A postcard from Australia
It’s nearly Christmas in Australia, a holiday celebrated by many at the beach or by the pool, provisioned with generous helpings of sparkling wine, sunscreen and seafood, all paid for with a swift tap-and-go at the local shops. In a pub down the hill from a church, parishioners pick up the tab for a round of drinks with a contactless payment on the same card they’ll tap an hour later to make a contribution to the collection plate at Midnight Mass. On the way, they might buy the Christmas edition of a street magazine from a homeless person using a small portable contactless reader.
A decade on from their introduction, 90% of all face-to-face transactions in Australia occur with a tap, making Australia a world leader in contactless adoption.
Every electronic payment leaves a data footprint, and this vast amount of additional information is providing an unprecedented opportunity for Australian banks to more intimately understand their customers and fine-tune their strategies around retention and share of transactions. For their US counterparts, the Australian experience offers a window into the increasing possibilities that will accompany the imminent surge in uptake of contactless payments by American consumers. Indeed, this might be one of the last articles you read on this subject, with indications that the US is on the verge of catching up to Australia in a hurry.
History tells us that when contactless becomes widely available, uptake among the card-carrying public is swift. Over the past twelve months the technology has quietly and thoroughly permeated American payments systems, with more than half of Visa’s US transactions occurring at contactless-enabled merchant locations. PayWave is now available at the terminals of 80 out of Visa’s top 100 merchants by transactions, and the company predicted in January that 100 million contactless Visa cards would be issued by the end of the year. Last year, JP Morgan Chase became the first of the big banks to announce that it would be moving its customers to contactless, and even the New York subway is moving to tap-and-go.
Thanks to its extended implementation period and widespread frustration with the “chip and pin” alternative, American consumers may well adopt contactless cards with as much gusto as their Australian counterparts. Contactless technology produces a vastly expanded universe of transaction data for banks to play with, with evidence showing that the number of transactions per contactless card can be as much as 30% higher than their conventional counterparts. We’ve had the opportunity to work with Australian card issuers to realise the immense power of this additional data and develop a much more comprehensive picture of their customer, based on transaction patterns. These insights, in turn, have been used to power meaningful personalization and loyalty strategies which offer real value and utility to those customers.
Examples of this kind of work include banking apps with the ability to accurately categorise historical spend and suggest more tailored budgets, the identification of spending patterns that indicate a customer’s suitability for other financial products (including other cards that better fit their lifestyle), and targeting customers for top-of-wallet.
This last point is important, as the potential rewards are already lucrative for early adopters whose cards achieve top of wallet as a result of being first-to-market with contactless, and this advantage can be further leveraged with insights from customer transaction patterns. The average American has four credit cards, and card issuers who can identify customers with frequently used cards from other financial institutions can create tailored conversations to incentivise them to drive their spend back in-house. This is a good example of how delivering a better, more personalized customer experience can deliver significant value to the bank in terms of loyalty and additional spend.
This deeper well of transaction data will also offer banks the opportunity to build analytics-driven loyalty marketplaces with the capability to surprise and delight their customers. Such a program would understand a customer’s tastes and habits and tailor their offerings and creative accordingly, with two customers of the same age and gender receiving entirely separate experiences, based on their spending profiles. Within a system like this, prediction becomes vitally important, anticipating when a customer will seek to spend rewards points, which offers are most likely to attract their attention and the associated next-best products (e.g. travel insurance). Banks aren’t traditionally known for their loyalty programs, but the experience delivered from leveraging this level of insight would deliver customers for life.
The driving force behind all of these activities is the same principle that will fuel the uptake of contactless payments – the simple fact that customers reward businesses who save them time and effort. The combination of tap-and-go technology and advanced analytics will offer progressive financial institutions a world of opportunities to fulfil that objective, and we’re betting that this will all unfold in the US over the next twelve months.
Quantium is a world leader in data science and artificial intelligence, and its Q.Refinery product unlocks richer, more accurate information from every transaction, providing the basis for an unparalleled understanding of each customer and delivering far more powerfully predictive targeting and modeling.
Established in Australia in 2002 and now employing over 750 people, Quantium works with iconic brands in over 20 countries, partnering on their greatest challenges and unlocking transformational opportunities.
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 Visa (2018), Tapping to pay is about to be even easier for U.S. consumers  Sanford, D (2019), Tap to pay is taking off, Visa, May 2019  Andriotis, A. (2018), JPMorgan wants card customers to pay with a tap, The Wall Street Journal, November 2018  Metropolitan Transportation Authority, MTA launches public pilot for OMNY contactless fare payment system – first new payment system in 25 years, Media Release, May 2019  ATKearney (2018), Why US banks should make contactless cards an immediate priority