Finding new customers in a VERY saturated credit card market

Pierre Boces has produced another case study, this one on Iceland, a country with 75% card usage (versus cash and cheques), with more than 2 payment cards per inhabitant and where 80% of all credit cards are already linked to some kind of loyalty program. How do you recruit a large number of new, high quality customers in such a tough environment? You have to steal them from the competition, of course, and avoid simply dropping fees.

Download the case study here and see how one bank was able to do this.

www.StopCheckoutFees.com

This website is another indication that US merchants are making progress in their fight against interchange fees.

"Nearly 50 lawsuits from giant retail corporations have been filed to add check-out fees (surcharges) to every purchase you make, whether you're buying a tank of gas, a gallon of milk or a lunchtime meal. In many states there are laws to protect consumers from check-out fees but mega-retailers are suing to dismantle those consumer protections."

The website's About Us section says that it is managed by an association called Americans for Consumer Education and Competition, and that the association has the financial support of Visa USA.

Card usage will be seriously threatened if merchants start adding a surcharge at the bottom of receipts. This is a huge risk and the industry is still not dealing with it properly. The current strategy is to fight merchant surcharges in court and try to influence public opinion through media like this website. But the only right answer long term is to make payment much more valuable to merchants so that they are happy paying interchange fees.

(WayTooHigh.com brought this website to my attention.)

French bank launches Web 2.0 credit card promotion

France's La Caisse d'Epargne is launching a contest tomorrow, inviting people from 16 to 25 to design the new visual for the bank's Visa card product for young people. Each entry will be posted on the bank's web site. The one with the most votes wins. Pierre-Philippe gives an inside view here.

Quite an innovative promotion for a major French bank.

Why are Visa, MasterCard and American Express all scrambling to announce contactless deals with a tiny coffee shop chain?

I was surprised a few days ago when Visa, American Express and MasterCard each issued separate press releases, all on the same day, announcing three individual contactless deals with a tiny coffee shop chain in the western United States, Tully’s Coffee, a retailer with 100 stores and $50 million annual revenue. In comparison, Starbucks is 150 times as big. Why so much excitement from all three payment brands about such a tiny player?

“Tully's Coffee and Visa today announced their collaboration to make it easier for customers to grab their coffee and go by accepting Visa Contactless payments, an innovative new payment technology that speeds up transactions, making purchases faster and more convenient than cash transactions.”

“MasterCard Worldwide and Tully’s Coffee Corporation announced today that all Tully’s corporate owned retail locations will accept MasterCard® PayPass™. MasterCard PayPass is a fast, cashless payment option that will allow customers to pay for their Tully’s purchases by simply tapping their PayPass-enabled MasterCard card or device on a PayPass reader.”

“American Express today announced Tully's Coffee Corporation, Inc. as the latest merchant partner to accept ExpressPay from American Express in the quick service category.”

I can understand the importance of signing up lots of small merchants, and Tully’s is probably a good one to have on board. But three separate Visa, American Express and MasterCard press releases issued on the same day for a deal with a $50 million retailer? What’s that all about?

The banking and card technology press talks about contactless like a done deal. Industry consultants and experts talk of massive contactless deployments (one company recently published a report claiming that contactless payment systems are “approaching the tipping point of adoption in retail”). If that’s the case, why so much excitement about contactless acceptance at a $50 million a year retailer?

How contactless payment brands (PayPass, Visa Wave, ExpressPay) can be much more attractive to merchants

Welcome has just released a new brochure on how to make contactless payment brands like Pay Pass, Visa Wave and ExpressPay much more attractive to merchants, so merchants will promote one brand over the others, and encourage their customers to use that brand.

"Contactless brands like Pay Pass and Visa Wave promise greater speed and convenience at the moment of payment. Is that enough to get merchants truly excited about accepting contactless cards?"

"There is little or no differentiation between contactless payment brands. What can be done to get merchants to accept and encourage usage of one brand over others, without simply cutting fees?"

You can download the brochure here (pdf)

The problem of multiple contactless cards in your wallet: will consumers choose to have only one?

Tim Jones recently described the problem of NFC enabled mobile phones programmed with multiple payment cards and rewards cards, and how the POS would not know which card to process. The same problem of course exists with having multiple contactless cards in your wallet, a situation which is far more likely to occur in the very near future than running around with a mobile phone loaded with lots of cards. Tim’s interview got me wondering if people are seriously talking about this problem yet.

Here are a few comments I pulled together in around 5 minutes playing around with Google.

ZDNet Australia (30 June 2006):

According to a MasterCard consultant: "If you've got multiple cards in your wallet, or even worse multiple technologies, then when you put it up to the reader, the reader can actually support many different types of contactless payments. So what would happen is you could actually wake up more than one card.

"So at this point the reader basically doesn't know what to do, it can see two cards for instance. However what we actually do is, on the reader, we know there's more than one card. So unfortunately as MasterCard I can't make a payment decision for you. I can't just select your MasterCard. So what I have to do is I have to go back to you, the cardholder, and ask you what would you like to do...

"It does mean if you have multiple contactless cards in your wallet, you would have to select a card to use."

RFid Gazette (10 November 2006):

"These contactless credit cards are expected to become popular for small transactions, so security issues aside, the likelihood that consumers will carry more than one, is increased. A merchant's RFID reader would thus detect more than one card in your pocket, unless you use an anti-RF sleeeve or wallet.

"If you don't use a sleeve (but you should - always use protection), that means you have to remove the desired card from your wallet/ purse. If you do use sleeves, then you still have to remove the right card - not just from your wallet but also from its sleeve. Where exactly is the time saving in that?"

Schneir on Security (7 November 2006 – a couple comments from readers):

“Whats most galling is that you gain almost nothing. Ohh, you don't have to take your card out of your wallet (but you still have to take your wallet out of your pocket), ohhh, what a timesaver....”

“If you don't have to take the credit card out of your wallet how do they know which one to charge? Once this rolls out and you have more than one of these it's saving only the last couple of inches of today's "swipe" action. I'm sorry, I've never felt so burdened by the exertion that I'm willing to accept the greatly increased risks.”

How might this problem get resolved? Security conscious people may simply stay away from contactless cards. So let’s leave out the whole sleeve thing and assume that people that like contactless cards will not worry about the perceived security risks. The people that want contactless cards will like them for the speed, that’s a no-brainer, right? Presumably, they will enjoy not having to take the cards out of their wallet or purse, right? So to avoid the multiple cards conflict, will people that like contactless cards only want to have one in their wallet?

This would put a new spin on the share of wallet battle. The trick is to get merchants to see more value in one contactless payment brand over another, so that they encourage cardholders to use that brand rather than others. Would that cause cardholders to get rid of the other contactless cards in their wallet? Possibly, if customers want to simply hold their wallet up to the reader without pulling a card out. Today, it’s hard to see which brand might succeed in making its cards more attractive to merchants, since all contactless products are absolutely identical.

Does anybody get this one?

I'm not sure when this ad was aired. It looks like it might be several years old already. The message? “Some people know when to pay a little more. The Discover Card. For the slightly smarter consumer.” Does anybody know if this is a real ad?