FORT LAUDERDALE, Fla. (11/18/15)--Within 10 years, smartphones will be the “chosen payment mechanism,” John Curtis told attendees at the CUNA/National Association of State Credit Union Supervisors Bank Secrecy Act Conference Tuesday. Curtis, the senior vice president of education and training for the Western Payments Alliance, shared with attendees the changing payment trends of millennials.
A 2013 Federal Reserve Payments Study tracked payments trends from 2009 to 2012. While the usage of checks declined 9.8% over that time period, credit card usage rose 6.8%, debit card usage rose 7.7% and prepaid cards rose a dramatic 33.9%.
“During the recession, people went away from using credit cards, were worried about racking up more debt, and they started saying, ‘I’ll save up and pay with a debit card,’” Curtis said. “And now prepaid cards are becoming the most popular negotiable instrument, they’re starting to replace checking accounts...They can be purchased almost anywhere, and they can easily be reloaded, and no reporting is required. They’re the payment choice for anonymity; nothing links your name to this payment.”
For credit unions interested in offering prepaid cards, Curtis said they should first look at guidance on the topic released by the Federal Financial Institutions Examination Council.
He also urged credit unions to do their due diligence when it comes to prepaid card vendors, as well as conducting a risk assessment on the product, and consider limits on both value and volume of usage.
For vendors, Curtis recommends credit unions:
Other growing payment methods Curtis discussed included:
(Editor’s note: For more coverage of CUNA’s BSA Compliance Conference, see the following stories in today’s issue: BSA Conference: Trafficking survivor hails compliance staff ‘crime fighters;’ BSA Conference: Serving cash-intensive biz means more due diligence; BSA Conference: Gold, virtual currency, nonprofit abuse trending worldwide.)