Here’s a startling thought. Payments industry experts had been predicting the end of cash for everyday transactions within 10 to 15 years. But thanks to Covid-19 and the way it’s driven a huge shift to contactless payments, they now believe it could be as soon as next year. Personally, I think it’ll take a little longer but there’s no doubt that those of us who live and breathe payments face fresh challenges and opportunities as a result of the exodus from notes and coins.
On one hand, we need to come up with solutions to ensure no one is left behind (prepaid cards certainly have a role to play in helping the unbanked). But on the other, the new breed of processors which underpin the payments infrastructure is going to have to innovate like never before, as consumer expectations reach new heights. One of those expectations is around payment card products’ ability to offer a genuinely real-time user experience.
Before we get into the growing importance of delivering in real time, let’s just look at the impact of the coronavirus pandemic on contactless shopping. In the UK, right at the beginning of the lockdown, the Government upped the contactless limit from £30 to £45. Many retailers – I’ve certainly noticed them – have displayed signs requiring people to pay by card rather than cash to reduce the risk of infection.
Whilst we’ve heard lots of talk about things getting back to normal, I think when it comes to shopping habits, it’s unlikely that people – even those who may have been slow to adopt contactless or card payments until now – will go back to carrying notes. Covid-19 has made lots of people realise their smartphone is about much more than Facebook or Instagram.
Just like real-time social media experiences, whether through Facebook Live or likes and comments on posts, mobile payment card apps have the ability to deliver similar intuitive benefits. For example, reminders that a purchase has been made or the ability to round up transactions and add the difference to a savings fund. These are great innovations that completely change the payments experience, something that customers are going to want to see evolve – and quick.
But as an existing or prospective card programme owner, how do you bring the real-time experience to life? At Marqeta, there are a number of ways we’re helping to support this, including through the use of webhooks and by allowing three seconds for authorisations. To help explain the benefits and possibilities, I’d like to walk you through some plausible consumer scenarios.
Scenario 1: Giving a helping hand to customers when they need additional funds
Imagine one of your valued account holders is at the point of sale paying for goods but they’re without sufficient funds to complete the purchase. With a modern card issuing and payment processing partner, this needn’t be a problem as long as certain criteria are met (for example, the data you’re deriving has built up a positive credit profile of the user). In real-time, your card programme could facilitate a new or increased overdraft and advise the account holder via a push notification. They could choose to accept or decline this offer. Either way, your customer is given some useful options they will appreciate.
Scenario 2: Supporting a loyal account holder with an exceptionally large purchase
Convention states that cards come with a daily spend limit – a limit that prevents large scale transactions, such as making a deposit on a house or buying a car. But that doesn’t have to be the case with a card programme. It’s possible through your app (again in real-time) to allow cardholders to change their daily spend limit to accommodate such significant payments. The benefits of these to the end user are clear. Gone is the need to set up a bank transfer or squander a chunk of one’s day in a call centre queue listening to tedious music punctuated by impersonal automated options.
Scenario 3: Give your cardholders life-enhancing benefits that make money go further
A good example of this is Square’s Cash Boost. This feature delivers instant cashback to account holders who use their card with selected retailers. By partnering with a modern card issuing and payment processing platform, card programme owners have the freedom and control to design a real-time rewards feature that they think will work best for their customers. It could be a discount or a freebie, such as a coffee or cinema tickets; but critically a process that doesn’t involve the cardholders having to go out of their way.
So, what happens behind the scenes to make these scenarios possible?
Payment processing is changing fast. Thanks to API-driven webhooks that allow the instant transfer of information between applications (for example, your platform and the user’s phone), it’s possible to have a real-time, personalised conversation with your cardholders. This could be at the point of purchase or at any other time you choose to engage them, perhaps to remind them to top-up a savings pot or redeem loyalty points.
Additionally, in allowing up to three seconds for authorisations, you open up a whole new world of possibilities for enriching transactions with a range of helpful and reassuring functionality. This could be checks relating to fraud and risk, or spending controls with certain retailers or in set locations. These extended auth times aren’t noticed by end-users or retailers but they do empower you, as the card programme owner, to glide seamlessly through the above three scenarios and many more to deliver a superior real-time experience.
But perhaps the most beautiful thing about this approach is that the technology enables user personalisation. Thanks to the continual flow of individual data, card programme owners can observe cardholder trends and respond proactively.
Where do we go from here?
As coronavirus fears abate, the unexpected new adopters of contactless payments will undoubtedly begin to look beyond how card apps have helped them to reduce infection risks. I suspect many people will now be thinking about the benefits of intuitive apps and the way they help them manage spending and improve their lives. This represents an immense opportunity for card programme owners – an opportunity that is well within the reach of those who partner with a modern card issuing and payment processing platform like Marqeta. A world of real-time innovation awaits.