Vibrant Credit Union sees great value in converting its members to mobile and digital payments. And days like Amazon Prime Day can be critical for its digital wallet strategy.
Vibrant, a Moline, Ill.-based credit union with $800 million in assets, has learned members who link a debit or credit card to a mobile wallet such as Apple Pay and Google Pay make more payments. Debit card users with a digital wallet make 55.8 payments a month, compared to 32.7 for the average debit card user; when it comes to credit cards, digital wallet users make 19 payments a month compared to 8.2 for the average card user — more than double the activity.
The credit union's trying to increase digital wallet use any way it can. An increase to just 5% or as high as 10% of digital wallet penetration makes a huge difference in revenue.
“If we left everything the same and we didn’t grow our card portfolio at all, on the low end we’re looking at an additional $50,000 in interchange; on the high end if you look at the combination of debit and credit, nearly $350,000,” said Steve Ducey, chief experience officer at Vibrant CU.
“If you’re an organization 10 times our size, that’s $3.5 million,” he said.
It’s debatable whether digital wallets create deeper relationships, or if the people who are already in deeper relationships are more likely to go digital. That said, “without doubt, you can’t argue the fact that their depth of relationship is substantially higher” than the non-digital customers, he said.
And ultimately, the goal of any issuer is to encourage those deeper, sticky relationships.
Ducey, who spoke during SourceMedia’s annual PayThink conference this week in Los Angeles, explained piggybacking on Amazon Prime Day is a low-cost way to boost digital relationships.
“To have that card front of wallet on Amazon is really critical because once it gets there, at the end of the day it’s difficult for people to make the decision to move it,” Ducey said.
Amazon is part of a bigger strategy of driving revenue through payments. Vibrant offers a cash-back card specifically meant to be the go-to card for digital purchases.
“It comes with a substantially higher APR, [and] it was designed that way on purpose — it was designed to not hold a balance on it,” Ducey said. “These are for people that are transacting, that are using it pretty regularly.”
On Amazon Prime Day, when Amazon was
Looking at past Prime Days, the credit union knew its members spent an average of $50, with one member on the high end spending as much as $3,000. Once the promotion was over, the credit union wound up paying for $70 worth of purchases from the winning member.
“It didn’t cost us a lot but it gave us a really good excuse to have constant communication around a digital wallet,” Ducey said.
And that communication is vital. Ducey recalled a story of purchasing a soda for a colleague using his mobile wallet, and the employee — who he described as young and tech-savvy — didn’t know this was possible using Vibrant’s cards.
“If our employees don’t realize that you have the ability to pull your phone out and do a simple transaction like get a soda at a vending machine, there is no way our membership has any realization that they can do this,” he said.
After the vending machine conversation, Vibrant created a simple video in-house to email to members to raise awareness. And it also picks a random transaction each week to refund to a random member as a way to drive engagement.
That transaction could be as low as a $3.50 cup of coffee, Ducey said, but it keeps the credit union in the conversation and gives members a reason to use its product. Vibrant also offers Pop Sockets (which stick to phones to make them easier to grip) to members who visit a branch and show that they use Vibrant’s card in a mobile wallet.
Charlotte Norton, senior vice president of central operations for Randolph-Brooks FCU, had a similar experience to Ducey’s interaction at the vending machine.
An executive at her credit union had lost his wallet when he left it inside his truck, which was stolen. She was able to block his card that Sunday and initiate the process to issue a new card and get it in his hands by Tuesday.
“I was so proud of our team,” Norton said. “We got it all set up and I was extremely excited — until Monday.”
That’s when the executive came to work and told her that the issuer of his Southwest Airlines card was able to deliver a replacement card digitally into his mobile wallet.
“And I went, ‘darn,’” she said. “He popped my balloon.”
This motivated the RBFCU to add this digital re-issuance capability to its debit card platform. The credit union makes a point of learning from its employees’ experiences.
The wrench in these strategies is the Apple Card. In the case of both Vibrant and RBFCU, the issuers were working to change the experience for existing customers. But Apple Card changes the experience at the point where the customer applies for the card.
Ducey applied for the Apple Card to see how smooth the process was. “It took me three minutes, if that,” he said. “It was incredibly fast … it makes you incredibly sticky to their product.”
The Apple Card is closely tied to Apple Pay, so it has the potential to thwart any other issuer’s efforts to be the top-of-mobile-wallet card. But it’s not an immediate threat, Ducey said.
“In our organization, I’ve seen nine payments go out to Apple — a pretty low number,” he said. Plus, more than half of Vibrant’s members use an Android phone, removing them from the potential pool of Apple Card applicants.
People who apply for the Apple Card are either tech-savvy Apple devotees, or people who want to show off that they have Apple’s new product, Ducey surmised. The novelty factor can only get Apple so far, he said.
“There’s still a climb that Apple’s going to have to make,” he said.
