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The payments market is rapidly changing, so credit unions need to monitor the market, evaluate payment platforms and channels, and determine where to enter and exit on the product life-cycle curve.
That's the message CUNA Mutual Group's Theran Colwell delivered Monday to attendees of a Discovery breakout session at CUNA's America's Credit Union Conference in New York City.
Seventy-five percent of credit union fee income stems from payments products and services, according to Colwell, director of strategy and business development for CUNA Mutual Group, which sponsored the session. “That’s what makes this a hot topic,” he explained.
Payments are the key to becoming a consumer’s preferred financial institution, Colwell said.
They move in all directions among seven platforms and two channels, he explained.
The platforms are:
►Credit card system;
►Debit card system;
►Automated clearing house (ACH);
►Wire transfer system; and
►Closed-loop systems and virtual currencies (i.e., airline rewards, Starbucks Card).
There are two channels:
►Electronic (Web, mobile, ATM); and
►Physical (cash, checks).
Check transactions and processing are significantly down over the last 10 years, while the number of debit-card transactions, credit-card volume and ACH transactions are up, according to Colwell.
Notable entrants into the payments market include Starbucks (Starbucks Card), Square (Square Register and Square Wallet), Google (Google Wallet), and Target (RedCard Debit, RedCard Credit), Colwell said.
Starbucks is regarded as the most successful entrant into the new payments world. Its Starbucks Card processes $2.7 billion per year, with more than 500 million transactions annually.
The future of payments for credit unions is dependent on members' desires, as well as technology, regulation, economics and timing, Colwell said. “Timing is critical in payments,” he added.