, , ,

Contactless Card Rollout May Not Hurt Mobile Payment Adoption, But Probably Won’t Help Either

(New York, NY) The death of plastic. Apple Pay’s launch in 2014 invited headlines touting the digital payments revolution, but in the years since, plastic has thrived. Consumers swiped, they dipped, and now they’re beginning to tap– all with a physical card. Some argue that the proliferation of tapping a physical card at checkout will increase comfort tapping one’s phone. However, a new issue of Auriemma Research’s Mobile Pay Tracker suggests that contactless cards may have some mobile-friendly consumers reverting from digital to physical payments.

Although mobile payments and contactless cards utilize the same near-field communication (NFC) technology, adoption of mobile payments is well behind contactless cards. Three plus years after its mainstream release, mobile payments have only been used by one-third of those eligible—far less than the 59% of contactless cardholders who have tapped with their contactless card.

Consumers appear amenable to contactless cards, specifically because the device (i.e., the physical card) is so familiar. Mobile payment users, however, are even more open to tapping their cards because they’ve been exposed to tapping with their phone. Three-quarters of mobile payment users have used a contactless card to make a contactless payment, compared to just four-in-ten non-users.

“Consumers have been repeatedly asked to change their payment behavior,” says Jaclyn Holmes, Director of Auriemma Research. “While adjusting to various card payments is easy, the larger switch in the physical mechanism of phone payments takes more time.”

Mobile payment users are enthusiastic about contactless technology. The majority (60%) expressed interest in using contactless cards, compared to just over one-quarter of mobile payment non-users. Mobile payment users are also more likely to believe contactless payments can improve everyday purchases. Over one-third say their experience with self-checkout lanes, grocery stores, vending machines, and public transportation would be made better if they were able to use contactless payments.

Until now, many terminals were not accepting of EMV contactless payments because of outdated technology. This has been a struggle for EMV contactless cards as well as Apple, Google, and Samsung Pay. However, with Visa now requiring all contactless terminals to support NFC contactless technology, both EMV contactless cards and mobile payments will have the space to grow.

Although these upgrades will make mobile payments an option at an increasing number of locations, that doesn’t mean mobile payment adoption will rise. Overall, consumers are uncertain about whether contactless card payments are better or worse than mobile payments—65% say they are about the same, 18% say they are better, and 17% say they are worse.

Those who believe contactless card payments are better typically say they are faster, easier, and more secure than mobile payments—three things mobile payment users often describe when asked why it is better to pay with mobile then with plastic. Those who believe contactless card payments are worse often express concerns about security (e.g., more susceptible to fraud, wouldn’t be any safer) and say they still need to take out their payment card.

“Consumers will have more options at checkout than ever before, but will they choose contactless cards or a mobile wallet?” asks Holmes. “Although upgraded terminals benefit both methods, the point-of-sale experience continues to be fragmented for mobile payment users who must pull out their physical card when things go awry.”

With contactless cards, technological barriers to tapping won’t upend the entire payment process. Consumers can still dip or swipe. This alone makes the case for contactless cards, which offer the mobile payment benefits people love without the barriers that have persisted since its rollout.

Survey Methodology

This Auriemma Research study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) between January-February 2019, among 2,001 mobile pay eligible consumers. Respondents were screened to own an iPhone 8/8+7/7+/6/6+/6s/6s+/SE/X or Apple Watch (in combination with an iPhone 5/5C/5S) – a Samsung Galaxy S9, S9+, S8, S8 Edge/Edge+, S7, S7 Edge, S7 Active, a Samsung Galaxy S6, S6 Edge/Edge+, S6 Active or Galaxy Note 5, Note 7, or Note 8 – Gear S2 or S3 watch (in combination with an Android/iPhone smartphone) – and/or other Android phone with KitKat (4.4) OS or newer. All respondents also have a general purpose credit card in their own name.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes at (212) 323-7000.

/by
, , ,

It’s Business as Usual for Most Consumers Impacted by Payment Card Fraud

In 2018, millions of consumers had their personal data compromised by breaches across a diverse set of industries—from tech to retail to hospitality and more—putting many at risk of payment card fraud. Most consumers are aware of their data’s exposure, but 91% believe their credit card issuer will cover them in the event of fraud. But this confidence causes some consumers to put themselves in harm’s way, according to Auriemma Research’s most recent issue of The Payments Report.

Fraud events have become mainstream, leading many consumers to feel numb to its consequences. According to Auriemma Roundtable’s Q4-2018 Card Fraud Benchmark Report, seven-in-ten financial institutions saw an increase in gross credit card fraud compared to the prior quarter; a similar number of issuers are forecasting gross fraud will stay the same or increase in 2019. Meanwhile, nine-in-ten consumers believe fraud has stayed the same or increased over the past year, according to Auriemma Research data.

“Many consumers have accepted fraud as a fact of life,” says Jaclyn Holmes, Director of Auriemma Research. “They know fraud happens, many are concerned it will happen to them, but they’re also confident that their issuers will take care of them.”

When asking consumers about how credit card issuers respond to fraud, Auriemma Research found over eight-in-ten say issuers react quickly and are good at monitoring. Even the one-fifth who say they’ve experienced card fraud in the past year share these positive sentiments. While a noteworthy 22% of these consumers say the experience has caused them to spend less on the impacted card, 15% spend more, and 63% don’t change their spending at all. In general, fraud events don’t appear to leave a lasting stain on payment behavior with the compromised card.

“In the court of public opinion, banks don’t appear to be to blame for fraud,” says Holmes. “But as fraud remains high industry-wide, issuers are now tasked with finding ways to further engage their customers in the fight, namely by reducing risky payment behavior and signing up for proactive protections.”

Consumers, however, are not demonstrably concerned with proactive, preventative measures. Over one-quarter of cardholders are comfortable making online purchases from unfamiliar websites, likely a direct result of the confidence consumers have in banks’ protective measures. In addition, over four-in-ten cardholders say they haven’t changed the password for their debit or credit card account in over a year. Other precautions, like fraud alerts, identity theft protection, and two-factor authentication are not overwhelming used by consumers.

“While issuers try to arm their customers with tools to defend against the impact of fraud, many aren’t taking advantage,” says Holmes. “Consumer complacency could be a challenge in 2019 and beyond, and if issuers aren’t able to enlist their cardholder’s support against fraudsters, we may see losses grow.”

Survey Methodology

This Auriemma Research study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group among 800 US adult debit cardholders in March 2018. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 25 minutes. For more information, call Jaclyn Holmes at (212) 323-7000.

About Auriemma Fraud Control Roundtables

Auriemma runs a series of information sharing and benchmarking groups for executives in fraud strategy and operations. Spanning credit card, debit card, and consumer banking, Auriemma’s fraud control roundtables combine executive meetings, industry-leading operational benchmarking, and peer group surveys to help participants identify vulnerabilities and optimize fraud management strategies. For information on membership, contact Ira Goldman at 212-323-7000.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, visit us at www.auriemma.group.

/by
,

Auriemma Group to Speak at CBA Live in April

Mindy Harris, Managing Director and General Counsel for Auriemma Group, will be a panelist at the CBA Live conference, scheduled for April 1-3, 2019 in Washington, D.C.

Harris will be a panelist for CBA Live’s “Efficiency Ratios: Right Sizing For Compliance” session, which focuses on best practices for building strong compliance risk management programs in today’s environment. Among other topics, the  panel will address ways to improve compliance management efficiency, and prevent gaps and failures to find and fix the most significant risks.

“A variety of factors, including high-profile enforcement actions and heightened regulatory expectations, have resulted in a reactive approach to compliance management,” Harris said. “For many institutions, this has resulted in fragmented controls, overlaps in testing, and other inefficiencies.”

Attendees will gain insight on how to overcome common challenges, including aligning internal functions to best optimize compliance risk structures, measuring the success of compliance risk management programs, and trends in determining  appropriate levels of compliance spend.

The session will take place Tuesday, April 2 from 9:20 a.m. to 10:20 a.m. In addition to Auriemma’s Harris,  panel participants will include Rosemary Gaidos of Citizens Bank as moderator, and Paul Noring of Navigant Consulting, Inc.

CBA Live attendees can schedule one-on-one meetings with Harris to discuss how the firm’s data and intelligence can help navigate the current environment most effectively. In addition to compliance risk management program structures, Harris is closely following recent  developments in preemption, exportation and the valid-when-made doctrine, as well as the merits and attributes of financial institution charters. CBA Live attendees may reach Harris at mindy.harris@auriemma.group.

 

About Auriemma Group

Auriemma Group’s mission is to give clients access to data and intelligence that drive decision-making. We provide information and advisory services in four areas: co-brand partnerships, consumer research, corporate finance, and operational intelligence. Founded in 1984, Auriemma serves the consumer finance industry from our offices in New York City and London. For more information, visit us at www.auriemma.group or call (212) 323-7000.

/by
, ,

An Announcement from Auriemma’s President

Dear friends

Our firm was founded 35 years ago, in 1984. It’s been a fantastic run, and we thank you for your support and friendship over the years.

Since then, our business has evolved to meet the changing needs of the payments and lending markets. Today, our business consists of four distinct specialty areas. The largest, by far, is our Roundtable practice. We now have 35 groups spanning seven market verticals and have become the standard bearers for operational benchmarking data. We are still quite active in developing and managing co-brand programs, which was our exclusive focus when we were founded. Our research team has established itself as a leader in providing membership-driven insights into consumer behavior relating to payments, mobile payments, and credit cards. And, our finance team is active in helping lenders manage capital requirements, and value assets.

As you can see, our current mix of business has come to rely less and less on traditional consulting services. As such, we began to feel that the word “consulting” in our moniker had outlived its usefulness and indeed put us into a competitive frame where we didn’t want to be. So, we went to the drawing board to see what new name might suit us best.

I’ll be honest and say that being eponymous has its pros and cons. But, if I could turn the clock back 35 years, I’d start fresh with a company name that didn’t include my personal name. But, as you can imagine, the Auriemma name has come to be well known, respected, and trusted in our ecosystem, thanks to the hard work of lots of people whose name is NOT Auriemma! So, getting rid of the name altogether didn’t make much sense. Nor did changing our name to the acronym ‘ACG’, which we considered… it turns out, very few of our clients refer to us that way.

In the end, we settled on simply removing the word “consulting” and will now be known as Auriemma Group.

Keeping the name Auriemma recognizes the significant brand value we’ve developed. Meanwhile, going forward, the word Group will refer not just to a group of talented individuals, but to the group of separate and inter-related sub-brands they represent.

To go along with the new name, we have a new logo and monogram, as well as new corporate colors. We also have a new website: www.auriemma.group

If you take a look (and I hope you do), I think you’ll see right away that the new site has a look, feel, and tone that really reflects the people-oriented and approachable style that you’ve come to expect from our firm. The new site also makes it easier to tap into the wealth of information we produce… whether that be our annual letters, press releases, and regulatory commentary letters or, for clients, our troves of market research and benchmarking data.

Welcome to the new Auriemma Group. We look forward to speaking to you again soon and continuing our longstanding relationship with this amazing community.

Cheers!

Michael

P.S.  Our e-mail address convention will also be changing from @acg.net to @auriemma.group – so please update your records!

/by
, ,

Time to clarify ‘true lenders’

John Costa, Managing Director of Auriemma Finance, has published an article in American Banker’s BankThink section. The piece describes how recent court cases have created confusion over the powers of national banks, with some findings in conflict with longstanding precedent. In the piece, Costa argues that Congress needs to clarify and reiterate certain legal principles, such as “valid when made,” in order to reaffirm the national bank regulatory model.

You can read the full story here: Dear Congress: Time to clarify ‘true lenders’

For more information, contact John Costa at john.costa@auriemma.group or 212-323-7000.

 

/by
© Copyright - Auriemma Group