Want Interchange? Look to Mobile Payment Apps

April 19, 2017 CO-OP Financial Services

This article previously ran on CUInsight.com.

As more incentives and rewards solutions become available to the market, competition among debit and credit card issuers is increasing.

According to a survey by creditcards.com, card users are typically fairly loyal. However, last year 24 percent of all respondents said they replaced an existing card with a new one; and that number increased to 43 percent among millennials surveyed.

So how can credit unions increase card loyalty?

One recommended practice that can create a stickier cardholder relationship is to make sure your cards support digital wallets, such as Apple, Android and Samsung Pay.

“It’s pretty simple,” said Jennifer Kerry, VP/credit card services at CO-OP Financial Services. “Card issuers need to embrace mobile platforms because that’s how consumers want to buy.  In today’s world, with digital transformation happening all around us, credit unions have to stay on top of new innovations and trends in order to remain relevant to members.”

Mobile Payment Apps Drive Interchange

Supporting mobile payment apps will also ensure that credit unions continue to maintain and grow interchange income. According to CO-OP, interchange represents 74 percent of credit union net income (Callahan and NCUA data – December 2016).

“The rate of interchange is always going to be in flux,” said Kerry.  “However, issuers must promote card usage to increase their income.”

And if your credit union isn’t supporting the “Pays” yet, you may already be behind the curve.

According to CO-OP Director of Product Development Michelle Thornton, “Members who want to use mobile payment apps have probably already uploaded another card – and are producing interchange income for a competitor. Which means you may need to launch a whole campaign around moving your card to the top of the phone in order to get members to use your card instead.”

Making up for lost time won’t be easy, she adds, but the benefits are worth the effort.

“Once consumers upload a card and designate it as the default payment card, 70 percent won’t change it,” said Thornton. “That statistic alone underscores the stickiness of mobile payment apps.”

Marketing Across Channels

Enticing members to switch a competitor’s card out for yours as their mobile app default may seem like a Herculean effort, but it can be done – with a strong marketing campaign across all channels – mobile, online and in the branch.

“Members not only need to gain awareness that your credit union supports mobile payment apps, but they must also be shown how to download the app, upload the credit union card, and designate it as the default payment,” said Kerry.

And, Kerry adds, credit unions must reinforce their marketing messages at every member touchpoint to gain traction.

Discover Mobile “Best Practices” at CO-OP THINK

Credit union leaders who attend CO-OP’s THINK 17 Conference in New York May 8 – 12 will have a chance to learn directly from their peers.

THINK 17’s theme – Your Digital Transformation Journey – will feature a session that shares case studies revealing how credit unions gained that coveted position at the top of the wallet, and at the top of the phone.

To learn more insightful card strategies, download our eBook below, “Payments Disruptors, Innovations and Trends: 9 Technologies to Watch.”

The post Want Interchange? Look to Mobile Payment Apps appeared first on Insight Vault.

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