What It Really Takes to Go Contactless: Two Credit Unions Tell All

Four years after the EMV liability shift, credit unions and other financial institutions are getting ready to embrace another wave of change in card technology: The move to contactless.

Contactless cards transmit payment transaction data when they are within a few inches of an enabled point-of-sale terminal, eliminating the need to swipe or insert the card. “Going contactless” isn’t as easy as it sounds, though – for credit unions and other card issuers, adapting to the new technological ecosystem takes time, money, planning and the right people. Here’s how two credit unions went contactless and what they said other credit unions need to know about going down the same path.

Knowing When to Begin

Going contactless is a project all its own, but for many credit unions, combining the move with other big efforts can make better strategic and financial sense.

That was the case for Pentagon Federal Credit Union, which announced in January that it was one of the first U.S. credit card issuers to roll out contactless Visa credit and debit cards. New members can ask for a contactless card right away, it said, and current members can get them when their cards are up for renewal or need replacement. The McLean, Va.-based credit union has $24 billion in assets and about 1.7 million members.

PenFed’s move to contactless was part of a process to deal with expiring EMV chips, PenFed Vice President of Payment Strategy and Operations Brad Patterson told CU Times. “It was an end-of-life thing anyway, so we kind of had a hard pivot to make because we needed to certify a new chip on all of our products,” he explained.

Most card issuers are in that EMV-chip boat right now, he said. “The version of chip on all the cards that were issued in 2014, 2015 and 2016 – they’ll likely have a four-, five-, six-year shelf life,” Patterson said.

For the Albuquerque, N.M.-based Nusenda Federal Credit Union, the move to contactless was part of a card conversion. “It was a perfect opportunity for us to go ahead and have to issue this technology, and that was mainly because we had to reissue cards as part of our card conversion,” Nusenda Chief Risk and Administrative Officer Tom Hagan said. Nusenda, which has $2.4 billion in assets and about 206,000 members, announced in June that it was issuing contactless credit cards.

More Than Just New Card Stock

Credit unions thinking about going contactless should know that the conversion involves more than just issuing new plastic.

“It’s also, how do you activate the card? What are your PIN maintenance costs? If somebody wants to set a PIN or reset a PIN, how do they do that? There are a lot of different components in getting a card in a consumer’s hand and getting that card to continue to work for a period of time,” Patterson said.

Credit unions also have to consider what other processes the move to contactless cards will affect. Nusenda’s contactless cards, for example, gave the credit union’s instant-issue machines a hard time due to small physical size differences, Hagan said.

“If you don’t adjust your instant-issue machines, maybe the color will come out different or the overlay won’t be perfectly set,” he explained. “Sometimes the quality is going to be different and the thickness of the card. Those small things can have an impact on your instant-issue machine.”

JJ Alcantar, who is vice president of card services at Nusenda, said there are a lot of other moving parts, too – especially if the credit union is juggling another project at the same time. “You’ve got your core processor. You’ve got your instant-issue vendor, your loan originating system – so all the different vendors integrating, which was probably the most significant struggle,” he said. “We had to go back and make some adjustments with our vendors.”

Months, Not Days

Credit unions shouldn’t expect to go contactless in just a few days or even a few weeks. The effort took PenFed about 160 days, according to Patterson, and that included an overhaul of all of its plastics.

Alcantar said it took Nusenda between 90 and 120 days to go contactless, though other credit unions may want to set aside even more time.

“I would say give yourself enough time, that’s the bottom line,” he said.

Good project management and multitasking are keys to moving quickly on contactless – card redesign alone can take 12 weeks, Hagan noted. “To expedite, as you’re doing your technical testing, you should really have those other things running simultaneously so you’re not at three months doing the testing and in three months developing your rollout. It should be simultaneous in those three months to have everything getting ready to go,” he explained.

“I really feel like it’s almost a six-month to eight-month project,” Alcantar said. “You really have to go live with employees and friends only, work out the bugs before you roll it out live. Day one, we rolled out live and we were working through changing the tires as [we went].”

Contactless Touchpoints

Credit unions also have to set aside time, money and energy for communications plans that help members and employees understand what contactless cards are and why people should want them. Nusenda, for example, benefitted from having a strategy for unexpected questions and feedback, Alcantar said. Visa also provided information that made it easier for the credit union to manage and develop content, he added.

But proving the product could be the toughest part – and the most rewarding.

“One of the biggest things we were concerned with was that we would have a large number of members saying that they didn’t want this feature,” Hagan said. “They were afraid that somebody was going to ‘read’ it. I mean, we’ve prepared to have the sleeves – the card-carrying sleeves – and members were really adamant about wanting that. We didn’t really experience that. And to our surprise, for both the merchants and the cardholders, and the people standing behind them when they use this technology, it’s a wow factor.”