Card marketers focus on mobile & enagement
The mood at the recent Card Forum & Expo in Florida, USA, was decidedly more upbeat compared to the past two years, according to The Wise Marketer's US contributing editor, Bill Hanifin of Hanifin Loyalty.
With the hardship of the economic downturn in North America in the rear-view mirror and the first wave of credit card regulations assimilated, the payments industry executives in attendance shifted their focus to payment innovations and, no surprisingly, yet more pending regulations. However, the three key themes that bubbled to the surface repeatedly during the conference were mobile payments, customer engagement, and speculation over the impact of the Durbin Amendment.
Representatives from Hyatt, Bank of America and Sovereign Bank (now Santander) illustrated how brands increasingly recognise that engaging customers with relevant content and demonstrating a higher level of personalisation is essential to success. Bank of America boiled down the entirety of its new customer focus to the creation of a customer portal allowing interaction between bank and customer outside the internet banking environment. The thought was that customers would be more likely to share needs and preferences at a venue where the focus wasn't on mundane tasks such as checking a balance or completing an online transfer.
Sovereign and Affinity Solutions shared a product launch that incorporated a mobile application, location based marketing, and merchant funded incentives to deliver value to debit cardholders. The value proposition to cardholders leveraged the familiar merchant rewards model, but the delivery in the mobile channel with geo-specificity created a new game to stimulate customer engagement and develop brand loyalty. Sovereign reported strong enrolment figures and indicated that the programme was creating stronger customer retention in its portfolio.
The mobile payment debate was kicked-off through an optimistic keynote address from Citigroup's Paul Galant, who predicted the rate of adoption for mobile payments would exceed "anything we've seen before" once the ball gets rolling. Similar forecasts were made by those with a stake in the mobile payments game, and the enthusiasm was put under the microscope in a heady panel consisting of executives from Acxiom, MasterCard and Kobie Marketing. Moderator Michael Hemsey, Kobie Marketing postulated that the customer experience using a mobile handset as payment device must bring visible and tangible benefit to the consumer in order for mobile payment to take hold. Joyce Chen, Acxiom and Chris Bond, MasterCard endorsed the idea saying the "added value of the mobile device will be more important than mobile payment itself".
A presentation on the intersection of social media and payments highlighted Dwolla Spots, a new location-based currency that was described by Dwolla's CEO, Ben Milne, as "like Foursquare for payments". In this presentation, a good example of the added value that can be created by transforming the mobile handset into a payment device was provided.
Loyalty programmes remained a focus of the conference with multiple points of evidence that their importance to brands is strong. Colloquy reported that "nearly 70% of new credit cards have some kind of rewards programme" and an executive from retailer Kohl's shared that "50% of transactions in Kohl's stores were initiated with a Kohl's card".
The debate over the potential impact of interchange regulation in the US was heated. One panel composed of representatives from Morgan Stanley, Dove Capital, and two attorneys pointed up the contrast between opinions and the venomous differences held by banks and retailers in the debate.
While it is clear that the banks are angry about new rules on debit interchange, most agreed that the sensible approach is to prepare for a future where income streams are diluted for both debit and credit card processing. Deborah Baxley, Capgemini was quoted saying "Anyone who doesn't think interchange rates in the U.S. will someday decline is putting their heads in the sand." Proof positive of this prediction was seen by a walk around the exhibit hall. Some of the traditional rewards suppliers were not in attendance, while the room was dominated by innovators in "merchant funded rewards" and "partnership marketing". Cost efficient processing and delivery of cardholder value at lower costs were leading talking points from these suppliers.
Some debate over the future of EMV chip standards in the US was undertaken, and it seemed that only now are US card issuers really getting to grips with the fact that card fraud is growing rapidly and that the EMV standard will have to become a way of life over the next few years.