Climb Aboard the Contactless Revolution

What a difference a pandemic makes. Just six months ago when contactless payments came up, credit union c-suiters, most of them, yawned and dismissed it as a nice to have that hadn’t vaulted up to must have status. And besides, many hundreds of credit unions are signed up for Apple Pay, which gives users a version of contactless. Who needs more?

More specifically: who needs a credit union contactless-enabled debit or credit card? Most credit unions, just six months ago, thought the right answer was “not us.”

That was then, this is now. And, in a pandemic, the consumer’s cry is getting loud: give us contactless and give it to us now.

(This blog is about contactless payments. Learn more about cashless trends here.)

2020 Is the Year of Contactless Payments

2019 estimates were that under 1% of payments were in fact contactless.

Expect much bigger usage numbers this year. That’s why Harland Clarke’s Nicole Machado, Executive Director, Product Strategy – Cards, in a white paper, claimed that “About 38% of consumers now view contactless as a basic need or feature of payments—up from 30% a year ago.”

MasterCard polling data now claims that 51% of Americans are using some form of contactless (Apple Pay included). “What we’re really seeing during this crisis period is a consumer behavioral shift to leveraging contactless products,” Linda Kirkpatrick, president of U.S. issuers at Mastercard, tells CNBC Select. “If you’re at a grocery store or a drug store where a consumer should avoid touching a terminal or coming into contact with the cashier, what contactless products really provide is an avenue to shop safely.”

And safety matters in the pandemic era.

51% of us also say we are using cash less, or not at all, since the pandemic began.

Step back from financial services for a minute. Take a look at the hotel and resort business and what you see is a stampede into contactless, not necessarily for payments (although many hotels are in fact embracing that), but definitely contactless everything else, from check in to check out. Ditto airports. Sneha Nigade, Disruptive Tech Analyst at GlobalData, comments: “The COVID-19 pandemic became a wakeup call for the travel and tourism industry to accelerate investments in contactless technologies like biometric check-in at airports and keyless hotel entry, which significantly reduces potential risks associated with physical touchpoints.”

Cruise ships, vilified during the early days on the pandemic as floating petri dishes for coronavirus, are fighting back in part by going contactless, too.

And there is US retail. Noted Harland Clarke’s Machado, “Experts estimate about 65% of U.S. merchant locations accept contactless payments.”

Right there is what has to frighten credit union executives whose institutions still don’t offer contactless cards—and that’s the vast majority.


What’s Your Contactless Plan?

Before, consumers may have ignored contactless payment tools in many retailers—but in the COVID era, they are in fact seeking them out. And then they need a card that will work with contactless, and that card just may become top of wallet.

Importantly, too, cash is being bumped out of use by COVID-19 fears. As the New York Times recently noted, “Cash was already being edged out in many countries as urban consumers paid increasingly with apps and cards for even the smallest purchases. But the coronavirus is accelerating a shift toward a cashless future, raising new calculations for merchants and enriching the digital payments industry.”

What’s in your members’ wallets?

In my wallet, there are nine credit and debit cards. Exactly three are contactless.

How many were issued by a credit union? Zero.

Discover issued one and the other two (Diners Club and an American Airlines card) were issued by banks.

Which cards now have climbed to top of my wallet? You guessed it: Diners and Discover.

Word of advice: start making plans to replace plain old EMV cards with what card geeks call dual interface cards that combine EMV with contactless, making the card more secure and more sanitary too.

Wrote Machado, “For many of your customers, it’s about time for firstgen chip card replacement. What better way to replace outdated technology than with state-of-the-art dual-interface technology that delivers a better cardholder experience that pays off for customers every day.”


Accept realities. Things are different today. Branch banking is never returning as the normal way to conduct financial services, cash definitely is rapidly losing ground as a medium of payment, and contactless is the new way to go with cards.

Get a contactless card plan ready to execute. Your members want it, your credit union needs it. Today.


Additional Reading

The pace of change in the credit union industry is accelerating, in no small part due to the COVID-19 pandemic. Also, technologies such as AI and blockchain increasingly power new, more secure solutions.

To help credit union leaders navigate a world of shifting technology, CU 2.0 has started a new service. It’s completely free and comes with no obligation whatsoever.

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