DES MOINES, Iowa-One expert sees 2013 as the year of the digital wallet, and believes credit unions need to get on board with this growing technology.
TMG's Brandon Kuehl pointed to several reasons for the increasing demand for digital wallets-rapid adoption of smartphones, consumers seeking a convenient method to consolidate payment methods, and merchants looking to deliver more instant discounts and coupons.
Perhaps the biggest reason to offer e-wallets, added the product development architect, are moves last year to gain share by Google Wallet and the emergence of Visa's V.me. There is PayPal, too, which introduced in-store checkout, and merchants are moving to create their own payments solution, the Merchant Customer Exchange.
"There has been a great deal of activity in the mobile space in the past year and we expect that to accelerate in 2013," said Kuehl during a recent TMG webinar. "We have non-financial players getting more heavily involved and retailers taking matters into their own hands. They are not afraid to tackle payments solutions on their own and cut out everyone else."
A Convergence of Channels
The drive to EMV by Visa and MasterCard is also opening the door wider for mobile, as merchants upgrade their POS terminals to accommodate EMV they will likely include mobile payments capability.
"We will get to the point where it's any transaction, any device, any time," he said.
Another important point to consider, noted Kuehl, is those coveted younger consumers often care more about the payment experience than the actual object they are buying. "To them it is often more about the journey than the end-point. Paying with the phone to them is cool." Kuehl expects the digital wallet will eventually become consumers' payments "hub" and that CUs not only will protect their current card revenue by offering an e-wallet solution but will also become more ingrained in members' daily lives.
Acknowledging there is still a lot to be determined with how mobile solutions will play out at the merchants' end, Kuehl believes what will lead the way with e-wallets is a hybrid solution-a mix of near field communication (NFC)-where the card is stored on the phone-and terminals that connect with the cloud-where the card is stored online. One plus for FIs: 75% of consumers say they'd rather have their digital wallet solution come from their financial institution.
"Learn how many of your members want a digital wallet. Learn their spending and transaction habits. Don't be afraid to do something-afraid you won't get the perfect solution-and hesitate as a result. Mobile is evolving quickly, so do something and learn from it, because if you don't offer your members a digital wallet, someone else will."
MORE@CUJOURNAL.COM
Subscribers can read related stories by going to www.cujournal.com and typing the following headlines into the search function
PSCU Partnering With Google Wallet
Proceed With Caution, But Don't Wait To Explore Digital Wallets
