NEW YORK (7/2/13)--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, said a CUNA Mutual Group speaker at the 2013 America's Credit Union Conference.
The conference, presented by the Credit Union National Association, runs through Wednesday in New York City.
Seventy-five percent of credit union fee income is related to the payments space because products and services related to payments generate revenue, Theran Colwell, CUNA Mutual director, strategy and business development, said in a Discovery Breakout Session sponsored by CUNA Mutual Group.
Seventy-five percent of credit union fee income is related to the payments space because products and services related to payments generate revenue, Theran Colwell, CUNA Mutual Group director, strategy & business development, said in a Discovery Breakout Session sponsored by CUNA Mutual at the 2013 America's Credit Union Conference in New York City Monday. (CUNA photo)
"That's what makes this a hot topic," he explained.
Payments are the key to being the consumer's preferred financial institution, Colwell said. With payments, there are seven platforms and two channels.
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, clearing house ATM) and physical (cash, checks). Payments move in all directions among the platforms and channels, Colwell explained.
One trend in roughly the past 10 years is that check transactions and processing are significantly down, while the number of debit-card transactions, credit-card volume and ACH transactions are up, he added.
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 known as the most successful entrant into the new payments world, with its Starbucks Card processing $2.7 billion per year, with more than 500 million transactions annually.
The future of payments for credit unions is dependent on what members want, technology, regulation, economics and timing, Colwell said. "Timing is critical in payments," he added.
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