Mobile devices are ubiquitous, with more than 225 million wireless subscribers in the U.S. They have empowered consumers with immediate access to information that's changing how we shop and buy-and how we interact with the payments value chain.
It's clear that the mobile wallet war is on. From Apple to Visa to telecomm leaders, everyone is innovating to try to win this space. But are consumers on board? And what does this mean for issuers?
Some consumers are still on the sidelines, but as the value proposition and merchant acceptance of these solutions grows, others, like the millions of users of the Starbucks mobile app, are all in.
Click-to-buy, touch-to-buy, or tap-to-buy - it doesn't matter which method you choose, it's all about improved experiences for the consumer - convenience, security, cost and rewards. Meanwhile, merchants and issuers have the potential to benefit from increased knowledge about the payments those consumers make.
Stay in the Game
To serve your members' needs tomorrow, you must deliver on meeting their needs today. That means offering mobile banking: balance inquiries, transaction history and statements, and intra-account transfers. Go after mobile alerts, remote deposit capture and mobile bill pay. In today's market, consumers want these services.
Innovations and collaborations are happening in the digital wallet space; stay informed. Be flexible in your approach to mobile development, especially when considering investments, product approach and partners. Do small-scale testing to see what appeals to your members. Six credit unions that process with CSCU have done that and will be first-to-market with V.me by Visa in 4Q12.
Where Is It All Going?
Innovation will not slow down. Experts predict full deployment of mobile payments via wallets at least three-to-five years in the future, but what will the landscape look like in the short term? There are three possible scenarios.
Mobile activity accelerates across the payments value chain with multiple competing technologies emerging. The market experiences a variety of pilots, launches, and failures. Cloud-based and mobile handset-based (NFC) solutions are linked to multiple product types, with issuers and retailers selectively participating. Major wallets such as Google, Isis, and PayPal may only gain limited traction in the early years.
Wallet adoption consolidates among a smaller number of providers in tandem with large issuers-driven by consumer preference for financial institutions as providers. Smaller and medium-sized issuers likely enable mobile capabilities through processing or network partners.
Retailers Strike Back
Retailers and their preferred payment products-private label credit, debit, and gift cards-have not been a focus of wallet solutions. If retailers' needs are not met by major initiatives, they may strike back and offer their own mobile payments and marketing solutions. The Merchant Customer Exchange (MCX), a retailer lead-mobile wallet initiative, indicates this is a possibility. Large merchants and their issuing partners may offer closed-loop solutions, or other retailer-friendly products like debit.
Mobile has already changed our lives. Now it's extending its reach to how consumers interact with their funds, and how payments take place. Credit unions bring to the table experience, member trust and relationships, and existing interaction points through numerous channels.
By monitoring the marketplace, surveying member needs, and proactively evaluating potential solutions, credit unions of all sizes can position themselves to mobilize their future.
Cassie Melvin is VP Marketing with CSCU, St. Petersburg, Fla. For info: www.cscu.net.