News from the Wire

TMG's FI clients disclose plans for mobile payments

Thursday, September 18, 2014 — 12:52:34 (EDT)

Des Moines, Iowa, Sept. 18, 2014 -- A select group of 68 financial institutions (FIs) recently shared their mobile payments plans in a survey conducted by their payments processor, The Members Group (TMG). Thirty-eight percent (26) reported having a mobile payments strategy in place today. More than half (40) of the TMG clients participating in the survey reported they plan to enable their cards for tokenization by the end of 2015.

The survey was conducted yesterday as a part of a webinar in which TMG shared with clients its roadmap for mobile payments, tokenization and Apple Pay enrollment.

Hosted by TMG product managers Brandon Kuehl and Brandon Bogler, the client-exclusive event shared insight on how NFC and tokenization will impact payment card issuers and the larger payments industry. Kuehl and Bogler have played integral roles in TMG’s EMV and wearables strategies, which aim to position TMG clients for continued success as the payments industry evolves.

In a communication sent to TMG clients last week, TMG CEO Shazia Manus said, “TMG has been preparing for the day payments would be made using NFC and tokenization. With the introduction of Apple Pay, that day has arrived. What some may see as a disruptor to the payments industry, TMG views as validation of the path our experts have been traveling.”

Kuehl added, “Although the announcement of Apple Pay has created quite a bit of buzz about the new future of payments, EMV, NFC and tokenization have been part of TMG’s strategic product roadmap for the past 18 months. What EMV promises to do for card-present fraud, tokenization promises to do for card-not-present fraud. Just as we have enabled a streamlined process for our clients to migrate to EMV, TMG will provide simplified token solutions for our issuing clients.”

Because many of TMG’s clients either have migrated to EMV or are in the process, Kuehl and Bogler drew several links between EMV and tokenization:

• Both are designed to reduce card fraud (EMV will mitigate card-present fraud losses; tokenization will mitigate card-not-present losses).

• TMG anticipates a tokenization liability shift similar to the one set by the major card brands for EMV.

• As with EMV, TMG will offer a streamlined migration process to enable clients for tokenization. This will happen under the product name TMG Token Services.

TMG Token Services will include issuer enablement with the major card brands and Apple Pay, as well as integration with major card brands’ token vaults to enable token management. Token Services will be incorporated within TMG’s existing reporting products.

As issuers evaluate the decision whether or not to enroll their cards in the Apple Pay digital wallet solution, Kuehl and Bogler advised TMG’s clients to first gauge their existing cardholders’ current engagement with Apple products. One measure of this is the number of cards already linked to Apple’s iTunes. Roughly 5 percent of the cards TMG processes today are linked to iTunes. In the second quarter of 2014, those cards initiated nearly 570,000 iTunes transactions. In addition, more than 60 percent of the mobile traffic to TMG’s cardholder-facing website, MyCardInfo, comes from Apple devices.

Kuehl noted issuers should consider tokenization and Apple Pay enrollment as two separate projects, as token provisioning is likely to be a prerequisite to other mobile wallet solutions soon to be released.

In the webinar, 70 percent (54) of clients participating in the survey indicated they would welcome TMG’s assistance in analyzing how Apple Pay is likely to impact their portfolio. Seventy-three percent (57) said they have plans to participate in the Apple Pay solution.

At the same time, 76 percent (55) of clients said they would be interested in an FI-branded tokenized mobile payment solution for Android. According to International Data Corporation (IDC), Android dominates the global smartphone market, with more than 255 million units shipped and nearly 85 percent of the market share in the second quarter of 2014.

About TMG The Members Group (TMG) is dedicated to creating customized, technology-driven card processing and payment solutions for credit unions and community-based financial institutions across North America. Innovations in fraud management, loyalty programs, alternative payment systems and analytic reporting, and the competitive advantages they create, have helped TMG forge a new standard in offering cutting-edge credit, debit, ATM, prepaid card products and a P2P payment solution. For more information, visit www.themembersgroup.com .

The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information: bankcardlife.com?orid=33533&opid=1 .

Source: Company press release.