haddad july 2008
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How will Banks Meet the Challenges of Innovations in Retail Payments? Aneace's keynote address for Financial Cards & Payments Asia, July 2008, Hong Kong.TRANSCRIPT
Copyright 2008 © Welcome Real-time
All rights reserved. Material in this presentation can be copied on condition that
“Source : Welcome Real-time” is included in a clearly visible fashion next to the copied material.
How will banks meet the challenges of innovations
in retail payments?
Aneace Haddad Chairman & Founder Welcome Real-time
Hong Kong, 15 July 2008
1964
1967
“I can present it and sign the bill in 35,000 shops, garages, restaurants etc., throughout Britain.”
“Instead of making dozens of separate payments, I can make just one a month. To you.”
“I get all these advantages, yet the card and the service cost me nothing.”
“BARCLAYCARD is all I need to go shopping.”
Stock
return %
over ’95-’05
Margin
growth %
over ’95-’05
Source: 24th April 2006 BusinessWeek, BCG.
Internet payments
Mobile payments
Contactless Biometrics
Prepaid
Loyalty
Micropayments
EMV
P2P
NFC Mobile
banking
“What problem does this innovation solve?”
“What pain does it alleviate?”
“What value does it deliver?”
“Who cares?”
The key questions
Source: The Paradox of Pain, www.chrisoleary.com
“A great idea eliminates a significant source of pain for a large number of people.”
Source: The Paradox of Pain, www.chrisoleary.com
WHERE’S THE PAIN ?
Source: Loyalty 2.0, Market Platform Dynamics, May 2007
USA Aug 2007
(LA Times)
1
8
Nashville August 2006
New York January 2006
www.StopInterchangeNow.com
Sydney April 2006
London Nov 2007
Denmark Nov 2006
Singapore March 2007
Singapore March 2007
1 - Find a problem. Fix it.
2 - Find an opportunity. Exploit it.
Source: Ron Shevlin, http://marketingroi.wordpress.com/
Two secrets to survival & success
Merchant dissatisfaction is an opportunity. Exploit it.
Source: http://thehistoryof.net/history-of-credit-cards.html
1979 A turning point in the credit
card processing industry
“In 1979, magnetic stripes on the back of credit cards allowed retailers to swipe the customer’s card through an electronic dial-up terminal, which accessed the bank’s cardholder information.
“The advantage of this system, besides saving paper, was the increased speed of processing authorizations – one to two minutes. It also decreased credit card fraud.”
29 years
Internet payments
Mobile payments
Contactless Biometrics
Prepaid
Loyalty
Micropayments
EMV
P2P
NFC Mobile
banking
Contactless: a card innovation
that benefits merchants?
1 out of 133 “There are 6 million places where you can use your credit card, 45,000 (contactless locations) doesn’t excite me.”
John Suchanec, Bank of America
“Waving a card in front of a reader takes about as much time as swiping one through.”
Manager, Sheetz, Inc.
Contactless forecasts for 2007
230 million
Jupiter Report (2004)
37 million
Jupiter Report (2006)
25 million
Card Technology (June 2007)
“What problem does this innovation solve?”
“What pain does it alleviate?”
“What value does it deliver?”
“Who cares?”
The key questions
Source: The Paradox of Pain, www.chrisoleary.com
Five innovation themes that can help you
benefit from current market conditions.
Reduce your dependence on interchange as a source of funding for your loyalty program.
Find ways to develop deeper partnerships with merchants who can co-fund rewards.
1
“Earn 2 points for every Euro spent at other participating merchants (1,500 all across Greece).”
“Earn 1 point for every Euro spent everywhere else.”
“Earn 4 points for every Euro spent at the big Bonus Partners.”
“There is no doubt that banks can work successfully with merchants to attract and maximise the value of customer relationships, through the payment process, for the benefit of both parties.”
“Banks are generating a new revenue stream from such
arrangements.”
Cut the cost of running your loyalty program by finding ways to simplify the rewards
redemption and fulfillment process.
2
Pay by card. Receive bank statement.
Check points balance online or call bank.
Select reward and fill out redemption
form. Wait to receive voucher by mail.
Put voucher in wallet and take to store.
Give voucher to cashier. Get reward.
Pay by card. Get reward.
HOME & FASHION EMPORIUM
1234 Orchard Rd Singapore
(555) 222-1234
CUSTOMER RECEIPT
CREDIT CARD SALE
Card #552251020230**** Date: 7/4/2008 3:26 PM
Auth. #02718
TOTAL: $75.26
X___________________________
YOU HAVE 1,230 POINTS
REDEEM YOUR POINTS HERE !
-------- THANK YOU -------- COME AGAIN SOON !
Work with Visa, MasterCard and American Express to develop new card features that provide much more value for merchants.
3
Help merchants promote their co-branded store cards.
Merchants can reduce their total interchange costs, and you can win new business issuing
more co-branded cards.
4
“This customer shops regularly in your store. She has been here 4 times this month, but she doesn’t use your store card.”
POS messages help merchants communicate with customers who are otherwise invisible.
-----------------------------
Don’t miss out on
savings. Use your
Carrefour Visa card.
Don’t have one?
Apply now. Present
this voucher for a
special gift.
An attractive feature for merchants … and an incentive for the merchant to convert private label cards to co-branded cards issued by your bank.
Find new value added payment services which solve real problems for merchants.
5
“Introduce payment information value-added services to reduce pricing pressure from merchants and convince them of the real value of bank-sponsored retail payment networks.”
“The retailer will have a platform to deliver tailored promotions
at the POS.”
“The promotion or message can be delivered via a POS receipt.”
He has obviously been filling
up somewhere else.
----------------------------
Coupon
TRY OUR NEW EZ CAR WASH AND
ENJOY A COFFEE WHILE YOU WAIT
CAR WASH+COFFEE
SPECIAL $2.00
Expires Nov. 15, 2007
Since he is here now, why not print an offer at the bottom of his card receipt?
A feature that is simple, low cost and valuable for all types of merchants.
London Apr 2008
1st visit
----------------------
M---R---S--
Use your Visa payWave card at McDonald’s. When all the
letters above are filled,
win your McSurprise!
2nd visit
----------------------
MC--RPR-S--
Use your Visa payWave card at McDonald’s. When all the
letters above are filled,
win your McSurprise!
3rd visit
----------------------
MC--RPRISE-
Use your Visa payWave card at McDonald’s. When all the
letters above are filled,
win your McSurprise!
4th visit
---------------------- Coupon
MCSURPRISE!
Congratulations! Present this ticket to any clerk
and get your McSurprise!
Not valid with any other
offer. Expires 31 Jan 2008
Card receipts don’t have to be boring.
DID YOU KNOW ?
Promotional marketing is huge ($342 billion in the US alone!)
Europe Pakistan China
Promotional marketing is global and the same techniques are used everywhere
Newspaper ad, half page:
9,000 - 12,000
Co-op package mailing,
1 insert: 350
Local coupon book,
1 page: 350
Promo marketing is expensive (and rarely targeted because too difficult)
“The profit margin for solving the merchants’ commerce problems and delivering new customers and/or closed sales is two to three times that of the payments transaction fee.”
“Data shows merchants will pay 7-9% for delivery of a sale vs. 2% for merely processing the payment.”
Merchants advertise with Google get FREE payment processing
“For every $1 you spend on AdWords each month, you can process $10 in sales the following month for free.”
+
Copyright 2008 © Welcome Real-time
All rights reserved. Material in this presentation can be copied on condition that
“Source : Welcome Real-time” is included in a clearly visible fashion next to the copied material.
Thank you
Aneace Haddad
Chairman & Founder, Welcome Real-time
http://aneace.blogspot.com
www.welcome-rt.com