CAMBRIDGE, Mass. -
"It's neat for the member to walk into a store, tap the card to the reader and light up the four green lights for payment confirmation," explained Jim Lawrence, retail operations administrator.
It's not the first time a credit union has taken to a technology in part because it's cool: cash-dispensing ATMs, debit cards and homebanking all owe some of their success to the "coolness" factor.
Contactless payments may have touched a nerve. In the short history of swipe-free cards in the U.S., which is the world's biggest contactless card market, there are more than 30-million contactless cards in use at more than 30,000 merchant locations, according to various research firms.
In May, the $219-million HUECU became one of the first credit unions to issue contactless cards.
"We want to get a jump on contactless around here because we're in a very competitive market," Lawrence said. "Eventually, we want to offer contactless through mobile phones, plastic wrist-bands for the beach and key-chain fobs-all offer capabilities that you don't have with standard cards."
HUECU uses the MasterCard PayPass program, in which members tap a HUECU-branded PayPass debit card, embedded with a computer chip and radio frequency antennae, on a PayPass reader that bears a universal radiowave symbol. Currently, national retailers accepting PayPass include McDonald's, 7-Eleven, CVS and Walgreens pharmacies, Petco and United Artists Theatres.
Contactless cards-which, alternatively, can also be swiped-cost $1 to $2 more per card to issue than swipe cards, but "we hope it's offset by the benefits it brings," Lawrence said.
Fun and fast payments mean members may use the HUECU debit card more often, he said. "The program is geared toward paying for smaller transactions so that people don't have to worry about carrying cash or counting coins. But MasterCard statistics show that people just start using their cards more for small and large transactions alike.
"We hope that our card will come out of their wallets more often and that they'll think about using our other services as they see our logo on the card," Lawrence said.
Members like that contactless payments are a touch faster than swipe payments, Lawrence continued. "I went to a game at Fenway Park, and every merchant had PayPass. I was in line at one of the stands and wishing every customer had a PayPass card because people were fumbling with their change. I could have gotten back to the action more quickly."
PayPass may help reduce fraud loss at HUECU as well, said Lawrence. Members have zero liability for unauthorized use. For transactions over $25, merchants are responsible for verifying transactions with PINs or signatures. If the merchant fails, they are responsible for any fraud.
"That should help with these large data breaches where merchants have been getting off scot-free," Lawrence added. "We've always had to soak up the cost for fraud."
HUECU issues 300 contactless cards per month to new accounts and as reissues, replacements and special requests. Of the CU's 10,000-card debit program, about 1300 cards are contactless.
The biggest challenge in setting up PayPass is coordinating with the various card and processing systems vendors, Lawrence said. "I'm still working to have reissued cards be PayPass cards without having to change the card number."
Harvard University Employees Credit Union serves 26,000 members comprised of the university's alumni, faculty and students.
more
Read more about related payments at cujournal.com and search the following bolded terms in the archive:
Tech Council Examines 'Under-Utilized' Technologies, on the CUNA Technology Council's efforts to educate members about contactless payments.
Contactless Cards Seen As The Answer In Micro-Debit, on how the payments industry would like to convert small change transactions to contactless cards.
Contactless Credit Card Use Still Low Nationwide, on why consumers are slow to use contactless cards.
For More Info On This Story
* Harvard Employees University CU, www.huecu.org
* PayPass, www.mastercard.com
