For years, credit card companies have been working to make the point-of-sale (POS) payment process a more seamless one. One of the best examples is a now famous 2007 Visa Check Card commercial showing how relying on cash instead of credit cards for everyday activities only exacerbates the checkout process.
Through the advent of smartphones, the payment card industry further evolved with innovative solutions such as Square, thereby turning the smartphone into a mobile POS solution able to accept multiple payment cards though a simple card reader interface. In fact, there has never been as many ways to use credit cards to purchase goods and services through a variety of POS channels as there are today.
But a real paradigm shift in payment card innovation occurred in just the last twelve months. New technologies such as Coin and Apple Pay have taken the traditional, physical payment card out of the payment equation. Coin, for example, is a Bluetooth enabled, battery-powered device the size of a traditional payment card capable of storing multiple credit, debit and gift cards. Encoded with the payment card’s expiration date and security code, this single device replaces a wallet full of cards. When a customer checks out, a user simply selects the card with which they wish to use for the purchase, and swipe. Apple Pay operates in a similar fashion except the iPhone serves as the payment card proxy. Again, a user simply selects the card it wishes to use and checks out via Point-of-Sale devices that are configured to accept Apple Pay.
Many would look at this latest innovation and say “What’s the big deal?” After all, a physical device is still being used to conduct the financial transaction. But it is not the transaction that is the revolutionary; instead it is the ability to have all of an individual’s payment transactions across multiple payment cards (i.e., Visa, MasterCard, American Express, etc.) available through a single device. From a credit card issuer standpoint, this is one of, if not the most sought out pieces of information about payment trends.
From a marketing standpoint, accurately understanding a customer’s buying habits and purchasing propensity can now be obtained by analyzing the underlying transactional data. Add to the equation the metadata captured about these transactions (i.e., the customer’s geographic location, merchant information, date/time of a transaction, etc.) and a customer purchasing profile can quickly be built allowing issuers and retailers to better understand the buying habits of their customer base.
In addition to greater understanding of a customer’s purchasing behavior, credit card issuers can also now understand, at a more definitive level, wallet share – the percentage of the consumer’s spending utilizing the issuing credit card when compared to all payment card activity. Historically, third party services were used to understand purchasing patterns and wallet share, but these services are only as good as the information streams provided from the card processors/issuers. Additionally, transactions not generated by the requesting card issuer are not typically available for analysis as it is competitor’s data.
From an analytics perspective, a more complete and simplistic way to gain a holistic picture of a customer’s purchasing patterns seem to now be within reach. Even with potential roadblocks such as card processor confidentiality and sharing of personal information, the potential is there to streamline the way customers use and learn from their payment patterns. It will be interesting to see what the next chapter of the payment card evolution holds…