In an era of almost daily news about alternate and mobile payment solutions in our industry, credit union executives are right to be concerned not only about the future of their business but also of the potential dilution of their brand as new players enter the market.
Consider this scenario. Brandon and Nicole need a new lawn mower. They’ve been saving money for a couple months in their share account, researching different models and watching for deals. They plan to use their credit union credit card to make the purchase when the time arrives.
The Sunday paper is delivered, stuffed with ads, and Brandon spots the lawn mower he wants on sale at the local big box home improvement store. He and Nicole borrow a trailer from the neighbor, load up their two kids and head to the store.
After talking it over with a salesperson, Brandon and Nicole take the inventory card with the SKU number and head for the checkout to purchase the mower with their credit union credit card. When they arrive, however, the cashier offers them an alternative, PayPal right there at the point of sale.
As they corral their two kids, Brandon and Nicole breathe a sigh of relief, smile and use the alternate payment platform to cut time from the closing of the sale. Nicole doesn’t even have to dig through the diaper bag for her wallet; she just punches in a few numbers.
And just like that, the credit union brand is effectively removed from the payment equation. This major purchase experience was made easier, and you can bet Brandon and Nicole will remember it the next time they go to make a purchase at the grocery store, the movies or when buying birthday presents.
There’s a subtle implication each time members take their credit union cards out of their wallets. When they see that logo, there is an immediate connection that purchase was enabled by their relationship with you. With emerging payment alternatives at the POS, like PayPal and Square, that connection is broken, and the branding opportunity is lost. The credit union is no longer the connection to the satisfaction of that purchase, whether it’s a cup of coffee or a lawnmower.
Providers of alternate physical payment platforms aren’t the only options for your members. Mobile wallets using near field communications and other cloud technologies are becoming less of a someday technology and more of a reality every day. With Isis testing its solution this summer and Citi partnering with Google Wallet, it’s easy to see the momentum. When mobile wallets inevitably gain traction, the movement will gain steam and quickly.
Although that movement has been a slow roll, but there is no doubt it is increasing. In a report published in December 2011, IMS Research, a United Kingdom-based analyst group, predicted NFC handset distribution to increase 129% in 2012.
According to recently published survey data from Carlisle & Gallagher Consulting Group, among consumers interested in mobile wallets, 80% said if PayPal offered financial services they would consider it as their primary financial institution. Google would be the choice for 60%, and 60% would also consider Apple, which has just recently launched what most believe to be the first phase of its mobile wallet initiative.
Keeping your credit union brand in front of members is essential to maintaining a long-term relationship in which you remain relevant. If you haven’t started the process of researching potential partners that can integrate with your online and mobile banking solution, there is still time.
Going back to our example, Brandon and Nicole had every intention of paying with a traditional method, using their credit union credit card. But a more convenient, instant solution presented at the point of purchase quickly changed the branding opportunity.
Disintermediation can happen just as quickly. As your members continue to increase their use of mobile banking, a mobile payment function presented as part of the total solution is the ideal way to protect your brand relevance. An alternative payment partnership that allows your credit union brand to remain in the forefront, while providing the flexibility and ease of use your members need, advances both your technology solutions and your relationship with your members.
Brian Day is the Dwolla product leader at The Members Group.
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