Jul 27, 2007

“What other innovations do you see coming in addition to targeted promotions?”

This question comes from Bryan Johnson, CEO of Braintree Financial, who recently left a comment on my blog.

I talk a lot about targeted promotions as a powerful way to get merchants excited about the value that banks can offer through new generation payment products like contactless and EMV. Once the infrastructure is a little more mature, lots of other things become possible, which Welcome is already working on.

Imagine for a moment that MasterCard PayPass cards are widely available across the US. Or if you prefer, look at Europe, and imagine that merchants already have a large number of customers using Visa Vpay debit cards, which all have chips. I’ve talked a lot about how a merchant can leverage data hidden within those card products to deliver targeted promotions. What else might happen in addition to targeted promotions?

Every once in a while, usually during the Christmas holiday season, the press gets to talking about return fraud, a huge problem that costs US retailers $16 billion annually and dwarfs bankcard fraud estimated at $3 billion. Over half of returns fraud is attributed to customers “renting” merchandise for free by purchasing a product, for example an expensive camcorder, using it once to record a wedding or graduation, then returning it for a full refund. Click here for prior posts showing how new generation payment products can help retailers address this problem.

Another angle we are exploring is something similar to roaming. When you go to another country with your GSM phone, you usually receive one or two SMS messages from your operator telling you which local operator to switch to for the best service. Why not have something similar when you use your card in a new country? The first time you pay, the receipt could include a roaming message from your bank telling you which bank’s ATM’s are free, or offering you special traveller’s insurance and a local number to call. You don’t want those messages popping up over and over again; the intelligence built into the new payment devices ensures that the message is only delivered once.

We’re looking at lots of other ideas as well, all of which are part of a new body of card features which Gartner calls "Payment Information Value Added Services" (or PIVAS).

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