How contactless payments can accelerate loyalty and eCommerce growth
If you’ve forgone cash and cards in favor of contactless options, you’re not alone. Since March 2020, contactless payments have displaced cash and cards as consumers’ preferred payment method. Whether a card-present or mobile contactless payment, almost a third of consumers have used contactless payments significantly or somewhat more often, says a 2020 451 Research survey.
The survey also revealed that 17% of consumers used contactless payments for the first time as a result of the coronavirus pandemic. The majority of first-time users said they’d keep using contactless payments, even in a post-pandemic world. This adoption of contactless payments presents businesses with valuable opportunities to accelerate their loyalty programs and eCommerce growth.
‘Activate as many customers as possible’ with contactless payments and loyalty programs
As more consumers get comfortable with contactless payments, businesses need to give them every opportunity to become known members of a loyalty program. Any business that offers contactless payments or loyalty programs through an app can use that tool to support customers on their buying journey.
“When it comes to accelerating eCommerce growth, the first and most important element is to increase the addressable member opportunity,” explained Jake Kiser, Chief Customer Officer for Stuzo, a loyalty, contactless commerce, and cross-channel digital storefront platform.
Businesses want to know everything about their customers. And, as Kiser explained in a recent webinar with Kount, businesses can use contactless payment platforms and loyalty programs to build a customer’s identity trust profile. A customer’s identity trust profile includes, among other things, where they shop the business, how often they shop the business, their average transaction size, and their preferred payment method. The more a business can learn, the more accurate picture it has of the customer’s level of identity trust and how to optimize their experience.
“As we think about commerce and loyalty programs, we think about getting to know and activating as many customers as possible,” he said. “Building an identity trust profile isn’t about getting as much data as possible. It’s about how the business asks to gather data while using it to provide value and drive outcomes and experiences.”
Kiser cautions businesses not to amass data for the sake of amassing data. Today, consumers know their information has value. Anytime a business asks to gather data, they have to provide value or a fair trade for that information. He suggests asking for a phone number the next time a customer earns or redeems loyalty points or makes a contactless payment. Starting small is an effective way to activate customers into loyalty programs and build their identity trust profiles.
“Think about the buying experience,” said Casey Zenner, Kount’s Director of Enterprise Sales. “There’s nothing more frustrating than being asked for a lot of data. So start with something small that you can build on, as the customer interacts with the business.”
Use case: Contactless payments increase loyalty at gas pumps and convenience stores
Today, American consumers are just as invested in fuel brands and their loyalty programs as ever. A survey of Gasbuddy users found that around almost half of U.S. respondents purchased fuel from one brand as of 2020. And brands are noticing. They’re using contactless payments and mobile wallets to understand customers’ buying habits and help them accumulate fuel points.
In 2019, PDI, enterprise management software provider, surveyed consumers and executives of national retailers and grocers, CPG brands, and convenience stores. The Road to Rewards report found that consumers who belong to loyalty programs that offer fuel savings grew to 66%. The report also suggested businesses can increase loyalty in three ways:
- Offer value through relevant rewards.
- Make it easy for customers to earn and redeem points.
- Use data-driven insights to improve program value and convenience.
Offering value through relevant rewards means giving customers points and rewards. The report found that half of consumers joined a loyalty program to earn points or rewards on everyday purchases. Meanwhile, offering convenience means providing mobile, contactless experiences to accommodate the 44% of consumers who prefer using mobile apps to track and redeem rewards. Finally, using data-driven insights means using loyalty programs to gather information and improve program value — something 25% of businesses weren’t doing.
When customers use contactless payments, mobile wallets, or loyalty program apps at the pump, businesses can start by asking for the customer’s phone number. By connecting a phone number to a transaction, the business can start to learn how frequently the customer pumps gas at that location and how much they spend. And having a phone number means they can gradually engage with customers by asking for more information or promoting products. Through promotions, businesses can start to understand more about what that customer likes and how much they’ll spend on certain products.
By the end of a year, Zenner and Kiser suggest, the business will have used these small interactions to establish identity trust and grow the business. For example, let’s say a business knows what products or locations a customer uses most. The business can use notifications and promotions to drive the customer towards new products and old favorites whenever they’re in the area.
Protect contactless payments and drive customer loyalty with fraud prevention solutions
It’s easy to forget that fraud doesn’t just affect businesses at the point of payment. It’s present at every part of the customer journey, from account creation to loyalty redemption and checkout. And while loyalty programs are an effective way to start building customers’ identity trust profiles, they’re also prone to fraud risks. The more identity trust data businesses collect, the more bad actors have to gain.
According to Javelin Research, 58% of retailers are investing in customer experiences. But only 34% are investing in fraud prevention and mitigation. But what businesses don’t realize is the right solution can help them prevent fraud and learn more about their customers. For example, a fraud prevention solution like Kount Command doesn’t just reduce fraud, automate decisions, and protect against chargebacks and disputes.
Kount is built on the Identity Trust Global NetworkTM. With every customer interaction, Kount can help populate and verify information in an identity trust profile. Data-driven insights from the global network can help businesses get to know their customers faster and more accurately. With more accurate information, businesses can better customize each interaction with a customer and provide adaptive friction when necessary.
Let’s say a bad actor is attempting to make a contactless payment at a convenience store. Having a full identity trust profile means the business can see that card’s location or transaction size is out of the ordinary and take steps to authenticate the transaction. Businesses can block or challenge low-trust activity and provide a frictionless experience for known, good customers.
A fraud prevention solution that’s built on a global network of fraud and trust-related signals protects the entire customer journey and helps businesses build identity trust profiles. From there, it takes a risk-based approach to blocking or challenging fraud, which reduces manual reviews, false positives, and chargebacks. Finally, it helps businesses focus on eCommerce growth goals and personalize experiences that can lower friction for good customers and increase sales conversions.