Credit unions should step up rewards programs and member communications.

When anything solid turns into a gas without first becoming liquid, that’s sublimation, according to Wikipedia. When the surface layer of snow or ice turns into fog or steam without melting, this is an example of sublimation. What does this have to do with payments? If the topic is Internet of Things (IoT) then sublimation is the word thrown around a lot to describe the disappearance of the financial institutions’ branding.

The IoT is pushing the payment to the background. Once a person sets up a card in the IoT to use for payments (like pushing the Amazon dash button to reorder detergent, or asking Alexa to order a pizza), then every time you want something, the payment is already in place – which is a great convenience for the consumer, but a major challenge to a credit union that wants to move up their card in the virtual or digital wallet. And even more importantly, not only is the payment already in place, but it’s “hidden” during the transaction, changeable only through a buried menu item.  The physical plastic card has been turned into a concealed payment capability – sublimation has occurred! When a consumer is ready to make a purchase, how does the credit union ensure that their payment card, be it credit, debit or virtual card or tokenized payment, is top of mind or top of wallet?

Anyone who uses Uber or Lyft knows that “paying” for a ride consists simply of stepping out of the vehicle. That’s it. No card, no payment options displayed. In fact, the time to choose payment is before requesting a ride. But as FIS Chief Product Officer Bob Legters points out, “once a card is loaded into that first-place spot, it’s very hard to dislodge.” “Consumers don’t care how it works. They just don’t want anything to stop the payments process and neither do the merchants.”

How does a credit union avoid sublimation? “Take every opportunity to show that you are their financial advocate every moment you can” according to Tom Davis, CSCU’s SVP finance and technology. “Provide reminders to members on the website and in mobile banking apps to let members know that their credit union card is the safest and best option for loading into any ecommerce app they encounter.”

Legters says: “The best way to overcome this challenge (of sublimation) is through rewards, and through communication. Credit unions are sitting on the most valuable asset in the payments world – the trusted brand of the credit union is embedded in the concept of trusted banking in the general population. Go to just about anyone in the U.S. and ask about credit unions, and you’ll hear about home town, local, connected to the community. Credit union members think of people, not a financial institution. Culturally that’s the biggest thing that needs to be leveraged to defeat sublimation. “

Lou Grilli Lou Grilli

Lou is the Director of Payments Strategy at CSCU and is responsible for providing leadership to the organization for emerging payments and industry trends, as well as managing the product portfolio.

Source: http://www.thepaymentsreview.com/