The overall speed, convenience, and contactless features of mobile wallets have made regular users out of 66% of consumers, according to Emizentach. As consumers straddle the worlds of in-person and online shopping, the all-in-one convenience and stronger security associated with digital wallets are pushing physical wallets into the realm of retro nostalgia. If credit unions aren’t putting mobile first in their card programs, they risk missing out on being top of wallet.
People are increasingly using apps and online sites to track purchases, pay bills, manage peer-to-peer transfers, and pay back buy now, pay later debt via their phones. Is it any wonder that people also want to have their payment cards stored in the same device?
Younger generations are leading the way for mobile wallets. They increasingly show a partiality for their phones in all areas of use, with Forbes finding that 75% of Gen Z prefers smartphones over other devices. According to PYMNTS, 60% of millennials pay with mobile wallets while shopping in-person and online. Interest among Gen Z for mobile payments is even higher, and mobile adoption is only expected to increase.
Mobile wallets also bring added levels of security that make them appealing to consumers. Not only do digital wallets have their own login requirements that further protect data, but the virtual cards stored within them utilize secure tokenization technology.
Tokenization replaces sensitive data with a unique identifier. This “token” has no relationship to the data itself, so it can’t be exploited by hackers. This technology also improves authorization rates, declining fewer valid transactions and offering a better cardholder experience.
Integration with mobile wallets is key to a successful card program, allowing card issuers to take advantage of trends within the traditional payments space. Debit use has increased 15% since 2020, according to PYMNTS, with millennials and Gen Z driving this trend. If credit unions want to remain relevant amid current and upcoming payment trends, they need to take their card programs to cardholders’ phones.
The payments sector has gone through subtle, yet fast, transformation in recent years. Issuers need to make sure their card is in the phone wallet. It’s a key part of modernizing a card program. If your credit union issued card isn’t mobile wallet compatible, cardholders are likely to move on to a card that is. It’s an opportunity credit unions can’t afford to miss.
Phillip Seely is AVP of customer service and portfolio development at Envisant.