Alternative Finances

Let’s Talk: Breaking That Payments Habit

Why did consumers willingly dump their feature phones and blackberries for the iPhone yet they still write checks and pay with cash?

Charles Duhigg, in “The Power of Habit,” makes the following assertion: Habits are formed in response to different triggers – cues – that cause people to develop a routine that gives them a payoff of some kind when completing that routine. This cycle varies by individual and is very deeply rooted. But this cycle creates amazingly powerful habits that, Duhigg says, “are so strong, in fact, that they cause our brains to cling to them at the exclusion of all else, including common sense.”

This Cue => Routine => Reward feedback loop is the neurological basis of every habit human beings have developed. Understanding this and using it as a framework for then changing habits is step one.

I’m sure that you can relate. Your daily routine includes making sure you’re on top of the latest news about innovation in payments. Your cue is seeing the PYMNTS newsletter in your inbox, and the reward is knowing that you’re in the know as a result of opening it and clicking thru.

If all habits were only that easy, low-fat, and calorie free!

But not all habits are good for you. Duhigg says that, unfortunately, lots of the ones that are hardest to break aren’t, or they at least keep people from realizing new opportunities that could be better for them. And breaking the bad ones don’t respond to the same “habit-kicking” formula since people are different, their motives are different, and the habits may have been formed over a long period of time. For instance, Duhigg says that kicking the nicotine habit is entirely different from wanting to give up unproductive work habits, which is different than wanting to lose weight.

That, unfortunately, means that there is no one-size-fits-all solution for changing habits, just a simple framework for figuring out where to start.

And that, Duhigg says, is with the routine or the behavior at the core of the habit that needs to change.

In the case of payments, that routine is whipping out a plastic card to pay for something at a physical store, which, of course, is precisely the habit every single person in payments wants consumers to break.

But what, precisely, is that routine? Is it using a phone to pay at the physical point of sale instead of a card? And, if so, and if the cue is the same – consumers walking up to a checkout in lane – what has to be different to change the routine? Does the cue have to change, or does the reward for using the phone, or both?

Then maybe the routine that needs to change isn’t substituting a phone for a card at all at checking but just authorizing the transaction at checkout? And, again, how does the cue and reward have to adjust?

Or maybe the routine is completely disconnected to payment and connected to something else in the consumer purchasing pattern? Avoiding the lines? Knowing that what the consumer wants is in the store before they get there? Saving money? All of the above? If so, how does payment fit, how do the cues have to change and what rewards need to be delivered?

Charles Duhigg, Pulitzer Prize winner and author of “The Power of Habit” will engage a panel of C-suite execs around this and give Innovation Project delegates an overview of how deconstructing his feedback loop has been used to change behavior for a variety of use cases, including retail and consumer spending. It will become the “level set” for a discussion of how payments and commerce players need to contemplate this framework for moving consumers towards a future dominated by phones and not plastic payments cards.

Don Kingsborough, head of global retail and strategy for PayPal, will be Duhigg’s counterpart, sharing experiences from his work in retail, payments and in spearheading PayPal’s move to offline transacting.

Other panel perspectives include:

Todd Diapola | CEO | InMarket, whose iBeacon deployments in grocery is delivering targeted messages to consumers via their phones in stores

Abhi Dhar 
| EVP | Walgreens, who has pioneered the use of mobile to enhance the consumer experience, focused exclusively on driving people into stores to buy more things

Rocco Fabiano | President/Retail | Qualcomm, whose Gimbal platform is enabling an entire generation of micro-targeting and in store innovation using iBeacon technology

Alex Rampell | CEO | TrialPay, who has gotten millions of consumers to try stuff they’d never thought about buying by giving them rewards to buy the things that they actually do like.

If your goal is to get consumers to move away from what they are doing now to something different – and isn’t that what everyone on some level is trying to do – then you’ll want to break whatever habits you have that would keep you from joining The Innovation Project 2014 session on March 20 on Breaking the Plastic Habit: Reinventing How We Shop and Pay.

To get on the list, please click here.

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