Thursday, 28 May 2015

m-commerce, loyalty programmes and banks

The success of Starbuck mobile payment solution showed the world that merchants will have a say in reshaping the future of payments. The secret sauce: integration in the app of loyalty, offers and payments, making the engagement with Starbucks a great experience. The app let customers pay, manage their Starbucks Card, register and manage My Starbucks Rewards® and Send Starbucks eGift Cards for special occasions. Now they are adding mobile order & pay functionality.

During the company’s earnings call on January 22, CEO Howard Schultz told investors that 13 million customers use Starbucks’ mobile apps, they complete over 7 million mobile transactions per week, and they represent 16 percent of total revenue.

Many other merchants have followed suit. A good example is Chipotle, which app you can use to order your food quickly, pay with a credit card or Chipotle gift card  and avoid waiting in line. Moreover, you can use your Chipotle account to access all your favourite and recent orders, and save your payment info. You can also see menu, nutrition and allergy information.  

And we´re increasingly seeing many other m-commerce initiatives (and in different categories), like MyTaxi, Hailo or Uber in which payment is embedded in the experience of getting a ride to your destination. Payments become invisible in this experience.  And this has implications for financial services, because a merchant can include payments in their customer digital experiences, but financial institutions can´t add a digital experience in a merchant environment to a payment solution, unless they partner with the retailers.

This trend is even more important for merchants seeking an omnichannel strategy, in which the line between online and offline blurs and complement. For example, according to a research from IAB Spain, 21% of the most important commerce brands in Spain already have an app with m-commerce. Extending their online m-commerce capabilities to the in-store experience (including payment) is a question of time.

And the arrival of Apple Pay in-app capabilities will probably increase m-commerce, specially when paying in-app is more secure and faster than paying with a browser where you will need to introduce and OTP received by SMS.

And we are seeing the first examples in Spain:

CEPSA has recently launched CEPSAPAY, a mobile app that let customers:

• Adhere to their loyalty programs
• Create a pre-paid virtual wallet
• Select the pump, the amount to refuel and pay with the mobile app at the pump or at the cash register with the app active balance or directly to linked payment bank card.
• Recharge your own balance or send to others. Users are able to send active balance to friends and family so they can use it at gas service stations without having a linked payment card.
• Set billing information

CEPSAPAY has been developed in partnership with PayMet Ltd. PayMet is a ISO-MSP through Banco Sabadell and its platform facilitates payments  between users and business without ever being financial intermediaries, this means that PayMet never holds third party funds.  PayMet business model is based on being a payment gateway, standardizing the process of mobile payments in physical or online stores for all retail partners.Cepsa expects to generate 43% of payments through the app.

What is interesting about this initiative is that it has not been developed with Citibank (bancopopular-e) that is the issuer of the Cepsa Visa Credit Card, something that would have had all the sense as being the main partner for consumer payments.
Another example is Vips restaurants. Vips Group, that manages well known brands in Spain like Vips, Ginos, Starbucks and TGI Fridays,Wok and that has 2.8 million customers adhered to its Club VIPS loyalty program has recently launched its Club Vips App. Vips Group has invested 1 million euros and has partnered with Gigigo, BT and BBVA. Their goal is replace the Club Vips loyalty card and generate 50% of sales throught it. But the app is more than a loyalty solution:

- it let you register to the loyalty programme instantly through the app
- order and pay your favourite food for take away or take in any Starbucks shop.
- pay with 1-click through BBVA where your card details are stored (not in Vips)
- create your wallet and top up or send money to other users for consumptions in Vips brands
- Find and book in any of the Vips brands
- Saved your favorites places and foods for a quick new order
- Gain 3% in EuroVIPS in each parchase
- Special promotion

In this case again, the financial partner has not been Banco Popular who manages the Club Vips Credit Card but with BBVA who has been able to provide the digital solutions for the wallet and the 1-click payment.

These two initiatives, are examples of how retailers will use digital to enrich and enhance their customer experience where the credit and loyalty cards disappear into the app. And also give us a hint of the sort of digital capabilities that banks will need to build to be able to partner with retailers. Now, you understand why Paypal acquired Paydiant.


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