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Inside this issue . . .

ISSUE 39 | Spring 2018

Contact MAP at:16000 Christensen Road, Ste 200Seattle, Washington 98188

Phone: 1.866.598.0698Fax: 206.439.0045Email: info@mapacific.com

www.mapacific.com See “VCR” on page 3

— VCR continued

— Industry News

— APIs: Pushing the Boundaries

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— SAVE the DATE: uConference18

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With the number of disputes rising, and processing time and costs increasing, it is time for a new process: Visa Claims Resolution (VCR). To improve the efficiency of handling disputes, Visa is focused on automating and simplifying the dispute-resolution process while also keeping pace with the needs of the payment industry.

Begining April 15, 2018, Visa disputes will be processed through VCR. Here’s what to expect and how the VCR will affect your credit union. Visa found that on average chargebacks take 46 days to resolve, with more complex cases taking over 100 days. Visa estimates its new enhanced dispute process will reduce dispute resolution timeframes from 46 days to less than 31 days, according to Forbes.

Moreoever, the new system will eliminate

— Biometric Payment Card

— Visa News

invalid chargebacks whenever pos-sible. This means if a member requests a chargeback when it is past the time limit or does not meet the minimum criteria, Visa will block the dispute from becoming a chargeback. VCR will reduce the process involved in dispute resolution by having all dispute follow one of two new workflows: “Allocation” and “Collaboration.”

All fraud and authorization chargebacks will go through the “Allocation” workflow. Using Visa Resolve Online (VROL), a series of automated checks will determine an initial liability assignment. These auto-mated checks ensure that the dispute falls within specific regulated time frames. In addition, VROL will automatically check to see if a refund has already been issued for the disputed transaction. Should Visa detect anything that makes the dispute

— Letter from the CEO

— GAFA or Fintech

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Exception Processing for 2018

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— Mobile Banking Goes Mainstream

— CUliance Grows ATM NetworkP.10

— Fraud Snapshot

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uConference18 SAVE the DATE: August 23-24

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Member Access Pacific is pleased to welcome client and guest credit unions to our 18th Annual Payments and User’s Conference. MAP’s two-day conference features leaders from the payments and complementary industries to present and discuss a range of is-sues impacting our core business. Our conference is a rare occasion for credit union professionals to learn about the rapidly evolving payments and financial services industry.

This year’s conference will kickoff on August 24 with a Practi-cal Innovation workshop where participants will be learning and practicing divergent and convergent thinking. In partnership with MAP, FutureThinkcombines a skill-building workshop with access to problem-solving tools to unleash an innovative mindset, helping participants disrupt the status quo about payments at their credit union and beyond.

On Friday, August 25, the second day of the conference will feature a payment Fraud Forum featuring industry experts. MAP’s keynote speaker is Mary Reeder, Vice President of Risk Management at Visa. Mary has more than 20 years of experience leading engineering and operations teams for early-stage and larger technology companies. Prior to joining Visa she served as Chief Technology Officer at Finsphere, the company that developed Visa Mobile Location Confirmation service that uses a person’s smartphone to confirm where they are in the world and check to see if that matches where their credit card is being used. Mary held a similar position for more than twenty years at HouseValues, Onyx Software (now Consona) and Microsoft Corpo-ration. She holds a patent for her work on the MSN platform.

Charles A. Harwood, Director of the Federal Trade Commission’s Northwest Regional Office in Seattle, will present on data breaches, data security, and data privacy. Charles has served as a Deputy Director in the Bu-reau and Acting Director of the Bureau of Consumer Protection. Throughout his career he has led law enforcement and consumer education efforts, often in cooperation with state authorities, involving a wide range of antitrust and consumer protection issues. In 2001, Harwood received the FTC Chairman’s Award for his service to the agency and the public. He is a graduate of Willamette University College of Law and Whitman College.

MAP is pleased to welcome back John Snodgrass, CAMS, to present on the breadth of financial crimes that CUs are facing. John is

Senior Manager of Financial Crimes and BSA/AML Compliance Officer at Boeing Employees Credit Union and has been with BECU for 19 years. He is responsible for managing the daily operations of the Financial Crimes Department. He is a Certified Anti-Money Laundering Specialist and serves as a member of the disaster recovery and crisis management teams at BECU. John is past President of the Northwest Fraud Investigator’s Association and he holds a B.A. in Business Communications and Graphic Arts from Washington State University.

MAP’s 2018 Annual Conference will be held August 23 and 24 at Hyatt Regency Lake Washington at Seattle’s Southport. The AAA Four Diamond hotel offers an upscale retreat near the shores of Lake Washington. Guestrooms and suites offer plush beds, ample workspaces, and 65” smart TVs, as well as views of Lake Washington, the Seattle skyline, and the Olympic Mountains. On-site amenities include complimentary Wi-Fi, indoor saline pool, 24-hour fitness center, multiple dining options, and more. For more information, please contact your Client Services Manager or Karl Kaluza at 866-598-0698 x1618 or karl.kaluza@mapacific.com.

MAP hosts this small conference each year for credit unions where we bring together industry experts to meet in a relaxed setting for learning and exploring what is happening in the payments industry and how it will impact our members. As an intimate event for select participants, space is limited. Registration will be available online at www.uConference18.com in April.

Mary Reeder

Charles Harwood

John Snodgrass

August 23 - 24, 2018 | Hyatt Regency Lake Washington

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invalid, they’ll block the dispute from becoming a chargeback.

If the dispute passes through the automated work-flow without triggering any invalid sensors, Visa will assign liability to the merchant.

While the majority of disputes will flow through the Allocation workflow, a portion will still require interaction between merchants, acquirers, and issuers. The “Collaboration” workflow is essentially the same as today’s chargeback process. Its goal is to simplify communication between each party and reduce the overall chargeback timeframe.

Finally, VCR is all about simplifying the process of chargeback resolution. Reason codes are getting an organizational makeover. The platform will simplify the dispute process by collapsing 22 chargeback reason codes to only 4 dispute groups:• 10 Fraud• 11 Authorization• 12 Processing Errors• 13 Consumer Disputes

Although this is may seem like a cosmetic change, the evidence needed to support the chargeback remains essentially the same and these categories will help reduce the dispute process’s complexity.

Visa recently completed a “Soft Launch” of VCR during which the average dispute resolution timeframes improved 57 percent to 24 days. Under the legacy process, the average dispute was resolved in 56 days. VCR’s new “Allocation” workflow contributed to the shorter timeline by reducing the number of items that required an acquirer response, decreasing the number of messages sent to the issuer. Consequently, issuers have had fewer items to evaluate. According to Visa cost data, these improvements have contributed as much as a 37 percent reduction in client dispute processing costs.

The launch of VCR is quickly approaching when the en-hanced dispute rules and new workflow and processes will take effect, leveraging the existing data and Visa Resolve Online (VROL). MAP and Visa are offering free training resources. See www.visabusinessschool.com/en/vcr for more information.

ISSUE 39 | Spring 2018

Industry News

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Banks Close a Record Number of Branches. More than 1,700 bank branches in the US closed in the 12 months ending in June 2017, demonstrating the biggest annual decline on record, according to The Wall Street Jour-nal. Most of those closures were consolidation cuts in urban and suburban areas where foot traffic was falling. The remaining others were in rural areas where lenders are just pulling out wholesale.

Amazon Pay is coming to Alexa. Amazon announced that Amazon Pay will soon be available to third-party developers making skills for Alexa, its virtual voice assistant, VentureBeat reports. This will enable third-party developers and businesses to accept Amazon Pay for in-app purchases from the Alexa Skills store. Eight percent of US respondents to a BI Intel-ligence survey said they used voice commands to buy something, send money to a friend, or pay a bill. That will nearly quadruple over the next five years to reach 31% of US adults — 78 million consumers — by 2022. The Amazon Echo is the leading device in the smart speaker market in the US, boasting a 68% market share, according to Strat-egy Analytics. Currently, security unease is the biggest inhibitor of voice payments — 42% of Amazon Echo owners pointed to safety as the primary deterrent.

Apple Pay Growth Still Unclear. Apple Pay volume more than tripled its global purchase volume according to Apple’s Q4 2017 earnings call. That’s a slowdown from the prior Q4, when Apple announced 500% annual growth. However, this growth still lacks the critical context needed to determine how much volume the wallet is processing, whether that growth is driven by scale or the addition of new markets. As Apple Pay continues to add merchants — it’s now accepted at half of all US retailers, including two-thirds of the top 100 — and moves into new countries, it’s sure to continue to grow, even if adoption remains stagnant.

ATM Jackpotting. Major ATM manufacturers, including Diebold

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Application programming interfaces (APIs) have taken the financial industry by storm in recent years. For instance, NACHA has recognized the value in APIs and is currently collaborating with various companies in the payments industry to develop standardized APIs. Financial services organizations have acknowledged that consumers expect a more digitalized banking experience that mirrors the high-tech services offered by companies like Google, Facebook and Amazon. Today’s consumers demand such services in real time with seamless interfaces and more personalized user experiences, which are all things that APIs can support.

For the payments industry, developing APIs that sup-port real-time payments remains a major focus. In fact, a recent study by Aite Group revealed that 67 percent of global financial institutions reported building APIs for real-time payment functionality is a top priority. How-ever, APIs can support use cases beyond real-time payments. The most effective use of APIs will allow the financial services industry to push past the current banking and payments ecosystem, engage a customer base across multiple channels including mobile and find new ways to provide value.

With APIs, it is much easier for outside developers to engineer new products or services and enable financial institutions and payments providers to quickly meet the current needs of their customers. Instead of creating a purpose-built solution with only a few use cases, organizations can use APIs to assemble various solutions from several vendors and provide a seamless customer experience that delivers true value.

In short, the future of banking and payments has the potential to mirror a smartphone business model, where the financial services organization acts as the smartphone while the products and services act as the apps on that smartphone. This means each customer can personalize the relationship with their financial services provider according to their unique banking and payments needs at any given time.

Several financial institutions and payments networks providers have already taken steps to prepare for an API-driven industry. For example, some are publishing APIs to encourage Fintechs to build applications that enable customers to invest in their savings based on various contextual variables. Mastercard and VISA offer numer-ous APIs to third parties as a part of its developer platform.

However, as more begin incorporating APIs into their service models, standardizing APIs will become increasingly vital. Without a com-

APIs: Pushing the Boundaries of Payments

mon standard in today’s open architecture world, APIs are less effec-tive, requiring different interfaces for each organization using them. By standardizing APIs, software vendors would follow a specified set of requirements. This standard would enable faster integration of new solutions while reducing integration costs, ultimately fostering more efficient innovation.

For an industry that has traditionally been slow to innovate, APIs are changing that, making it easier for outside developers to help banks and other financial services organizations deliver value in new ways. According to a 2016 report from FinLeap, nearly 75 percent of the top financial institutions are opening APIs to Fintech compa-nies in an effort to provide customers with more access to financial services. This trend will continue and organizations that fail to take steps toward establishing an API strategy will be left behind. With consumer expectations that are higher than ever, financial institu-tions and payments providers must recognize the value in leveraging APIs to expand the variety of services they can offer. This approach empowers the development of banking and payments services that make customers’ lives easier, which is ultimately a win-win for everyone.

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ISSUE 39 | Spring 2018

Visa News

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Counterfeit Fraud Down 70% with EMV. As of December 2017 there are 481 million Visa-branded chip cards in circulation, representing two-thirds of the brand’s total, and 59% of mer-chants are now accepting chip cards. EMV usage is considered ubiquitous, with 96% of US card payment volume being processed as chip-on-chip, according to Visa. As a result, counterfeit fraud at chip-enabled merchants is down 70% from the rates seen just after the EMV migration in 2015. And, because most major mer-chants are now EMV compliant, EMV has likely brought fraud down overall. That’s a big win for consumer safety, but with identity fraud remaining at an all-time high, merchants will now need to find new ways to protect e-commerce and the other channels fraudsters will likely flock to as in-store safety continues to rise.

BigCommerce And Visa Partner For Faster Checkout. E-commerce platform provider BigCommerce is partnering with Visa to in-tegrate Visa Checkout, the firm’s one-click buy button, on its platform. The part-nership enables BigCom-merce’s 55,000 small-and-medium sized business (SMB) customers to accept the payment method on their own branded websites. Visa Checkout saves consumers’ payment and shipping information, allowing them to check out — on a computer or mobile device — without having to re-enter their information every time they make a transaction. Over 200 BigCommerce merchants have received early access to Visa Checkout and have integrated the payment option into their checkout pages.

Visa rolls out pilot blockchain system at UnionBank. Using the Visa B2B Connect platform, UnionBank launched a pilot cross-boarder payments solution in Singapore using the Visa B2B Connect. Visa B2B Connect is using blockchain, a digitized, decen-tralized, public ledger that records all transactions in chronological order, providing central record keeping that financial technology companies use to facilitate the exchange of cryptocurrencies—the most popular of which is bitcoin—without having to use the existing payments infrastructure used by banks and traditional institu-tions. Currently, Visa B2B Connect will not process any exchange

Biometric payment cards are emerging as the next innovation in payment. According to ABI Research the payment card is here to stay and fingerprint authentication within the card is the next natu-ral evolution to retain convenience while increasing security.

Every year, around 4 billion smartcards are sold globally. They are mostly payment cards and around half of them are contactless. And, all of these numbers are increasing year on year as we move closer towards cashless societies, but convenience needs to be balanced with security to drive consumer trust. Research revealed that con-sumers want to use their contactless cards but security concerns and transaction caps are holding them back. Indeed, 38% of consumers see security as the main barrier to use. “On-card” biometrics may be a way to bring trust and security to contactless payments without compromising convenience.

Financial Institutions can open up many opportunities to increase the use of payment cards, while reducing fraud and customer frustration. New technology can also enable them to bundle with other innovative services. Biometrics like fingerprints are leading the charge. As cutting edge brings increased status and trust, new customers are sure to follow.

Consumers will be the real winners as they are driving demand for new features and the industry is working hard to answer the call. To make it happen, though, players from the entire eco-system need to work together.

Card Manufacturers are developing and manufacturing the smart cards and working with the card issuers and card networks to ensure that biometric technologies are interoperable, secure and stable.

Currently, trials are underway with technology that is ready to scale with low power consumption and the required biometric performance that will work with existing contactless point of sales terminals. All of this could come together to make 2018 the year of biometric payment cards.

2018 - The year of the Biometric Payment Card

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learning software during the last year, although no organization has turned control 100% over to automated controls.

With Card Not Present fraud and Authorization Stream attacks on to rise, credit unions need to harness the power of data science when it comes to protecting members. The most efficient, accurate way to do this is by identifying anomalies in real-time throughout the member journey. Self-learning fraud prevention systems are key to keeping up with these constantly evolving fraud tactics.

Today, a fraud management solution for these challenges exists. With the release of Falcon Fraud Manager 6.4 additional capability include a real-time machine learning system that use unique Adap-tive Behavioral Analytics. Adaptive Behavioral Analytics, or “Adap-tive Analytics,” gives a credit union’s fraud teams the edge in the fight against fraud, by spotting behavioral anomalies and blocking fraud attacks as they occur. This software works by understanding individual behavior in real-time and relying less on business rules that can be bypassed by fraudsters.

Adaptive Behavioral Analytics approach is being used to stop fraud, reduce customer friction and keep operational costs down.• Detect fraud as it happens: a machine learning software

system spots and blocks fraud as it happens.• Reduce the number of genuine customer incorrectly blocked:

using adaptive behavioral analytics, a machine learning ap-proach monitors individual customer and merchant behaviors in real-time, enabling organizations to detect anomalies. The deep understanding of individual behavior means that genuine activ-ity can be identified more accurately, reducing the number of incorrectly blocked customers (also known as ‘false positives’).

• Automatically improve fraud model accuracy: the most advanced of these fraud systems are self-learning. This means the fraud models do not degrade over time, unlike many legacy fraud systems.

Now is the time for businesses to get ahead of tackling the fraud trends for 2018. Whether it’s old or new fraud, the key is to use real-time machine learning to become a fraud fighting champion to protect and serve credit union members.

Identity fraud hits all time high. The 2018 Identity Fraud Study released by Javelin Strategy & Research, revealed that the number of identity fraud victims increased by 8% (rising to 16.7 million US consumers) in the last year, a record high since Javelin began tracking identity fraud in 2003. The study found that despite industry efforts to prevent identity fraud, fraudsters successfully adapted to net 1.3 million more victims in 2017, with the amount stolen rising to $16.8 billion.

US data breaches hits all time high. In 2017, millions of payment cards and social security numbers were exposed to data breaches according to the Identity Theft Resource Center (ITRC), a U.S. non-profit organization set up to help ID theft victims. In 2017, ITRC counted 1,579 U.S. breaches, up 45 percent from 2016. That doesn’t reflect every U.S. data breach last year. Rather, it’s a count based on the data breach notifications that an organization is legally required to issue to authorities or residents of most states, if it sus-pects that their personal details may have been exposed.

Fed: FIs suffer record high fraud losses. U.S. financial insti-tutions recorded higher fraud losses in 2016 across almost all major payment types, according to a new survey from Federal Reserve Bank of Minneapolis of 283 banks and credit unions. The results suggest that even as financial institutions implement more sophis-ticated fraud-mitigation techniques, they have not been keeping pace with criminals. The challenges are particularly acute at smaller banks and credit unions, which comprised a majority of the survey’s respondents.

Cyberattacks grow during 2017 holiday season. Threat-Metrix research identified 251 million fraud attempts, a 113% growth over 2016, during 2017’s fourth quarter. The report also revealed an increased volume of attacks originating from Rus-sia, using both automated bots and location spoofing tools. These persistent, but increasingly sophisticated, attacks primarily targeted top American retailers.

According to Worldpay’s Fraud Report 2017, Artificial Intellegence (AI) and Machine Learning is playing a key role in combating fraud. There has been a significant growth in the deployment of machine

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What is the biggest risk to banking as we know it?

Industry NewsContinued from page 3

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Nixdorf and NCR, are warning their US customers about “jackpot-ting,” an attack in which criminals use malware and hardware to force ATMs to spit out large piles of cash, according to Krebs on Secu-rity. Jackpotting, which has previously been a problem in Europe and Asia, typically occurs at nonbank, stand-alone ATMs, like the ones in pharmacies, big-box retailers, and drive-thrus. ATM fraud has been a huge con-tributor to card fraud. Card skimming, which has historically been the most common form of ATM fraud, is an over $2 billion problem globally. For context, 85% of debit card fraud in the US comes from compromised ATMs, two-thirds of which comes from nonbank ATMs. These are the same ATMs most at-risk for jackpotting, which means that the threat continues to evolve.

60% of Consumers are open to FinTechs. According to news from Bloomberg, a survey by consultant Bain & Co. found that nearly 60 percent of U.S. bank customers are willing to try a finan-cial product from tech giants they already use. Younger respondents are even more open to it, with about 73 percent of people aged 18 to 34 saying they would try a tech company’s credit card, deposit account, investment or mortgage.

Consumers are ready for wearable devices to displace smart-phones. According to a new report from Ac-centure, over half of the 21,000 global consumers surveyed agreed that they would like to replace their smart-phones with a wearable device that has smartphone functionality via voice input, hologram interfaces, and augmented reality (AR). This enthusiasm from consumers is unexpected given that the AR headset category isn’t even a major device segment yet. While Google tried to enter the market first with its Google Glass AR glasses in 2013, the device was ill received by the greater consumer market, largely due to privacy concerns. In fact, 72% of US consum-ers wouldn’t buy Google Glass due to privacy concerns, according to a 2014 survey from Toluna. While Microsoft, Magic Leap, and Google all have AR headset products in the works, none of them are cur-rently available to or targeted toward the general consumer market.

If you look at the wave of dissatisfactions roiling around the world, a massive one comes out of banking. While the 2008 financial crisis might seem far away to those in the industry, it had a massive – and lasting – impact on the average person. Not since the great depres-sion do people speak of banks in as negative a way.

Add to that a massive increase in competition in traditional financial services markets, like GAFA and Fintech and the bank of the future could be one with all core services outsourced – from the core data processor, to all banking products, to regulatory compliance.

Yet, according to a new study from Capgemini, most Fintechs regard the traditional financial services industry as allies, rather than as rivals to be ousted for the good of consumers everywhere. Today, Fintechs are happy to act as technology providers for incumbents. Almost 66% of surveyed Fintechs said that acting as white-label tech providers is their preferred way of interacting with incumbents, while over half (53.6%) are happy for incumbents to outsource their operations to them. Fintechs’ openness to collaboration suggests that they have recognized the scale of the challenge they face in gaining brand awareness, trust, and market share in the face of incumbents’ status as household names, despite traditional firms’ usually inferior customer service.

Tech giants Google, Apple, Facebook, and Amazon (GAFA) have all been rolling out banking-related features for some time, with Google introducing Google Wallet and Amazon launching credit cards, for instance. This is probably why many believe GAFA will likely achieve mainstream banking success in the next 10 years. According to Marketforce, where 83% of senior bankers stated that both Amazon and Google will develop banking capabilities in the next 10 years.

GAFA moving into the banking sector threatens financial institutions generally, but Fintechs in particular should be worried. Fintechs don’t have a technological advantage over GAFA, which has large quanti-ties of user data, which they can use to further personalize their solutions. Hence, the tech giants rival Fintechs’ tech savviness, and also boast large customer bases typically associated with big banks, making them a threat to both institutions. While big banks may be able to compete with GAFA due to their trusted brand names, Fin-techs will perhaps struggle more because of their emerging nature.

or Fintech

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difficult task for customers, who either disliked the lack of clarity around where to find alerts, or could not get the feature to work.

As mobile banking approaches saturation, a BI Intelli-gence study

found that 83% of respondents are using mobile banking, indicat-ing that the plateau isn’t because of declining interest, but rather near ubiquity, where growth is coming more from customers new to banks rather than those new to mobile offerings.

Members are using digital banking more than ever. While 77% of consumers still use a branch at least once a month, that percent-age has fallen from 84% in 2007. More importantly, however, the number of transactions per month has dropped from 4.26 to 3.79. In percentage terms, the number of transactions done in branches have fallen 18% in ten years.

As a result, credit unions need to shift their approach to mobile banking, and focus on how they can best use it as a relationship-building tool, since all their customers have it, rather than dismissing it as a baseline necessity.

The best way to do this is to hone in on value-added tools and services that consumers want — right now, the most popular are card controls and peer-to-peer (P2P) transfer functionality — and use those to grow customer engagement and increase loyalty, which in turn will improve competitive positioning and lifetime customer value. For example, mobile banking also optimizes cross-selling; as one industry survey reported, mobile banking customers have 2.3 products compared to 1.3 for branch-only customers, an opportunity to generate more revenue.

In an effort to find the right solution, a lot of credit unions and banks changed their digital banking vendor in the past year. Overall vendor churn was 15% since 2016 and was the same in 2015. That

Mobile banking is now considered mainstream in the U.S. Most FIs view it as part of their core business strategy and an important customer service channel. They understand

that mobile banking can improve overall customer satisfaction and loyalty, and that customers with high mobile banking satisfaction are more likely to recommend their FIs to others.

So far, mobile banking has been the domain of the young, with Millennials 50% more likely than average to use the service, while older users are 57% less likely. But with Millennial usage of mobile banking basically ubiquitous at this point, any growth to come in that channel will need to come from older generations. There is still a gap, but it is much smaller than before. This trend should continue in mobile banking over the next five years. Institutions should consider ease of use, text size, and support as more users adopt mobile banking who might not have the intuitive connection with the smartphone that Millennials have.

As digital banking matures, credit unions need to work to find new ways to engage users. Institutions have plenty of incentive to drive greater digital engagement. A study by Bain found that each call or visit to the branch from a member comes at a cost of $4 to the FI. The same transaction completed through a mobile app costs the credit union 10 cents. But while mobile is a highly cost-efficient channel for financial institutions, the rate of customer uptake for the channel has declined.

To find out how FIs can make mobile banking more appealing to us-ers, UserTesting, a customer insights platform, asked 300 consumers to evaluate mobile apps from the three largest financial institutions. The resulting Banking Mobile Customer Experience Index compiles user evaluations based on ease of use; speed; credibility; aesthetics; and delight. Among the findings, aesthetics was the highest-scoring factor. Common adjectives customers used to describe the apps were: clean, clear and consistent.

Delight was the lowest-scoring, most elusive factor. Customers expressed frustration about the “extreme difficulty” of navigating to online statements. Finding and setting up fraud alerts was the most

Mobile Banking Customers Most Frustrated with Difficulty Setting Up Fraud Alerts

Mobile banking goes mainstream

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Visa NewsContinued from page 5

of cryptocurrencies and only allow this to be a platform for official currencies or fiat monies that governments recognize as legal tender.

Visa launches Transportation Center of Excellence. The Transportation Center of Excel-lence is a global service that brings together the power and scope of Visa’s programs including the Visa Developer Platform, Visa Token Service, Visa Ready for Transit and Visa Global Transit Solutions with its global network of Innova-tion Centers and Studios. Building on Visa’s experience in working with transportation companies such as Transport for London and Uber, Visa’s Transportation Center of Excellence is designed to improve the consumer journey by using new technologies to transform the consumer experience with the use of digital credentials to make it easier for travel and allow providers to seamlessly integrate payments into the customer journey.

Visa unveiled the first Wallet Card. The Visa-branded version of the Wallet Card is the same size and shape as a normal Visa credit or debit card, yet it incorporates multiple features and technologies not previously found in a single payment card. Features of the Wallet Card range from the capacity to access multiple cards – whether EMV-, contactless- or magnetic stripe-based – to a pro-grammable on-card display that enables account information, such as alerts or coupons, to be sent to the cardholder via an embedded antenna. Wallet Card includes a cell phone chip and cell phone antenna so data can be transferred between Wallet Card and a con-sumer’s bank anywhere in the world and at any time of the day.

Visa Ditches Signatures. Beginning in April, Visa will no longer require a signature option for chip card purchases, becoming the last of the four major US card networks to eliminate signing at the point of sale (POS) as an authentication mechanism. The move, which will impact 2.5 million merchants and shift the way customers authen-ticate 25% of Visa transactions, was made to increase security and convenience at the POS.

means over 30% of the market changed hands in 2 years. As mobile banking usage becomes ubiquitous, there is a drive towards differen-tiation and desire to “make my app different from everyone else’s.” Currently, institutions are using features to achieve this, such as P2P or card controls, and they are seeking it through a move from one vendor to another.

Seven Federal Reserve Districts recently released a combined report, Mobile Banking and Payment Practices of U.S. Financial Institutions. The most important mobile payment findings provide a snap shot of the current state of mobile banking in the U.S.:

• Implementation of mobile payment services is accelerating as FIs respond to competitive pressure and industry mo-mentum for mobile payments: in addition to the 24 percent already offering mobile payments, 40 percent plan to do so within two years.

• Over two-thirds of the respondents partner or plan to partner with third-party processors and more than half are considering partnerships with wallet providers that support near-field communication (NFC).

• Mobile wallet implementations are increasing steadily, with Apple Pay as the current leader.

• Survey results indicate that by 2018, FI support for wallets will be: 99 percent for Apple Pay; 84 percent for Google Pay; and 70 percent for Samsung Pay.

• Asset size affects results in several areas: larger FIs have greater resources to expend on new services, implementa-tions, and security technologies/controls.

• Banks and credit unions often differ in approaches and strategies for mobile payments.

Banking Delivery Channel Usage: 10-Year Trends

According to Raddon’s recent study, Payments Insights: Rise of the Digital Pioneers, online banking is the most used banking channel, with almost nine in 10 consumers (88 percent), and mobile banking is exhibiting the steepest growth, having grown from 20 percent us-age in 2012 to 57 percent today. Clearly, consumers are embracing self-service through the use of mobile banking, but their desire for in-person accessibility remains strong.

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Google Pay is Here. Google will consolidate all its existing pay-ment offerings into a new service called Google Pay, which will encompass in-store payments (Android Pay), peer-to-peer (P2P) offerings (Google Wallet), in-app and in-browser payments made through stored credentials in Chrome, and more, according to a company blog post. The consolidation began in February 2018.

Contactless payments market to reach $2.23 trillion in transaction value by 2025. According to a new report by Grand View Research, innovations in technologies such as Internet of Things (IoT) may act as major drivers of this growth. The ongoing trend of making payments through QR codes and mobile devices will also play a significant part and drive market demand. Benefits such as reduction in transaction time and improved service delivery offered by contactless payments have resulted in a significant rise in the number of users.

Cyber Monday is largest online sales day in history. Ac-cording to Adobe, Cyber Monday and the holiday weekend overall saw sales of over $6.59 billion, a 16.8% increase over 2016. In comparison, Black Friday and Thanksgiving Day brought in $5.03 billion and $2.87 billion respec-tively. The most notable finds is the surge of mobile shopping, which represented 47.4% of visits (39.9% smartphones, 7.6% tablets) and 33.1% of revenue (24.1% smartphones, 9.0% tablets).

Bank of Amazon. Amazon is reportedly in early-stage talks with major banks, including Capital One and JPMorgan Chase, about partnering to build a checking-account-type product, according to the Wall Street Journal. Amazon will likely leverage its clout and existing payment options to build a cohesive product given that as many as 45 percent of Amazon users would be willing to use Amazon as their primary bank account, a figure that ticks up to 52% among existing Prime customers. Nearly half (and 58% of Prime users) would use it as a secondary or savings account. That’s something Amazon could capitalize on, especially if it leverages its partnership to boost these figures by easing security concerns among customers that might be less certain about using Amazon’s financial services.

Industry NewsContinued from page 7

CUliance Grows Surcharge Free ATM Networks Across USCredit unions can provide a comprehensive, national surcharge-free ATM solution for their members through CUliance. CUliance offers a growing selection of Surcharge Free ATMs from across the U.S. Through CUliance’s partnerships with Allpoint and MoneyPass, credit unions can offer surcharge-free ATMs in all 50 states, including international ATMs.

The Allpoint Surcharge-Free ATM Network is now available at nearly 7,000 Walgreens locations nationwide Allpoint, the largest surcharge-free ATM network with 55,000 ATMs worldwide, has experienced sig-nificant growth at Walgreens family of drugstore locations. Since late 2016, Allpoint has added approximately 2,000 locations with the drugstore chain in key metropolitan areas across the nation, including the introduction of Allpoint ATMs at Walgreens and Duane Reade stores in New York City, as well as Walgreens stores in Chicago.

This past year the MoneyPass Network began providing surcharge-free access at more than 8,000 7-Eleven locations in the U.S. The ATM roll out will increase the number of Mon-eyPass surcharge-free ATMs in the United States to an estimated 33,000.

CUliance is an alliance of credit unions that, together, can accom-plish more than individual credit unions can accomplish themselves. As a member of CUliance, credit unions belong to a CUSO dedicated to providing the support, encouragement, services, and expertise co-operative institutions need to compete and improve their members’ lives.

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A look ahead: 2018 payment trends and outlook

Although credit unions are faring relatively better than their recent past, competitive pressure from traditional rivals and emerging competitors are tightening margins, and impacting profit across all areas of the business.

The payments industry is increasingly being driven by expectations set by the “GAFAs”, (Google, Amazon, Facebook and Apple), where customers get what they want, when they want, with seamless efficiency. While growing its roots in the retail and consumer space, the trend has fully impacted the payments and banking market, as consumers seek out and switch providers based on financial technology offerings – according to a recent research from East and Partners.

As a result, credit unions have recognized the importance of member experience manage-ment and are driving deeper financial relationships by offering engaging and personalized service. With access to a wealth of internal data, paired with a “whole of market” overview, they can increase their share of market and member wallet by offering a smooth cardholder journey from acquisition and onboarding, through to account expansion.

To keep up with rapidly changing business demands, credit unions will have to re-evaluate how they predict and monitor what products and features current and future members will need, and at what price point. Application Programming Interfaces (APIs) will be at the forefront of discussions throughout 2018 and will transform how financial institutions and payment service providers capture and share customer data.

Moving into 2018 and beyond, credit unions need to embrace digital payments transfor-mation. Despite the industry being built on physical interactions, be it onboarding new members or providing advice, credit unions need to listen to the “voice of the member” to develop products and services that drive loyalty through personalization and a member-first approach. For credit unions to compete in a year of rapid change and disruption in the financial services industry, you can count on MAP to be looking out for your best interest. Created for credit unions by credit unions, collaboration is foremost in our thinking when evaluating partners and delivering solutions to our clients.

At MAP, we strive to make our clients more competitive by providing payments solutions that best serve their mem-bers. For nearly two decades our success has come from providing cost-effective, best-in-class solutions for our clients. We will continue this success for credit unions by making smart investments for today’s technology with an eye keenly focused on the future of payments. For more information about how MAP can best serve you and your institution, feel free to call me, 1-866-598-0698, ext 1610 or email me at cyndie.martini@mapacific.com.

Letter from the CEO

ISSUE 39 | Spring 2018

Cyndie MartiniPresident/CEO

16000 Christensen Road, Ste 200Seattle, Washington 98188

Phone: 1.866.598.0698Fax: 206.439.0045

Email: info@mapacific.com

PRSRT STDUS POSTAGE

PAIDSEATTLE, WA

PERMIT #1445