How credit unions can navigate an evolving payments landscape
May 14, 2018 1:24 PM
Payments in the palms
At its first immersion conference under the Trellance brand, the credit union service organization formerly known as Card Services for Credit Unions, or CSCU, served up a host of insights into everything from payments fraud, digital strategy and even a Shark.
The People's Shark: Daymond John
Daymond John, the creator of the FUBU hip-hop clothing line and one of the “sharks” on “Shark Tank” offered his five “shark points” for success during his keynote speech at Trellance’s immersion 18:
1. Set a goal
2. Do your homework
3. Amor (love what you do – but also, don’t leave love behind for success)
4. You are the brand (and you should be able to sum it up in two to five words)
5. Keep swimming (or, just like a shark that stops swimming, die)
John noted that he has failed any number of times in his life, and what he has found is that every time he has failed, one of those five points was missing. Indeed, although the FUBU line still exists and is profitable today, it largely died out of the U.S. around 2003, five years after its founding. He said it is no coincidence that happened right about the same time his first wife left him. She left not because she no longer loved him, but because she was seeing him on TV more often than she was seeing him at home. In effect, he left his love behind to continue pursuing success—his third shark point. Only when all five points are present can there be success, he said.
1. Set a goal
2. Do your homework
3. Amor (love what you do – but also, don’t leave love behind for success)
4. You are the brand (and you should be able to sum it up in two to five words)
5. Keep swimming (or, just like a shark that stops swimming, die)
John noted that he has failed any number of times in his life, and what he has found is that every time he has failed, one of those five points was missing. Indeed, although the FUBU line still exists and is profitable today, it largely died out of the U.S. around 2003, five years after its founding. He said it is no coincidence that happened right about the same time his first wife left him. She left not because she no longer loved him, but because she was seeing him on TV more often than she was seeing him at home. In effect, he left his love behind to continue pursuing success—his third shark point. Only when all five points are present can there be success, he said.
Why you can't wait for members to ask
It took 75 years to get to the point where 50 million people had adopted the telephone and just 19 days to get to 50 million users of PokemonGo, according to Victor Oliveria, products specialist at MasterCard. And that’s exactly why a credit union can’t afford to wait until consumers start asking for something. “Don’t get caught up in ‘my members aren’t asking for this,’” he cautioned. “They’re not asking for it because they can just as easily go get it elsewhere.” That is especially true for mobile and online shopping where, if there’s an easier way for them to pay, they will move to that form of payment rather than wait around for their credit union to get on board.
Refresher on basic terminology
One of the hardest things about talking about digital strategies is that everyone isn’t always speaking the same language, according to Lou Grilli, director of payment strategies at Trellance. So Grilli offered up a few basic definitions to try to get everyone on the same page:
Mobile wallet: Stores your credit card or bank account information and uses different technology to pay online or through a smartphone app. It can be bank branded, technology branded or merchant branded.
Mobile proximity payments: Using a mobile device to pay at the terminal either either near field communication (NFC) or magnetic secure transmission (MST).
P2P: The ability to send funds from one person to another regardless of financial institution
Though this seems really basic, Grilli said, there are still enough people out there using different terms and/or defining these terms differently to cause confusion.
Mobile wallet: Stores your credit card or bank account information and uses different technology to pay online or through a smartphone app. It can be bank branded, technology branded or merchant branded.
Mobile proximity payments: Using a mobile device to pay at the terminal either either near field communication (NFC) or magnetic secure transmission (MST).
P2P: The ability to send funds from one person to another regardless of financial institution
Though this seems really basic, Grilli said, there are still enough people out there using different terms and/or defining these terms differently to cause confusion.
Payments wars are the new VHS vs. Beta
Another point of contention when it comes to digital strategy is the sheer number of players out there and the uncertainty about which one will win out in the end. Much like the battle between Betamax and VHS back in the days of the videotape format war, credit unions are wondering which of the various mobile payment platforms will eventually win out. For example, Sarvady noted, Fiserv currently offers both its own platform – PopMoney – and Zelle. At a recent payments conference, he said, a Fiserv executive shared why this is so. “He said Fiserv believes Zelle will be the eventual winner, but Fiserv will continue to offer both because as long as they have customers who are using PopMoney and don’t want to convert to Zelle, they will support both.” Zelle, he noted, has the right idea: eliminate the confusion about whether both ends of a transaction have to be with the same financial institution and create an FI-agnostic brand for P2P. The problem, he said, is there are still any number of other issues Zelle – and any P2P platform – will have to address.
Why one credit union kept fraud mitigation in-house
Lori Hodges of Visa and Shari Hoover, card fraud manager at Pennsylvania State Employees Credit Union, shared the stage to give credit unions some insight into why the $5 billion credit union has kept fraud in house. “It gives us control over false declines,” Hoover related. “But also, members don’t want to deal with a third party. There’s a loss of trust when they hear from someone else instead of the credit union.” More importantly, however, is the degree to which a credit union’s own, dedicated employees will go above and beyond to investigate a fraud case instead of just paying off on the claim, she said. For example, she related the story of a member who claimed not to have made $5,000 worth of purchases at a Cabbage Patch Kid convention. “We reached out to the merchant to alert them that this woman was claiming she didn’t buy these dolls. The merchant was outraged,” she said. As a result, the merchant was also only too happy to help with the investigation and promptly emailed the credit union member to ask if she had received her merchandise and if she was pleased with it. She happily responded to the merchant that yes, she had the dolls and was thrilled with them. The CU’s fraud investigator also went to the member’s Facebook page, where the member had posted a photo of all her new dolls. It was awfully hard for the member to continue to claim she hadn’t made those purchases, Hoover said, adding, “are you sure a third party will go to that much trouble?”
