An Apple Pay Competitor that is Backed by 84 Credit Unions

CU Wallet, the mobile payments system owned by 84 credit unions, is poised to go live this year, most probably in the second quarter. CU Wallet got renewed interest post the Apple Pay launch. Big credit unions are now looking to be associated with the mobile payment service. The largest one yet includes the $10 billion SchoolsFirst Federal Credit Union. Other large credit unions on the CU Wallet bandwagon include the $8 billion Security Service Federal Credit Union, the $6.6 billion San Diego County Credit Union and the $5.8 billion Digital Credit Union.

A major barrier that CU Wallet faces is the lack of sufficient in-store acceptance, unlike Apple Pay. But an advantage that CU Wallet has is its underlying payments technology. CU Wallet is powered by Paydiant’s payment technology which is non-NFC based and requires merchants to simply upgrade their POS software to accept the cloud-based system. Another advantage for CU Wallet is that it can work on just about every smartphone. It runs on Android, iPhone and can also be configured to run on Windows Mobile and Blackberry.

Credit unions had already started testing the mobile payment service in a number of pilot programs last year. Since the Paydiant technology is already active across the Subway chain, earlier tests involved use of CU Wallet at Subway outlets. Unlike Apple Pay, CU Wallet makes transaction details known to credit unions. The platform under CU Wallet will enable credit unions to offer QR code-based payment services to members on a white-labeled basis.

With Paydiant, CU Wallet will integrate complete mobile wallet capabilities into its own mobile application including contactless mobile payments, e-receipts, offer redemption and cardless cash access on existing payment terminals, point-of-sale (POS) systems, ATMs and online shopping carts. The real opportunity for banks, credit unions and retailers is in targeted offers, customer retention, new services and new revenue sources. Working with Paydiant, CU Wallet will provide credit unions with better control, and a real and tangible service advantage that appeals to members, enhances loyalty and increases new revenue opportunities.

CU Wallet can gain considerable market share in the mobile wallet space as consumers trust financial institutions more with their money as compared to non-banks like Apple. Individual credit unions are not that significant in the financial services landscape but the credit union industry, as a whole, has enough scale to attract merchants and influence other payments participants.