How Credit Unions Win the Next Era of Payments

Nearly half of Americans now use contactless payments regularly. For credit unions, that single stat is both a warning sign and a massive opportunity.

Here’s the thing about modern payments: members don’t separate “payments” from “banking.” Tapping a card at the grocery store, storing a card in a mobile wallet, redeeming rewards on streaming services — it’s all part of their perception of your credit union. If your card isn’t top-of-wallet (or top-of-phone), you’re quietly losing relevance… and interchange income.

Matt Good, Senior Vice President and General Manager at Elan Advisory Services, recently highlighted that roughly 45% of Americans shifted to contactless payments in the wake of the pandemic. That behavior didn’t bounce back; it stuck. For credit unions, the question isn’t whether payments have changed. It’s whether your strategy has.

This matters because payments have become your most frequent touchpoint with members. If you get this right, you strengthen loyalty, deepen relationships, and position your AI and data strategy around real behavior — not just static account data.

In this post, we’ll break down how credit unions can compete in the next era of payments, drawing on themes from Good’s conversation on The CUInsight Network and layering in practical, member-centric tactics you can act on now.

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1. Payments Are Now Your Front Door — Treat Them That Way

Payments are the primary way members “experience” your credit union day-to-day. Cards, digital wallets, subscriptions, recurring bills — those interactions happen far more often than branch visits or even app logins.

Most institutions still treat payments like a support product. That’s a mistake.

When 45% of Americans adopt contactless payments, they’re sending a very clear message: convenience and speed are non‑negotiable. If their credit union card feels clunky compared to a fintech or big bank, they’ll simply use someone else’s card.

What this shift means for credit unions

If payments are your front door, then:

• Card design and provisioning are part of your brand, not an afterthought.
• Digital wallet compatibility (Apple Pay, Google Pay, etc.) is basic table stakes.
• Authorization rates, fraud experience, and dispute handling all shape trust.

You’re no longer competing only on rates or branch service. You’re competing on:

• How fast a card can be issued and provisioned
• How easy it is to add that card to a phone or watch
• How smart your alerts, controls, and rewards feel to the member

Credit unions that embrace this view make different decisions. They budget differently, they prioritize payments infrastructure, and they partner more strategically.

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2. Contactless and Digital Wallets: From Nice-to-Have to Mandatory

Contactless adoption was already climbing before the pandemic, but COVID accelerated it dramatically. That surge created new expectations that aren’t going away.

Members now expect to:

• Tap to pay at stores
• Pay in‑app without re‑entering card details
• Store multiple cards in digital wallets and choose the most rewarding or convenient option

If your card isn’t easily used in these contexts, it falls to the bottom of the virtual wallet.

Core components of a competitive payment experience

To stay competitive, credit unions should treat these as minimum requirements:

1. Contactless‑enabled cards
   Every reissue should be contactless by default. Don’t wait for members to ask; most won’t. They’ll just use another card.

2. Instant digital issuance
   When a member opens a new account or replaces a lost card, they shouldn’t wait days to transact. A digital card issued into your mobile app and instantly pushable to major wallets keeps you top-of-wallet.

3. Strong card controls
   In‑app controls (freeze card, limit transactions, set merchant types, travel notices) are now baseline expectations, not bells and whistles.

4. Clear messaging about safety
   A lot of members — especially older ones — still worry that contactless means “less secure.” That’s your moment to educate: EMV chips, tokenization, and biometric authentication actually make this more secure than magstripe and physical signatures.

Where AI fits in

Smart credit unions are starting to use AI to:

• Detect unusual card behavior in real time and prompt the member in‑app
• Predict which members are most likely to adopt digital wallets and proactively nudge them
• Identify members still using magstripe‑only behavior and target them with simple education

That’s member‑centric AI: using data to reduce friction, not just to push more products.

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3. Rethinking Rewards: From Generic Points to Real‑Life Value

Matt Good pointed to a major shift in rewards programs since the pandemic: members care less about generic travel points and more about everyday value. Think groceries, fuel, streaming services, food delivery, and subscriptions.

Most companies get rewards wrong. They treat them as a static marketing perk instead of a dynamic member‑engagement engine.

What modern reward programs look like

A member‑centric rewards strategy for credit unions in 2025 should:

• Prioritize cash back on everyday essentials (groceries, gas, utilities)
• Include digital‑first categories (streaming, ride‑share, food delivery)
• Offer occasional, time‑bound boosts (e.g., extra cash back during holidays or back‑to‑school)
• Provide simple, transparent redemption right inside your app

If a member has to remember a portal login, wait weeks to redeem, or call a support line to use rewards, your program is quietly failing.

Using AI to personalize rewards

Here’s where AI can make a real difference for credit unions:

• Spend‑based personalization: If the system sees a member spending heavily on streaming and subscription services, automatically offer a “3% back on streaming” promo.
• Lifecycle‑based offers: New parents get grocery and pharmacy boosts; recent grads get rideshare and restaurant boosts.
• Smart reminders: Nudge members when they’re close to a redemption threshold or when rewards are about to expire.

The reality? It’s simpler than you think. You don’t need a giant data science team. You need a card program partner that can ingest transaction data, run models, and surface clear, member‑friendly offers you approve.

Don’t forget communication

Good makes a key point: communication about rewards has to be constant.

Members forget. Life is busy. Your rewards program only builds loyalty if they:

• Know the card benefits
• Understand how to earn
• See how to redeem in two or three taps

Use:

• Email and in‑app messaging to explain benefits in human language
• Monthly “You earned X in rewards this month” recaps
• Targeted campaigns for under‑engaged cardholders who are leaving value on the table

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4. Staying Competitive Without Trying to Be a Fintech

A lot of credit union leaders quietly worry they can’t keep up with big banks and fintechs on payments. That’s fair — they have bigger budgets, more engineers, and slicker apps.

But here’s the flip side: you have trust, community, and member data they don’t. You don’t need to be a fintech. You need the right partners and a clear strategy.

Where partnerships matter

Working with a payments partner or advisory service can help you:

• Launch or upgrade a credit card program without building everything internally
• Access modern fraud tools, tokenization, and instant issuance
• Run competitive rewards and marketing programs without hiring a full marketing analytics team

You stay in control of the member relationship, brand, and experience. The partner brings scale, technology, and expertise.

When evaluating partners, credit unions should ask:

• How do you support member‑centric design, not just generic card programs?
• What AI or advanced analytics capabilities do you offer that we can brand as our own?
• How do you support contactless, tokenized, and digital wallet transactions today?
• What reporting will we see on card usage, rewards, and member engagement?

If a provider can’t clearly answer how they’ll help you grow member relationships — not just card volume — keep looking.

Operational moves that keep you competitive

There are a few practical steps any credit union can take in the next 6–12 months:

1. Audit your card portfolio

   • Contactless penetration rate
   • Wallet provisioning rates
   • Rewards redemption rates
   • Percentage of active vs. dormant cards

2. Clean up your digital flows

   • How many steps from “I want a card” to “card is usable in a wallet”?
   • How clear are card benefits in your mobile app?
   • Can members see rewards in real time?

3. Train branch and call center staff
   They should be fluent in digital wallets, card controls, and rewards. If staff don’t understand it, members won’t either.

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5. Leadership in Tough Times: What Member‑Centric Really Looks Like

“When you’re in tough times, you really see the leaders rise.” Matt Good’s line applies directly to payment strategy.

The last few years have been rough: pandemic disruption, rate whiplash, rising fraud, and increased member anxiety. Some credit unions froze, waited, and hoped things would stabilize. Others used the moment to rethink how they serve members, especially around everyday financial behavior.

The credit unions that are winning in payments right now tend to share a few leadership traits:

• They accept that behavior has changed and don’t waste time arguing with it.
• They experiment in small, fast cycles — pilot a new rewards offer with 2,000 members before rolling it out.
• They measure engagement, not just balances and delinquency.
• They tie AI projects to real member problems, like card fraud, confusing rewards, or friction in digital wallets.

Leadership here isn’t about having the flashiest app. It’s about making practical choices that keep your credit union at the center of members’ financial lives.

And there’s a human side to this too. Good’s own story — from sports to payments, from the Detroit Tigers to leading at Elan Advisory Services — underscores something many credit union leaders share: a non‑linear career path, a bias toward service, and a belief that success is measured in impact, not just scale.

That mindset fits the moment. Members don’t care how “high‑tech” your stack is. They care that paying for groceries works every time, that fraud is handled quickly, and that their loyalty is rewarded in ways that actually matter to their lives.

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What Credit Unions Should Do Next

If you’re mapping out your 2026 strategy, treat payments as the backbone of your member‑centric banking approach.

Here’s a practical checklist to get started:

• Ensure every new and reissued card is contactless‑enabled
• Roll out or enhance digital wallet support and instant digital card issuance
• Redesign rewards to focus on everyday spend and digital lifestyle categories
• Use AI and analytics to personalize offers and detect fraud in real time
• Partner where it makes sense to fill in technology and expertise gaps
• Train your entire team to talk confidently about cards, wallets, and rewards

Credit unions don’t need to mimic big banks to win in payments. You just need to align your payment strategy with what you already do best: putting members first, understanding their lives, and building trust over time.

The next era of member‑centric banking will be decided every time a card is tapped, a wallet is opened, or a reward is redeemed. The only real question is whether your card is the one they choose.