45% of Americans now use contactless payments. Here’s how credit unions can modernize payments and rewards, stay competitive, and stay truly member‑centric.
How Credit Unions Win the New Payments and Rewards Race
Forty‑five percent of Americans now use contactless payments. That single number captures the shift that’s re-wiring how members expect to move money, earn rewards, and interact with their credit union.
Here’s the thing about payments: members don’t compare you to the credit union down the street anymore. They compare you to big‑tech wallets, instant approvals, and apps that “just work” in two taps. If your card, app, or rewards program feels even slightly harder than that, you’re losing share of wallet whether you see it in your reports yet or not.
Matt Good of Elan Advisory Services has been on the front lines of this shift, and his core message to credit unions is blunt: be proactive, not reactive, about payments and rewards. This post pulls from that perspective and connects it to practical, AI‑ready moves any credit union can make—especially those serious about member‑centric, data‑driven banking.
1. Why Payments Strategy Is Now a Member Strategy
If you want stronger, deeper member relationships, start with payments. Payments are now the daily touchpoint that silently decides whether you stay relevant or fade into the background.
When 45% of Americans have already moved to contactless forms of payment, your members are training themselves on new behaviors:
- Tap‑to‑pay at the grocery store
- One‑click checkout in mobile apps
- Digital wallets and wearables instead of plastic
Every time that happens with someone else’s card or wallet, you lose data, engagement, and interchange. You’re not just losing a transaction—you’re losing visibility into your member’s life.
Why this matters for credit unions
Most credit unions say their differentiator is relationships. But relationships without daily relevance don’t hold up. Payments are the most frequent interaction most members have with any financial brand. If your card isn’t top‑of‑wallet, your app isn’t the default, and your rewards aren’t meaningful, you’ve essentially outsourced the relationship to someone else.
Here’s the reality:
- A strong payments and rewards portfolio anchors primary financial institution (PFI) status.
- Contactless and digital payments raise expectations for speed, convenience, and security across everything you offer.
- AI tools now make it entirely possible for even small credit unions to personalize payments and rewards at scale.
If your 2026 strategic plan doesn’t treat payments as a core member‑relationship pillar, it’s not really a modern member‑centric strategy.
2. Contactless and Digital Payments: The New Baseline, Not a Perk
The baseline expectation is simple: members want to pay anywhere, instantly, safely, with whatever device they have in their hand.
Credit unions that still treat contactless cards, mobile wallets, or instant issuance as “nice to have” features are misreading the moment. Those are now table stakes.
Non‑negotiables for a competitive payments program
At a minimum, a competitive, member‑centric payments stack in 2025 should include:
- Contactless debit and credit cards as standard, not premium
- Wallet compatibility with all major digital wallets
- Real‑time controls (card on/off, transaction alerts, travel notifications) inside your mobile app
- Instant or near‑instant card issuance for new and replacement cards
- 24/7 digital dispute initiation so members don’t have to call or visit a branch
If you’re missing more than one of these, your members are already routing spend elsewhere—they just haven’t told you yet.
How AI fits into payments modernization
AI isn’t just a buzzword bolted onto core systems. Used correctly, it can:
- Flag unusual transactions faster and more accurately than rules‑based systems
- Predict which members are at risk of shifting spend off your card
- Recommend the next best product or limit change based on real behavior
- Support members with always‑on digital assistants handling routine card questions
The right partners (including advisors like Elan Advisory Services) help credit unions integrate these capabilities without having to re‑architect everything from scratch.
3. Rethinking Rewards: From Generic Points to Real Life Value
Traditional points‑for‑travel rewards don’t match how many members live and spend today. Matt Good calls out a major shift: rewards are moving from aspirational to everyday practical.
Members don’t just want a vacation “someday.” They want:
- Cash back on streaming services they use every day
- Extra rewards on groceries and gas when inflation bites
- Bonuses on food delivery, transit, or digital subscriptions
If your card still promotes generic points with a confusing redemption catalog, it’s competing with products that speak directly to daily life. That’s a losing position.
What a modern, member‑centric rewards program looks like
A modern credit union rewards strategy should:
-
Align with real spending categories
Build bonus categories around what your members actually buy: groceries, utilities, streaming, local merchants, family experiences. -
Be easy to understand
“3% back on groceries and streaming, 1% on everything else” beats a dense points table every time. -
Make redemption painless
Members should be able to:- Redeem through your app in a few taps
- Apply rewards as statement credits or cash directly
- See their progress and upcoming bonuses in real time
- Change as member behavior changes
Use usage data and AI to rotate offers:- Holiday boosts on travel and gifting
- Back‑to‑school boosts on retail and computers
- Local business spotlights to support community partners
The critical piece: communication
Matt Good stresses something credit unions routinely underestimate: rewards only feel valuable if members know about them and see them working.
That means:
- Regular, targeted emails or app messages highlighting how much a member has earned
- Simple examples: “You earned $27 in cash back last month just by using your credit union card for groceries.”
- Personalized nudges: “You’re $15 away from a $50 reward—use your card this week at grocery stores to hit it faster.”
AI can automate most of this. The heavy lift is deciding to treat rewards communication as a strategic engagement channel, not a quarterly marketing blast.
4. Practical Steps: How Credit Unions Can Stay Competitive Now
Credit unions don’t need a massive budget to make real progress. They need a focused roadmap and the right partners.
Here’s a practical sequence that works:
Step 1: Get brutally honest about your current payments reality
Look at your own data and ask:
- What percentage of our active members use our credit or debit card monthly?
- Is average ticket size and frequency rising, flat, or declining?
- How many cards are active but barely used?
- What share of our members are enrolled in rewards and actually redeeming?
If you don’t have clean reports, that’s the first signal you need advisory help.
Step 2: Prioritize member journeys, not internal org charts
Members don’t care which department “owns” cards, mobile, or rewards. They care that:
- Applying is fast
- Adding the card to their phone is easy
- Using it is secure
- Earning and redeeming rewards is obvious
Map the end‑to‑end journey for these high‑value scenarios:
- New member onboarding
- Existing member opening a card
- Member disputing a transaction
- Member trying to add card to a digital wallet
- Member checking or redeeming rewards
Then fix the friction points ruthlessly, one by one.
Step 3: Use AI where it directly improves member experience
You don’t need a full AI lab to see impact. Focus on a few targeted use cases:
- AI‑driven fraud monitoring to reduce false declines and improve trust
- Next‑best‑offer modeling to identify which members are most likely to adopt your card
- Smart segmentation for rewards offers based on real spending, not generic demographics
- Intelligent support (chatbots + agent assist) for payment and dispute questions
The goal isn’t AI for its own sake. The goal is faster, more relevant, more human‑feeling service for members.
Step 4: Partner instead of going it alone
Most credit unions don’t have the budget or staff to build sophisticated payments, rewards, and AI capabilities in‑house. That’s normal.
This is where partners like Elan Advisory Services come in: they bring:
- Scalable payment platforms
- Data and rewards expertise across many institutions
- Tested program designs and risk frameworks
- Ongoing strategy support, not just implementation
The strongest credit union leaders aren’t the ones who try to build everything. They’re the ones who curate the right ecosystem and keep members at the center of it.
5. Leadership Mindset: What “Rising in Tough Times” Looks Like
Matt Good’s line—“When you’re in tough times, you really see the leaders rise”—has played out across the last few years in credit unions of all sizes.
The leaders who rose didn’t just cut costs and hunker down. They:
- Experimented with digital payments, contactless, and virtual service when branches were constrained
- Rebalanced rewards portfolios toward grocery, streaming, and everyday essentials when member budgets tightened
- Communicated constantly about benefits, protections, and relief offers
- Leaned on data and partners instead of guessing what members wanted
I’ve seen the same pattern repeatedly: credit unions that used disruption as a forcing function to modernize payments and rewards gained share, even without a huge marketing budget.
This isn’t about chasing every shiny trend. It’s about being clear‑eyed: payments and rewards are no longer side products. They’re the front door to your brand.
Where to Go From Here
If your payments and rewards strategy hasn’t been materially updated in the last 18–24 months, you’re behind member expectations. The good news: catching up is absolutely possible, and you don’t have to do it alone.
Focus on three concrete moves:
- Modernize the plumbing – Make contactless, digital wallets, and real‑time controls standard.
- Redesign rewards around real life – Everyday categories, simple structures, and constant communication.
- Apply AI where it counts – Fraud, personalization, and proactive outreach that make members feel known.
Credit unions were built to serve people first. In 2025 and beyond, that mission shows up most clearly in how you handle something as simple—and as powerful—as a tap of a card.
If your team’s asking, “What’s our next step in payments and rewards?” that’s the right question. The next one is even more important: Who’s going to help us get there fast enough to matter for our members?