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.
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.
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.”
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.
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.
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”.
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.