CU Wallet has added 10 new credit union partners since the initiative's September unveiling, for a total of 25 credit unions representing 3 million members across 17 states.

"And we're adding more every day," says CU Wallet co-founder Paul Fiore, who says there are 90 million credit union members throughout the U.S. CU Wallet is building a userbase in preparation for its product launch, expected by the end of this year.

Credit unions have long used shared services such as interoperable branches and technology cooperatives to compete with larger banks, and CU Wallet follows the model. CU Wallet is developing its technology through vendor partnerships, with the goal of allowing member credit unions to offer branded wallets that share common services.

"As consumers become more comfortable with using smartphones for commerce, the [credit unions] will be ready with their own wallet," Fiore says. "They won't have to say 'here's some third party to do mobile payments.'"

Paydiant, which sells mobile payments technology, will work with CU Wallet to support contactless mobile payments, e-receipts, offer redemption and cardless cash access on existing payment terminals, point of sale systems, ATMs and online shopping carts. DoubleBeam will power enrollment and Check Alt will manage processing.

"Paydiant had already built a white-label mobile wallet, and we can bring that to credit unions and help them integrate to mobile banking on the front end," Fiore says.

The credit unions that adopt CU Wallet will be able to offer their members a common way to access offers and execute mobile payments from across the entire network of participants, enabling both national offers through the network and local campaigns through individual credit unions, Fiore says.

"There are 6 million merchants, and you can't have all of them on your phone," Fiore says. "If the credit unions offer a mobile wallet, it would complement the merchant wallet…you can add a gift card to the wallet, etc."

CU Wallet is also keeping interoperability in mind with point of sale payments, favoring Paydiant's QR code technology over other methods of executing mobile payments at the point of sale, Fiore says. Most smartphones can display QR codes, which are a type of two-dimensional bar code that can be read by many point of sale scanners.

"For us it's picking the lowest common denominator. If one credit union picked Paydiant and another picked another technology, and some were QR does and some were [Near Field Communication], there would be no scale," Fiore says. "And each consumer would have a different experience."

CU Wallet is not alone—it is not unusual for a business sector to build its own mobile payments network. The Isis venture is led by mobile carriers, whereas the Merchant Customer Exchange (MCX) is led by retailers. 

Isis uses NFC to execute payments, while MCX and other digital wallets, such as Starbucks, are opting for QR codes or other software-based systems. Similar to CU Wallet, these companies say a non-hardware approach enables the wallet to scale quickly.

While most mobile wallets plan to allow consumers to add other payment relationships, the entity that enrolls the consumer typically has the most control over transaction data and cross-selling, says Mary Monahan, an executive vice president and research director at Javelin Strategy & Research.

Credit unions have a head start in the mobile payments race given existing consumer preference, she says.

"It's theirs to lose," Monahan says. Forty-three percent of consumers surveyed say they prefer a mobile wallet from their financial institution, making it the most popular option, she says.

"Consumers … consistently say they want to use the mobile wallet of their primary credit unions or banks over those offered by Google, Apple, Facebook, Amazon or any of the top payments networks or the largest network operators," she says.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry