DES MOINES, Iowa-Credit unions need to keep their eyes on alternative payment strategies because they operate at an advantage over traditional payments systems.
That advantage, offered Jeff Russell, senior advisor for The Members Group, could spell fast adoption for some of the alternative payments methods.
"You have a lot of companies in payments, such as Google and Apple, that do not make money off payments to fuel their business model, which is fueled by something else," said Russell. "Payments to them is just a way of gaining insights into spending trends.
"The entire payments spectrum is "very interesting" now, added Russell. "All kinds of rumors are out about changes in debit routing. Square pushing electronification of payments down to micro-merchants. Google Wallet, Dwolla, ISIS, ClearExchange, all working in the non-MasterCard and Visa space. Apple and Amazon lurking in the background. Prepaid making a resurgence, and possibly cash, in certain scenarios."
Russell urged CU leaders to avoid "burying their heads in the sand. Have a payments strategy. Know what is important to your credit union. There are lots of things happening elsewhere in the credit union-loan demand is down, corporate stabilization expenses-but payments are the one product that credit unions touch their members with nearly every day."
Russell urged CUs to experiment with new payment types. "People ask me if Dwolla will be the next PayPal, and I don't know. They have the tools, but it also takes some timing in the market. Credit unions should explore platforms like Dwolla to learn how consumers will react as the marketplace changes. Now is a time of great fluctuation in the payments market, more than I have seen in my 20 years in credit unions and payments. I think this is an important time for credit unions to actively manage a payments strategy."
