Mobile devices are ubiquitous, with over 225 million wireless subscribers in the U.S. They have empowered consumers with immediate access to information that’s changing how individuals shop and buy as well as interact with the payments value chain. It’s clear that the mobile wallet war is on. From Apple to Visa to telecom leaders, everyone is innovating to try to win this space. But are consumers on board? And what does this mean for issuers?
Some consumers are still on the sidelines, but as merchant acceptance of these solutions grows, others ─ like the millions of users of the Starbucks mobile app ─ are all in.
Paying With Mobile
Click-to-Buy: Online purchases with wallet not requiring card information to be entered each time
Touch-to-Buy: Online purchases with mobile phone
Tap-to-Buy: Mobile phones replace plastic card and allow payments at point-of-sale
Click-to-buy, touch-to-buy, or tap-to-buy – it doesn’t matter which method you choose, it’s all about the consumer experience, including enhanced convenience, security, cost, and rewards. Meanwhile, merchants and issuers stand to benefit from increased knowledge about the payments those consumers make.
Stay In The Game
To better serve members’ needs tomorrow, credit unions must first deliver on meeting their needs today. That means mobile banking with balance inquiries, transaction history and statements, and intra-account transfers. Go after mobile alerts, remote deposit capture, and mobile bill pay. In today’s market, consumers expect these services.
50% of consumers would use a mobile wallet, according to Carlisle & Gallagher Consulting Group
Innovations and collaborations are happening in the mobile wallet space and it’s critical for credit unions to stay informed. Be flexible in your approach to mobile development, especially when considering investments, product approach, and partners. Do small scale testing to see what appeals to members. Six credit unions that process with CSCU have done just that and will now be first-to-market with the new V.me solution by Visa in 4Q12.
Where Is It All Going?
Innovation will not slow down. Experts predict full deployment of mobile payments via wallets in at least three-to-five years, but what will the landscape look like in the short term? There are three possible scenarios.
Fits And Starts
Mobile activity accelerates across the payments value chain with multiple competing technologies emerging. The market experiences a variety of pilots, launches, and failures. Cloud-based and mobile handset-based (Near Field Communication) solutions are linked to multiple product types, with issuers and retailers selectively participating. Major wallets such as Google, Isis, and PayPal may only gain limited traction in the early years.
Open Wallets Win
Wallet adoption consolidates among a smaller number of providers in tandem with large issuers and driven by consumer preference for financial institutions as providers. Smaller and medium-sized issuers likely enable mobile capabilities through processing or network partners.
Retailers Strike Back
Retailers and their preferred payment products ─ private label credit, debit, and gift cards ─ have not been a focus of wallet solutions. If retailers’ needs are not met by major initiatives, they may strike back and offer their own mobile payments and marketing solutions. The Merchant Customer Exchange (MCX), a retailer lead-mobile wallet initiative, indicates this is a possibility. Large merchants and their issuing partners may offer closed-loop solutions or other retailer-friendly products like debit.
Mobile has already changed consumers’ lives. Now it’s extending its reach to how they interact with their funds and how payments take place. Credit unions already bring experience, member trust and relationships, and existing interaction points through numerous channels to the table. By monitoring the marketplace, surveying member needs, and proactively evaluating potential solutions, credit unions of all sizes can better position themselves to mobilize their future.
For more information about how your credit union can mobilize its future, visit www.cscumobile.net.
CSCU is the credit union industry’s advocate, partner and leader in total payments solutions. CSCU works exclusively with credit unions to provide a customized, holistic offering that maximizes value for both credit unions and their members.