As members confront increasing concerns around physical POS transactions, they are adopting contactless and mobile wallet payments at a growing rate. With all signs indicating this growth may last well beyond the COVID-19 crisis, credit unions should offer expanded digital payment solutions to help your members in this moment and to secure Primary Financial Relationship (PFR) status – and CO-OP is prepped to help credit unions adopt these solutions today.
Before the COVID-19 pandemic crisis introduced consumers to a “new normal,” contactless was already gaining ground as a preferred method of payment.
A February 2020 report from Juniper Research forecasted global contactless transaction values would triple from $2 trillion in 2020 to $6 trillion by 2024. In the United States alone, transaction values would grow from $178 billion in 2020 to $1.5 trillion in 2024[i].
Contactless Trend Accelerates During COVID-19 Crisis
As the coronavirus pandemic has swept the world, consumers have grown increasingly concerned with traditional methods of in-person payment, including cash and dipping or swiping their card at the point of sale. Cardholders are looking toward contactless and digital wallets as safer alternatives. A March 3, 2020 survey of consumers, 38% indicated that having a contactless feature on their credit card was a “table stakes” need, up by more than 26% compared to a prior period[i].
If consumers were rallying around contactless before COVID-19, post COVID-19, the demand has simply skyrocketed. 27 percent of U.S. small businesses have reported increases in contactless usage, according to an April survey.
In the U.S., the pandemic has spurred contactless transaction volume growth at essential merchants like pharmacies, groceries, warehouse clubs and convenience stores. For example, Costco has been pushing contactless payments at its stores – deploying contactless terminals, offering a cobranded contactless credit card and actively encouraging contactless use at checkout. As a result of these efforts, Costco saw a 60% lift in contactless use in March 2020 over the prior year.[i]
Offer Contactless Now to Help Your Members Feel Safe
As your members seek safer ways to shop for essentials, your credit union can take a few important steps now to ease their minds.
First, remind them that mobile wallets and contactless cards are not only easy and secure methods of payment, but may also help reduce their exposure to the virus.
“One trend we’re going to see continue even beyond COVID-19 is the adoption of contactless and mobile wallets,” said John Patton, CO-OP Senior Payments Adviser. “I think almost all point-of-sale (POS) terminals will have wave/tap functionality, due to concerns around infection. And, at some point, I expect payment networks to apply a ‘discount’ on contactless and digital payment transactions as they have over the last three years to get merchants to install EMV Terminals.”
Next, use this opportunity to expand your digital payment offerings in order to secure Primary Financial Relationship (PFR) status well beyond the current crisis. As contactless payments become a more regular part of your members’ daily lifestyle, offering them a variety of contactless options is vital to becoming their PFR. This includes offering the ability to digitally issue credit or debit cards and allowing members to control them using card controls.
CO-OP currently offers Contactless debit and credit cards, and a suite of digital wallets including Google PayTM, Apple Pay®, Samsung PayTM, Fitbit PayTM and Garmin PayTM, enabling credit unions to offer these solutions today. Talk to your CO-OP Representative or contact us to learn how to bring these solutions to your credit union.
[i] “COVID-19 and Debit and Alternative Payments Products,” by Sarah Grotta, Mercator Blog, March 31, 2020. https://www.mercatoradvisorygroup.com/Templates/BlogPost.aspx?id=8230&blogid=25506
[i]PayThink: Contactless payments must evolve from ‘how’ to ‘why’,” by Demitry Estrin, PaymentsSource, March 25, 2020. https://www.paymentssource.com/opinion/contactless-payments-must-evolve-from-how-to-why
[i] “Contactless Payment Transactions to Reach $6 Trillion Globally by 2024, Fuelled by Increased Card Use,” press release, Juniper Research, February 11, 2020. https://www.juniperresearch.com/press/press-releases/contactless-oem-pay-transaction-values-to-reach-$1
The original article How COVID-19 is Strengthening Contactless Payment Adoption Among Members can be found on Insight Vault.