How much can your credit union lose to payment fraud and data breaches? The numbers are nothing short of alarming.
Direct attacks result in annual financial risk ranging from $190,000 for small credit unions to $1.2 million for larger institutions. The potential repercussions of a breach through a single vendor are equally problematic. Black Kite found that a single vendor attack could exceed $1 million for large credit unions and $300,000 for their smaller counterparts.
These numbers should leave no doubt about the urgent need for secure payment solutions. This leads us to our first strategy: Partner With a Tech-Savvy Payment Processor Partner
Payment processors specialize in secure online payments. They possess extensive knowledge and expertise in payment security measures. They also have secure infrastructure in place. By getting into a strategic partnership with a payment processor, you leverage their expertise.
Importance of Secure Payment Solutions for Small Banks and Credit Unions
Here are key reasons why you should prioritize business data security:
Safeguarding Customer Trust
Security breaches severely impact customer trust and loyalty.
In the Cisco 2022 Consumer Privacy Survey, “81% of respondents agreed that the way an organization treats personal data is indicative of how it views and respects its customers.”
So customers EXPECT you to protect their personal and financial information. If you demonstrate the commitment to do so, you’ll foster long-term trust and maintain a competitive edge in the market.
Mitigating Financial Risks
As we saw earlier, payment fraud and data breaches can lead to substantial financial losses. Remember that customer data protection along while simultaneously safeguarding their funds and assets is paramount to maintaining a stable and trustworthy financial environment.
Compliance with Regulatory Standards
Small banks and credit unions operate in a heavily regulated environment. You must adhere to data protection and privacy regulations like PCI DSS and CCPA. Secure payment solutions help your institution meet these regulatory standards and avoid legal consequences resulting from non-compliance.
Advantages of Partnering with a Secure Payment Processor
A strategic partnership with a secure payment processor offers you several advantages.
Robust Security Measures
Scalability and Innovation
If your client base grows, the payment processors often offer scalable solutions that accommodate the growth and the changing needs. They are also at the forefront of payment technology advancements and continuously innovate their services.
Reliability and Business Continuity
Your commercial clients, like utility companies, will not have to worry about payment processing downtime. Payment processors have redundant infrastructure and disaster recovery measures to ensure uninterrupted service.
Solutions Offered by a Secure Payment Processor
Payment processors offer a secure payment gateway that serves as a bridge between your institution, customers, and payment networks. You get solutions such as:
IVR (Interactive Voice Response) payments allow customers to make secure payments over the phone using touch-tone or voice commands. For example, merchants can create personalized IVR pathways incorporating pre-recorded messages to effectively manage incoming calls.
ACH (Automated Clearing House) processing enables electronic fund transfers between bank accounts. Secure payment processors ensure that ACH transactions are encrypted, protecting the customer's bank account details and transaction information.
Payment processors employ tokenization to safeguard sensitive data throughout the ACH process.
Mobile payments provide convenient and secure payment options through mobile devices. In a survey by eMarketer, the USA had the greatest jump in the adoption of mobile payments within the two years (2019 to 2021), rising from 29% to 43.2%.
So offering mobile payments to your customers aligns strategically with the growing trend of mobile payment adoption. It also provides them with a convenient and seamless way to make secure transactions on the go.
iCG Pay lets you securely accept the following:
- Credit card transactions
- Remote deposit capture (RDC)
Recurring payments allow customers to set up automatic payments for regular bills or subscriptions. Recurring payment solutions are particularly important for attracting utility clients due to the nature of their billing cycles.
Other popular solutions offered by payment processors include:
- Email invoicing
- Hosted payment portals
- Credit card processing
- Cash discount programs
Case Studies: Successful Partnerships with Secure Payment Processors
Here are a few real-world examples of credit unions/small banks that have experienced positive outcomes by collaborating with payment processors:
Empower Federal Credit Union - Worldpay
For Empower Federal Credit Union, having multiple vendors created a complex environment. They also had multiple processors, so they could not accurately capture fraud.
Therefore, they sought to consolidate their card processing to one trusted payment processor to improve visibility into fraud trends. They found Worldpay. This partnership helped streamline their operations and reduce fraud by half.
Digital Federal Credit Union - Payrailz
Although Digital Federal Credit Union already had an innovation department for mobile and online banking development, it partnered with Payrailz to leverage its modern technology infrastructure.
With this strategic partnership, they would be able to offer their members modern solutions for:
- Bill pay
- Bill negotiation
- A2A and P2P services
How to Choose the Right Tech-Savvy Payment Processor Partner
Which metrics and methodology do you use to determine the best payment processor to partner with?
Third-Party User Reviews
Reviews provide valuable feedback from other banks, credit unions, or businesses that have already utilized the payment processor's services. Third-party reviews offer unbiased opinions on the processor's performance, reliability, customer support, and overall satisfaction.
Scalability and Customization
How big is your client base? Do you see it growing?
So, firstly, assess the payment processor's ability to handle increased transaction volumes as your client base grows. Inquire about their infrastructure, processing capabilities, and capacity to accommodate higher transaction volumes without compromising speed or security.
Additionally, can they customize their solutions to meet your specific requirements? Each bank or credit union has unique workflows, systems, and customer preferences.
Assess the security measures implemented by the payment processor.
Which industry-standard encryption protocols do they employ? Look for the tokenization methods and advanced fraud detection systems they use. Verify their compliance with relevant security certifications, such as PCI DSS (Payment Card Industry Data Security Standard).
Partnering with payment processors will help you access new markets and channels.
These partnerships foster scalability and customization. They ensure that payment solutions can accommodate the growing needs of your bank and credit union. Importantly, these partnerships save you from the burden of extensive software development and maintenance.
To get started, schedule a discovery call with our team at iCG. We will assess your specific requirements, discuss potential solutions, and address any concerns or questions you may have.