NAFCU Services Blog

By Nicole Jass, Vice President of Data Products, Vantiv, now Worldpay. 

Mobile wallets are getting a lot of buzz. Well-known solutions like Apple Pay and Samsung Pay have captured the attention of the media, and the image of smartphone-waving hipsters at the local Starbucks is undoubtedly the embodiment of cool.

But is mobile wallet really where the action is?

For years, issuers have fought a high-stakes war of attrition with cardholders’ pocketbooks as the battlefield. Issuers have tried numerous approaches to getting “top of wallet,” or the cardholder’s first choice of payment at the point of sale, including offering color-coded card edges, custom designs and photos, and loyalty programs to boost point of sale activity.

But as cardholder behavior steadily shifts to the digital realm, the theater of engagement is changing. And as trendy and exciting as mobile payments are, for now it’s just a skirmish in the larger war. Digital wallets represent the future, and that is where your credit union should focus its efforts.

To illustrate this shift, as of late last year, card not present (CNP) transactions now make up over 7 percent of credit union card sales volume.[1] This is an increase of 7 percent over 2016, representing very strong growth. But national banks are seeing even faster growth in this channel; CNP transactions grew by 12 percent in over the same time period, and now represent nearly 9 percent of sales volume for these institutions. [2]

Although credit unions are seeing some success with mobile wallets, with 33 percent year-over-year growth in September 2017, versus just 10 percent growth for national banks, this probably owes more to credit unions catching up with banks’ earlier adoption of Apple Pay and Samsung Pay over the past year. National banks still own this market, with .22 percent of sales volume versus credit unions’ .12 percent of sales volume. Overall, this represents a tiny fraction of total sales transaction volume, and mobile payments have been slow to take hold across a wide range of demographic segments.[3]

To capture a greater share of digital payment transactions, your credit union should try some new tactics, such as targeted loyalty campaigns and acquisition campaigns aimed at demographics that conduct heavy card not present transactions. Otherwise, the war will be over quickly, and your credit union may be left behind.

Vantiv, now Worldpay is the NAFCU Services Preferred Partner for ATM, Debit Card & Gateway Processing; Credit Card Processing & Servicing. More information and educational materials are available at nafcu.org/vantiv.