The Importance Of Payments Innovation

Chuck Fagan, president and CEO of PSCU, believes that payments innovation is key for credit unions that aim to meet their members’ needs long term. In this excerpt from The Connected Economy’s Power Source – CEO Edition, Fagan shares the new requirements for digital banking providers to build strong, trusted relationships with their members.

Prioritizing payments innovation is a critical area of focus for credit unions as they look to serve the future needs of their members. Payment solutions and offerings are key drivers of the credit union-member relationship, encouraging increased trust and ultimately leading members to continue banking with their credit union in the long term. Conversely, if proper attention is not given to innovation, it can push members away.

According to the most recent PYMNTS/PSCU Credit Union Innovation Study from February 2021, 88 percent of credit union members are “very” or “extremely” satisfied with their credit unions. At the same time, members want their financial institutions to innovate, and 22 percent of all members reported they would consider leaving their credit unions for competing FIs if their credit unions do not innovate.

Likewise, it is no longer enough for credit unions to simply provide the basic set of banking requirements — members’ primary interest no longer lies in legacy core banking systems, share accounts or loans, but rather in innovative payment solutions and offerings that are personalized, simple and secure.

Digital banking is the new core and must be integrated across all products, services and offerings. Members expect to access their accounts via multiple channels, and self-service tools are more important than ever for members seeking to manage their accounts — as well as for credit union employees to provide an optimal member experience. Members want to choose how they transact, making it critical for credit unions to provide the newest payment innovations and technologies like contactless cards. Buy now, pay later installment solutions can also provide members with the freedom to budget as needed and have more control over their finances – which is important, given the increased demand for this convenient payment option that has been further accelerated by COVID-19.

In addition, strong fraud management is critical as members shift to conducting more card-not-present (CNP) transactions and fraudsters continue to innovate and find new avenues of attack. With key functionality like digital issuance of plastics, real-time fraud text alerts, enhanced loyalty solutions that allow redemption at the point of sale, and more intelligent fraud tools that decline fewer transactions, credit union credit cards have the features to successfully compete with any of the large bank issuers when it comes to creating exceptional payment experiences.

Regardless of the enhancements in which a credit union chooses to invest, payment innovations must provide seamless integration with all other offerings in order to deliver a unified payments experience. We have seen the accelerated adoption of all things digital as the pandemic has progressed; these shifts are very real and are here to stay. No matter where credit unions are on their digital transformation journeys, it’s clear that payment innovations are the future of the credit union industry when it comes to meeting the evolving needs and expectations of members.


‘Unbeatable’ Fake IDs Become Booming Underground Business

While digital identity crimes are an ever-present threat, fake physical IDs have never gone away.

And as The New York Times (NYT) reported recently, these IDs — long-prized by underage folks who want to hit the bars before they’re legally allowed — are only growing more sophisticated.

That’s because continual upgrades to license designs means that the type of fake ID students once put together themselves in their dorms no longer past muster, the report said. Now, counterfeiters are putting together fake IDs that include holograms, bar codes and laser engraving that can trick bar owners’ electronic scanners.

The counterfeiters, the report added, put up websites listing replicas by state, take payments in cryptocurrency, and build fake IDs with equipment and materials they promise can fool the sharpest-eyed bouncers.

These sites, NYT said, list licenses with “scientific specificity,” including details about card thickness in micrometers, laminates, and security enhancements like embedded data chips, ultraviolet features and coded magnetic strips.

“They are unbeatable,” Martin Sheil, 62, who owns the Josie Woods Pub in Greenwich Village, told NYT.

The report noted that Chicago’s O’Hare International Airport last month confiscated 984 counterfeit licenses in less than a week. Steve Bansbach, a federal Customs and Border Protection spokesman, told the newspaper that there’s a larger threat here than just kids getting served alcohol: the idea that these cards could be used in identity theft and human trafficking.

PYMNTS discussed the problem of fake IDs last year with Intellicheck CEO Bryan Lewis, who noted that advanced technologies are vulnerable to threats, as voice prints, face prints and facial recognition can all be mimicked with artificial intelligence (AI).

At the same time, he added, treating everyone like a criminal to filter out the small number of people who actually are criminals can inject friction into the verification process and harm businesses. The key, Lewis told PYMNTS CEO Karen Webster, is to let people prove they are who they say they are in the easiest way.

“If you can tell that a government-issued ID is real, that’s the most important step,” Lewis said. “After that, you can use the face or something else, because now we’ve tied a face or voice to an identity — and you can create an immutable token.”

Lewis said his company’s data shows that 1% of activity moving through title companies involves a fake ID. The same percentage applies to the bank branch setting, where someone could open an account to move money without a credit pull. It’s the reason account takeovers are one of the fastest-growing forms of identity theft, he added.