ST. PETERSBURG, Fla.—Count Chuck Fagan as another expert who believes credit unions must pay attention to the “contactless wave.”
As CUToday.info previously reported, an increasing number of analysts believe tap-and-go plastic will claim a much bigger piece of the payments space this year. Fagan, president and CEO of PSCU, credited merchants for driving the greater presence of contactless cards.
“Payments just continue to grow, and contactless is just another big area of focus for credit unions now,” said Fagan. “And it needs to be, because Mastercard and Visa are really pushing hard for it and merchants are out now with large acceptance for contactless, with contactless enabled terminals. Visa and Mastercard say that 65% of their terminals will be enabled for contactless this year. If we get to that level of acceptance, issuers need to take advantage of it.”
As many payments analysts have told CUToday.info, contactless plastic will bridge more consumers over to using digital wallets, whose acceptance has been lagging far behind original expectations. Fagan agreed.
“I think you'll have certain segments of the population that will jump right to the mobile phone, but we as a society are so ingrained in the use of plastic…,” said Fagan. “But I think we're going to have to go through that step and some will stick with plastic and others will transition into mobile phones, especially as security fears regarding mobile payments—which are unfounded—go away.”
Again, Fagan said issuers are driving the contactless plastic wave.
Faster & Faster
“From a merchant perspective, you got an EMV or swipe transaction, and that's still 10 to 15 seconds while a tap with plastic is two to three seconds. So merchants are looking at speed of the checkout line, while financial institutions are wanting to make the experience at the point-of-sale better for cardholders,” he said.
Fagan talked about the different stages of issuers’ payments priorities, saying first attention was given to price, then it was loyalty, and now payments experience is coming to the front.
“You can probably argue that Uber pushed things here,” said Fagan. “The payment experience with an Uber transaction is so easy, and it's preferable to just sitting in a cab and giving the guy cash or a card and waiting for a receipt. With Uber everything is electronic, so I think the contactless push is taking advantage of this growing, and expected consumer experience.”
Fagan reiterated that while contactless plastic will make consumers more comfortable with NFC payments, what will further drive the move to digital wallets is when consumers overcome their unfounded fears about digital wallet transactions being less secure than a card.
He pointed to how security is a growing concern among consumers and how it is markedly influencing how they pay.
“At PSCU we’re doing a lot a lot of market research, more than we've ever done, and one of the key findings we just came back with is the preferred card in the wallet is the one consumers feel is most secure—the one for which they don't feel the risk of identity takeover or just regular fraud.”
Striking a Balance
Fagan also emphasized that when it comes to Fraud prevention, PSCU is paying a lot of attention to making sure consumers are protected, but also that not too many legitimate transactions are denied due to fraud concerns.
“We are really focused here and credit unions need to pay a lot of attention to this delicate balance of protecting members but not making things inconvenient.”