Consumer First Approach: How It Affects Competitive Payment Systems
December 7, 2022
With all the new payment methods on the market, such as the increased adoption of the digital wallet, more credit card offers and the abundance of e-commerce tender types, there is a question that has risen: how can financial institutions (FIs) and card issuers continue to be the primary payment choice for consumers?
To answer this question, The Fintech Times teamed up with Wildfire System’s chief revenue officer, Shawn Conahan.
“Wildfire is a white-label loyalty, rewards, and cashback platform seeking to allow FIs to integrate wider consumer value into their payment systems."
In this article, Shawn talks about the reward “schemes” that are offered with payment systems, and how it affects the market in a positive way.
The payment options for online shopping are abundant, more than ever before.
“Options like PayPal, Venmo, ApplePay, Affirm and Klarna have become commonplace within online checkouts. Alternatively, they can use their debit or credit card. Or, there’s also the option to pay via gift card or store credit. And of course, these are in addition to a lease-to-own option offered by many merchants.
When paying, there is a “battle for primacy”: many payment options reach the consumer before they have the opportunity to enter their debit or credit card’s information at checkout.
At the same time, the simplicity of digital wallets is attracting more users each day, with ApplePay having processed more than 6 trillion in payments last year alone, a higher number than Mastercard.
Consumers have the advantage of carrying a single point of contact, a smartphone, to access “large stores of buying power.”
The result is a leveling of the playing field among payment options in the minds of consumers. ‘Money’ has become an abstract concept. It represents a collection of actual wealth combined with various lines of credit, which lives in a nebulous ‘cloud’ somewhere.
This availability of “e-commerce at a click” allows consumers to “conjure up their money” at any time they need it.
So the question becomes, how can a bank or card issuer discern which payment option takes primacy over others? And how can they differentiate them?
The answer is easy: value and simplicity. Basically the highest value with the lowest friction always wins.
Focusing on value is imperative.
When times are good, people don’t mind saving money. But when times are tight, they actively seek out ways to save money.
After the pandemic and amidst rising inflation, a good way to increase customer loyalty and volume is to help consumers to extend their budgets, so cash-back rewards and coupons are extremely important nowadays.
Consumers expect rewards, and they are coming to expect them from their payment provider. In fact, a recent LendingTree survey found that 50 per cent of consumers feel that loyalty programmes are more important than ever
According to data, 75% of consumers joined certain programs to receive rewards for spending, and 66% joined to have access to discounts.
This means cash-back and coupons are a great addition to a FI’s value.
The abundance of payment options are overwhelming to consumers. A suggestion is to reduce friction and move the payment option’s window to show up sooner than other payment methods, before consumers even have the opportunity to see the checkout page, this has the added value of providing the consumer with the “simplest payment option of all”.
One way for an FI to do this is to offer a tool that does the following: Enables customers to activate cash-back and coupons as they shop online Gives them a one-click checkout that auto-fills their PAN With this method, the first thing consumers see when they land on a merchant’s website is the FI’s branded tool, on top of all other payment options, reminding them they are receiving cash back for shopping when they use the FI’s payment method.
In conclusion, providing consumers with rewards or discounts, and making sure the payment options are simple and readily available are key for any alternative payment method to gain traction.
Want to learn more? Check out The Fintech Times’ full write-up here.
Share your thoughts on our LinkedIn page.
SMEs: Analyzing 2023 And What to Expect in 2024
Mobile Payments: Will They Dominate The Market?
