancelled, travel was discouraged, social interactions were restricted, and masks became required. As PSCU – the nation’s premier payments credit union service organization (CUSO) – has reported throughout the past year, the pandemic has had a major impact on payment preferences and purchasing behaviors. A year later, what payments trends are here to stay and what’s on the horizon as we look to a return to everyday life?

Digital First and Foremost

It likely comes as no surprise that the forced digital modernization many credit unions and their members experienced as a result of the pandemic is here to stay. As PSCU reported in its 2020 Eye on Payments survey, COVID-19 was a significant driver of digital adoption in 2020. Card Not Present (CNP) activity for both debit and credit increased by 24% and 21%, respectively, according to year-over-year data analyzing purchasing behaviors of PSCU’s Owner credit unions. Contactless transactions on dual interface cards showed strong consumer adoption as well, with debit and credit contactless tap-and-go transactions more than doubling from January 2020 to March 2021 (8% to 17% and 6% to 13%, respectively).

Some digital innovations that were “nice-to-haves” before the pandemic – like contactless cards and mobile wallets – are now necessary and expected. If credit unions do not already have a plan in place to get contactless cards and other new technologies in members’ hands, now is the time to develop and execute a digital-first strategy.

Debit as Preferred Payment Choice

For the second year in a row, respondents in Eye on Payments reported debit as their preferred way to pay, with data from PSCU Owner credit unions supporting this finding as well. Given the economic uncertainty, many consumers shied away from driving up credit card balances and instead used the opportunity of reduced discretionary spending brought on by the pandemic to chip away at credit card balances.

Given all of the focus and emphasis that debit has received of late, credit unions would be remiss to put credit card programs on the back burner. In fact, now is an ideal time to showcase all of the features your card programs – both debit and credit – have to offer. Educate members about your credit union’s online and mobile offerings and let them know what else they can do outside of just paying bills and checking balances, like the different redemption options that rewards cards offer or how to add their credit union card to a mobile wallet to easily transact from mobile phones and other wearables.

In addition, remind members of alerts, card lock, and other available security measures. According to data from Eye on Payments, eight in 10 respondents choose their method of payment based on which is the most secure and, as such, expect an elevated sense of security from their trusted banking partner. Communicate with members what security features are available from their credit union and how they can simply access these features, whether through the credit union app, contact center, or online.

Looking Ahead

While many credit unions were quick to adapt to changing economic factors and consumer behavior ignited by COVID-19, they now need to look beyond the pandemic and prepare for consumer expectations in the “new normal.” While some members may never feel comfortable stepping foot in a branch again and choose to conduct routine activities exclusively via digital channels moving forward, others may prefer to go back to branches. It is important for credit unions to ensure all channels work together seamlessly to provide members with the experiences they are seeking out today and into the future.

Norm Patrick is vice president of Advisors Plus Consulting at PSCU. Advisors Plus was established in 2004 as the consulting arm of PSCU. Together, PSCU and Advisors Plus’ products, financial services solutions and service model collectively support millions of credit, debit, prepaid, online bill payment and mobile accounts at PSCU’s Owner credit unions; protect over 2 billion transactions annually from fraud; and optimize credit union performance and growth. With nearly 25 years in the financial services industry, Norm founded the Debit & Checking practice area in 2007 based on his experience in managing one of the largest debit card portfolios in the U.S. For more information, visit AdvisorsPlus.com.

 

 

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April 5, 2021


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