We have been building ROI models with our customers for years, primarily concerning the bank’s own card issuer related metrics on cardholder acquisition, card usage, retention, etc. Banks have now begun sharing new data that can help understand how a payment brand can benefit when merchants are excited. The results confirm our premise that a payment brand becomes much more competitive when merchants can use data hidden inside the card’s chip to deliver targeted messages and promotions on the POS receipt. What do merchants think, in a nutshell? “Nine out of ten merchants perceive it positively,” says a Kasikornbank executive in a Cards International interview. “Instant marketing at the POS is the way we convey the concept to the merchants.”
The graph below summarizes the results achieved at specific merchants in various retail categories. The figures show that a card brand’s transaction volume can increase by an average of 75% when merchants use the card as a targeted promotional marketing platform. What drives such a high increase? The fact that merchants find the payment product valuable, of course!
When a scheme’s product is valuable to merchants:
- Merchants encourage customers to use that payment product over others.
- Merchants encourage customers to get a card if they don’t already have one.
- The cards are more attractive to customers, so easier to sell.
- Interchange fees are more easily justified with regards to that payment scheme.
- The product is adopted by more issuers.
When the product is not valuable to merchants:
- They encourage use of cheaper payment methods (such as cash).
- They make no special efforts to promote card acquisition.
- The cards are no different than those of other payment schemes.
- High interchange fees are not justified, and end up getting cut.
- Banks prefer other payment products.
This is fundamental stuff. We’re talking about the engine that drives competition between payment brands. More value for merchants means more value for issuers and a powerful new way for payment brands to compete.
You can find the individual merchant case studies here, all compiled by Pierre Boces.