How digital payments are changing consumer habits

19 - 03 - 2020

Use cases and Market news By Gaëlle René-Corail

The impact of technology on consumer habits is now a concrete reality. In this context, there seems to be a general trend towards integrating the digital payment component into many devices. This growing trend can be seen in different use cases and has a strong influence on the development strategies of companies wishing to offer new experiences to their customers.

But in concrete terms, what are the benefits of mobile and digital payment?

In order to better understand how digital payment is profoundly changing existing business models, we will discuss three major use cases that are undergoing real transformations: the world of gift cards, loyalty cards and banking. All of these sectors, which are now highly competitive, have in common that they are increasingly digitising their activities in order to retain their customers, develop their market share and offer their users new consumer experiences.

The case of gift cards: traditionally marketed at points of sale (stores, post offices, etc.), once purchased and used, they did not allow card issuers to maintain a connection to the recipient. By digitising these cards and introducing mobile payment, it is now possible to enroll the consumer and build a lasting bond with him or her to give him or her other shopping experiences over time. The gift card is then transformed into a purchasing card and makes it possible to move away from a purely “One Shot” approach.  This is also the strategy chosen by One4all, a major gift card retailer in Ireland, which has chosen to digitise its card issuing, sending and production process. Consumers of these gift cards can now use them directly from the One4all Android application or from their Apple Pay wallet for iPhone users.

Digitised loyalty cards: here again, mobile and digital payment is changing the game and expanding the possibilities available to loyalty card holders. Thus, from a single point, it is possible to directly add the notion of payment to offer numerous complementary services such as financing and credits for example.

This is the case of the German FinTech Stocard, which has chosen to add payment functionality to its loyalty card application on mobile phones. Stocard is the leading mobile wallet application in Europe, with 40 million users, including 3.6 million in France (June 2019).

On the subject of loyalty cards, it is worth noting that the French are among the most numerous cardholders in Europe. This is therefore a real opportunity for brands.

The growth of mobile banking: the traditional banking industry is undergoing profound transformations that are leading it to digitise its operations in order to remain competitive and offer ever more value to its customers. In this context, mobile banking is now becoming a concrete reality, to the extent that some establishments such as Arion Bank in Iceland have gone from a traditional mode to a 100% digital mode in less than five years. As a result, the mobile is the preferred communication channel for all its operations, including payment, which is positioned as one of the main services used by consumers. Integrated with other services, it is a key element of the system.

The user experience and consumption habits are therefore key points that explain the digitisation of many operations in different use cases. This trend is expected to accelerate sharply in the short term and to continue its breakthrough in many sectors worldwide. One thing is certain, the transformation is under way and the most innovative players will be the big winners of this structural change.

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