The first sign of a routine errand turned scary came at the start of 2020 when Debra Miles went to the pharmacy.
"I'm a bit of a germaphobe. When I picked up a prescription they still wanted me to sign, and I'm like 'yuck'," said Miles, the chief financial officer at Astera Credit Union, a 15,000-member credit union based in Lansing, Mich., and assets of $178 million. "And a lot of our members felt the same way. Suddenly the request for contactless rose."
Miles told her credit union's story at PaymentsSource's recent Card Forum: Contactless event. Astera, which has four branches, was embarking on an expansion to promote more flexibility in its card strategy via a migration to PSCU, the St. Petersburg, Fla.-based credit union service organization.
That project began in 2019 and is still underway. But the project's priorities changed rather suddenly during 2020, and pushed a greater emphasis on contactless payment support.
"As part of our evaluation in January 2020 we found, based on our location and merchant adoption, contactless was not being asked for in our area," Miles said, adding that experiences similar to the drug store started cropping up rather quickly after January. "Some of the merchants complained to me that I was not the first one asking for contactless at their store."
Contactless had suddenly jumped from the back burner, and became enough of a necessity that it's now part of the credit union's relationship-building strategy. The same businesses that were slow to adopt EMV years ago had begun racing to update their terminals for contactless payments, according to Chassidy Butler, a strategic consultant at CU Engage, which is advising Astera on its PSCU migration. Butler also spoke at Card Forum: Contactless.
Astera was faced with the prospect of losing germaphobic customers to larger institutions that jumped into contactless payments earlier. Whenever people learned Miles worked for Astera, they'd begin asking when the credit union would support contactless payments. The answer is by the end of April, Miles said.
Contactless in all forms — shopping, ordering, transit ticking, payments, and ATMs — is one of the
The impression of being with consumer trends can matter as much as the technology, said Butler, citing research from Visa that found 79% of quick serve chains, 77% of drug stores and 61% of grocery stores in the U.S. now accept contactless payments, making contactless decidedly less of an outlier.
"Contactless is not just something for millennials," Butler said. "The pandemic has been a great leveler."
Contactless debit is also rising faster than contactless credit cards, Butler said, citing data from PSCU that found contactless debit rose to 18.6% of payments in 2021, from 8.4% in 2020, while credit increased to 13.6% in 2021, from 6.5% in 2020. "Usually credit cards move faster, but people are concerned about their finances," Butler said.
Consumers and merchants became aware of these trends toward both debit and digital payments, creating a need for Astera to adopt contactless and mass card issuance to get contactless out faster. The credit union is also moving to
"Members are telling us that if we have contactless payments they would make us their primary financial institution," Miles said. "We know our members 'cheat' on us with other financial institutions, but if we can be their top FI — if this is one thing we could do — I was on board."
As a small credit union it is important to stand out, Miles said, adding a lot of banks and credit unions that do business near Astera's footprint do not have contactless payments.
"The mass issuance and contactless coming together make sense for us in terms of reaching users and in terms of dollars and cents," Miles said.
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