From mobile P2P to EMV technology and beyond, the payment industry is rapidly changing. And while consumers are eagerly embracing these new and geometrically expanding payment methodologies, many do so without fully understanding their benefits and risks.
This dynamic payment environment presents an opportunity for your credit union to shine as a financial expert and thought leader in your community. So what do members need to know about the new payment technologies?
“Consumers are faced with many alternatives and sometimes unsecured options for payments, and the risks involved, may not be apparent to them,” says Lois Hansen, vice president of product development for CO-OP Financial Services.
Jennifer Kerry, CO-OP’s vice president of credit card services, adds, “The importance of security can’t be emphasized enough. However, a prominent trend in payments today is the use of rewards. Evaluate your rewards program, make it competitive and get your rewards program squarely in front of members for their benefit and yours.”
Against this backdrop of today’s changing payment landscape and fraud challenges, Hansen and Kerry offer seven things that you should proactively inform your members about:
1. Remind members to stay vigilant. Consumers like technology to be fast and easy, but speed and simplicity don’t necessarily equal security. Hansen recommends advising members against using social media sites for payments. “Also, let them know that an authentication process should be long and involved,” said Hansen. “Consumers need to stay away from any payment site that relaxes its standards in this area. Make sure your members know that proper authentication is well worth their time from a security standpoint.
It is also important for consumers to be fully aware of their accounts, and that means, quite simply, doing something that all too often people don’t do – regularly and thoroughly review their statements. Consumers should go online and log into their account every few days and make sure they don’t see anything they haven’t seen before and they don’t see any charges – even small ones – they didn’t authorize or don’t remember authorizing.
2. Inform them about your rewards programs. Eighty percent of credit card transactions today are made using rewards cards. “Your members value rewards and may not know all your program has to offer,” said Kerry. “A merchant-funded rewards program that allows them to benefit just by shopping at places they already frequent provides you with an opportunity to communicate about rewards more often.”
3. Advise members on when to use debit and when to use credit. Both have their advantages – Credit is typically more secure, debit can be easier for budgeting purposes. CO-OP offers a wealth of information on how consumers can use each method most effectively. Direct members to the blog at www.co-opcreditunions.org for more details.
4. Answer all their questions about digital payment – before they ask. When Apple came forward with Apple Pay tokenized mobile payments in September 2014, it was a fun and easy new way to pay. And when Visa, MasterCard, Discover and others joined the Apple Pay ecosystem, it was a turning point for the industry and for the way members use payment methods.
Samsung Pay and Android Pay are also now making significant inroads with their own versions of point-of-purchase methodologies, both of which employ tokenization as well.
Tokenization is the process of substituting a sensitive data element with a non-sensitive equivalent. When tokens replace live data in systems, the result is reduced risk of compromise or accidental exposure and unauthorized access to sensitive data.
“Your members may not realize just how secure tokenization is, so tell them about it,” said Hansen. “Everyone wins. Your members experience the convenience of digital payment, and you as a credit union get the interchange.”
5. Update members on EMV technology. Hansen expects EMV payment cards to continue to gain momentum nationwide. She explains, “While your members may have EMV cards already, many merchants still don’t have EMV-enabled card readers. That will soon change, though, as consumers gain appreciation for the chip card and merchants follow suit.”
Let your members know that EMV continues grow in both breadth and depth in the U.S. Today, EMV chip cards are accepted by more than 1.2 million national merchant chains and an average of 23,000 new merchant locations become chip-ready each week.
With this growth, payment card companies have taken the adoption process to the next level with more advance programming that will speed the adoption process. As reported on Yahoo Finance, MasterCard recently announced a new EMV chip terminal testing and certification program aimed at speeding chip adoption by U.S. merchants. By accelerating the testing and certification process, MasterCard can make more terminals available to more merchants at greater speed, increasing the safety of the entire payments ecosystem.
In addition, Visa announced a series of initiatives to help accelerate EMV chip migration for merchants. Also reported on Yahoo Finance, Visa’s program includes streamlining its testing requirements, amending and simplifying the terminal certification process, and committing to investing further resources and technical expertise that can reduce timeframes by as much as 50 percent. Visa is also making policy changes to help limit exposure to counterfeit fraud liability for merchants who are not yet chip-ready.
6. As a CO-OP affiliated credit union, you partner with top fraud protection providers. Tell members how hard you work to protect them and their cards. In addition to working with Fair Isaac Corporation (FICO), the number one source for fraud detection, CO-OP applies advanced data analytics tools to quickly uncover fraud wherever it occurs. Such provider partnerships, and the security they bring to member accounts, is a competitive-advantage story credit unions should be telling their members.
In addition, partnership with CO-OP Financial Services enables credit unions to stay competitive with the latest in customer payments technologies. A good example, particularly in terms of fighting fraud, is CardNav by CO-OP, which provides transaction-level alerts and controls via members’ personal smartphones.
7. Demystify Person-to-Person (P2P) payment technology. Direct payment to another person, account-to-account in real-time. It’s a marvel of making payments today, and members need to both understand it and know that you offer it. For CO-OP, Hansen says, “This product line is core to our business and will be expanded with new solutions as the technology advances.”
According to Kerry, “Member education is so important. Your members look to you for guidance. Opening up these dialogs both demonstrates your leadership and sets the stage for deeper, more lasting member relationships.”
CO-OP Financial Services makes it easy to educate your members with customizable marketing materials available by visiting the CO-OP Marketing Portal.
For expert insights on the state of credit payments, view the premium content offer, “The Credit Evolution: A Panel Discussion” available exclusively from CO-OP Financial Services.