Credit Unions, Small Banks Prepare for Android Pay, Samsung Pay

Credit unions and community banks are increasingly preparing to adopt Android Pay and Samsung Pay, while reporting more consumer use of Apple Pay since its launch last year.

The Members Group, a payment technology provider and consultant for smaller financial institutions, has begun enrolling its clients for testing of Android Pay and Samsung Pay by late this year or early in 2016.

"Today, only the largest issuers are participating in these wallets," Brandon Kuehl, TMG's manager of product development, stated in a Nov. 10 press release. "TMG is prepared to change that beginning this week."

TMG's expertise in providing digital wallet enablement "has paved a quick and easy path to Android Pay and Samsung Pay access for TMG's card-issuing clients," Kuehl said.

In a recent survey of clients at a webinar, Des Moines, Iowa-based TMG found that 86% of the 75 participants plan to make Android Pay and Samsung Pay available to their cardholders.

More than 75% of TMG's clients are live with Apple Pay. Through the end of October, the number of Apple Pay transactions for 2015 has "increased by a factor greater than 10," TMG stated in the release. It did not provide a specific number.

The average Apple Pay transaction amount was $14.43 in January and had increased to $36.25 in October. McDonald's, Starbucks, Walgreens and vending machines were the four most popular places at which customers of TMG clients used Apple Pay.

Samsung Pay uses magnetic secure transmission technology to operate at more merchant locations than the purely Near Field Communication-based Apple Pay and Android Pay. Because of this, 54% of TMG clients surveyed expected Samsung Pay to be more attractive to their cardholders than Android Pay, which came in at 40%.

Despite the widespread interest Apple Pay has drawn among banks and merchants, consumers have done very little with the mobile wallet in its first year. Pulse's annual Debit Issuer Study found that consumers who enrolled a debit card with Apple Pay used it for just 0.34 transactions per month (or roughly one payment every three months)  in the mobile wallet's first year. But many financial institutions refuse to give up on Apple Pay just yet.  

"For credit unions and community banks, enabling mobile payments today is about readiness for heightened consumer demand tomorrow," Kuehl said. "People love their plastic, but media attention to data breaches, cybersecurity attacks and the online fraud fallout from EMV chip cards in the U.S. rightly has them concerned about security."

One of the main selling points of Apple Pay and other mobile wallets is the improvement in security. Apple Pay uses tokenization, EMV security and biometric authentication to protect each transaction.