Debit card usage is growing, as are the services members want from their credit union. Nearly half (46 percent) of the top 50 U.S. banks and credit unions (by asset size) have adopted instant card issuance technology, according to a report from the Mercator Advisory Group, while the Aite Group forecasts that the number of institutions offering the service will grow by 65 percent by 2021. This allows for the perfect combination of in-person interaction with your members and providing them with instant, easy access to their money.
Many financial institutions also say instant issue technology is an effective way to reduce card theft through the mail. Divergent opinions regarding instant issuance can be confusing for those considering whether to adopt an instant issuance program, continue one that is already in place or even add a digital issuance option. In this article, we’ll take a look at some of the nuances of the topic so you can make the right decision for your credit union.
Factors driving adoption
Instant issuance remains an attractive offering for credit unions for three primary reasons:
- It gives them a competitive edge by keeping pace with member demand for fast, convenient financial services. Research indicates that cardholders appreciate instant issuance options; a recent study revealed that the service influences their choice of financial institution for 36 percent of debit card users, and 47 percent for 18-24 year-olds.
- Financial institutions view instant issuance as a way to increase security and address fraud concerns by more quickly getting EMV chip cards in their cardholders’ hands. This can give a credit union an important competitive advantage since the majority of cardholders (76 percent) view EMV chip cards as more secure.
- Instant issuance allows financial institutions to position their card top-of-wallet and immediately start capturing interchange revenue. Data from Fiserv show that eliminating the lag-time for account holders to receive their card in the mail and activate it leads to higher use and better performance; instant issuances result in 30 percent of cardholders using their card on the first day and 70 percent within five days. Over a 45-day period, instant issuance cards outperformed mailed cards by 53 percent.
What about digital issuance?
While instant issuance is “table stakes” for many financial institutions, digital issuance is not yet a standard offering in the industry. According to Vantiv Product Manager Jared Morgan, who specializes in the topic, digital issuance is virtually nonexistent in the current marketplace. However, he notes it is on institutions’ 24-month road maps.
“I think we will start to see it and the uptick in mobile wallets will help drive it,” Morgan said. “But because adoption is still relatively new for mobile wallets, it’s not at the forefront of people’s minds.”
Additionally, Morgan notes that it’s not a matter of digital issuance replacing instant issuance, or even about institutions needing to offer both solutions. Instead, it’s about two different demographics and two different strategies to complete a card issuing strategy.
“Every institution is going to have a demographic that won’t embrace the digital age, that isn’t using Apple Pay, and won’t use it in the next three to five years,” Morgan said. “I really think institutions are going to develop a better understanding of the fact that there are two important ways they should be thinking about their card issuing strategy over the next few years.”
Choosing your strategy
Meeting members’ expectations for secure and convenient access to their credit union accounts and creating a positive experience for account holders are two of the most important considerations for all financial institutions. Recent estimates are that as much as two percent of the credit and debit cards in circulation today have been instantly issued and that three or more percent of credit and debit cards will be issued in a branch by 2021.
Whether instant issuance, digital issuance, or other card issuance strategies are right for you institution depends on many factors. To learn more about your options, and for expert guidance on the right path to take, contact Vantiv or your trusted payments provider.