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Frictionless Payments
Written by Cyndie Martini
on June 23, 2020

As more consumers find themselves at home, whether voluntarily or through stay-at-home orders, card-not-present transactions (i.e., online or phone initiated) have soared while card-present (i.e., on-site) have taken an expected hit. What should credit unions do to take advantage of this flip in payment transaction methods?

According to analysis by CO-OP Financial Services, card-not-present transactions have increased by 30% year over year (April 2019 to April 2020) while card-present transactions have dropped by 41%. 

Department stores have taken the brunt of this drop. Per purchase spending at grocery stores increased but overall volume fell by 15%. Discount stores have seen their debit and credit volumes increase by 9% and 14%, respectively. Hardware stores have seen even larger volume increases with 28% in debit and 21% in credit cards, possibly due to consumers spending more time on DIY and home improvement projects.

Amazon has been the biggest card-no-present gainer during this period. In its April quarterly earnings report, Amazon revenues were up 29% in North American. Debit and credit transactions were up 33% and 55% respectively for the company.

Across the entire spectrum of industries, debit transaction volume dropped 41% while credit transactions dropped 29% In April. How can credit unions grab a few percentages of this increase in online transactions? 

Credit unions would do well to promote their cards in industries that are seeing growth in online spending. Certainly, an easy choice is almost anything related to Amazon. Running promotions in categories that are producing the highest interchange growth is another good option. Offering temporary fee and interest relief on credit cards can help spur spending as well.

Knowing that the majority of spending is currently online, credit unions should make sure customers are aware of their mobile payment platforms, specifically mobile wallets. As customers eventually move back to spending in stores, contactless payments will be another area that should be front and center in customers' minds.

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