NFC technology is hoping to make a bulging wallet a thing of the past. Is your credit union ready to make the change?
No will deny the fact that technology is ever-changing. Stats are thrown around about how an iPhone is now more powerful than NASA’s supercomputers were in the 70’s. That is impressive.
With all of this change, businesses need to be constantly evaluating what their options are at all times. The credit union industry is no different. In fact it may have more to lose with some of the new technology coming down the road.
Let’s look at Near Field Communication (NFC) technology as an example. NFC is technology found in phones that allow an individual to pay for goods and services without pulling out their debit or credit card. This technology is much more commonplace outside of the United States but even within it is growing. Currently there are two main competitors in the space, Google Wallet and Isis. While Isis is still testing out their network, they do have the backing of Verizon, AT&T, and T-Mobile. This ensures that Isis will be available on many handsets in the near future. Google Wallet has, of course, Google backing the service, along with MasterCard. This enables Google Wallet to be used anywhere PayPass is accepted.
Yes, at least with Google, there needs to be a debit or credit card backing the purchase but currently the only card compatible is a Capital One MasterCard or the Google PrePaid MasterCard. That means each and every credit union will either miss out or be left funding the Prepaid card (all of this could change once Google Wallet opens up its software). The Durbin Amendment has already limited access to fee income many credit unions and banks relied on. This will only take more.
While NFC has not yet hit critical mass, the rumor mill is ablaze with Apple working on their own NFC technology. This could change this greatly.
Next up is PayPal. Have you heard PayPal is working with many national retailers to make it feasible to use your PayPal account to make your purchases at the register? Why does this matter to credit unions? PayPal currently has over 220 million accounts. This makes for a lot of potential customers for this service. Many have used PayPal as a makeshift savings account and now they can use it as a checking account too.
Never fear! There are always things you can do to counteract new technology that could negatively affect your business.
1. Learn everything you can about the service. Test it out yourself, if you can. Merely saying that the service is not safe will not stop people from using it. Look at Foursquare. Many have denounced Foursquare for privacy reason but people still use.
2. See how you can adopt the technology. The old mantra of “If you can’t beat ’em, join ’em” is in full force. If this is the way your members want to go, let them. I would suggest making sure your cards can be added to Google Wallet, Isis, or Apple’s service once it is all made available.
3. Create your own! While it may not be economically feasible for most institutions to go on their own with this, it is always an option. The IT infrastructure that would need to be in place might be a little much and it really would be easier to integrate into the current structure.
As tech is ever-growing, what do you see as being an issue from credit unions (or other businesses) in the near future?
P.S. Having used Google Wallet, I do appreciate it. I am one of those people who is always fumbling with my phone so not needing to put it down to pay for my food is great for me. Is Google Wallet the answer? Time will tell. NFC is here to stay though.