Mobile card services could be the Swiss Army knife of card management for consumers, because of the capabilities they can make easily accessible to the customer or business using them. Allowing users to turn their cards on and off, set spending limits, restrict usage based on purchase location and receive alerts when cards are used are just a handful of the popular uses for mobile card services (MCS).
The problem is that for all their potential to be a payments multi-use tool, they aren’t living up to it. Just one-third of American consumers report having used MCS, according to PYMNTS’ research. So what gives?
The problem, Ondot Chief Revenue Officer Todd Lesher told PYMNTS, isn’t for lack of interest. Ondot creates MCS tools for small and medium-sized banks and credit unions, and what the firm has observed both through its own experiences and those of its banking partners is that when customers are aware of the service, they are both enthused by it and use it.
The problem, he said, is that outside of one or two features, most consumers aren’t really all that aware of MCS offerings that are available to them, and are missing the benefits.
“There is a focus on the ability to turn cards off and off — I think even going back a few years we’ve seen that in banks' advertising. But that is a limited capacity compared to the set of services and features that are part of the larger picture — that needs more active promotion,” Lesher said.
Benefits that go hand-in-hand with MCS make themselves incredibly clear to users quickly. But those benefits, he noted, also accrue to the banks that offer them to consumers, giving them reason to find ways to “continue to promote these features even in the midst of all the other services they are trying to make people aware of.”
The Case That Makes Itself
In the seven-plus years that Lesher has been at Ondot, he told PYMNTS, he can count on one hand the number of times he’s explained the concept of mobile card services to parents and not had them express interest.
“What I hear most often is some version of ‘Oh my gosh, I wish I had that for my child to put some parameters on where and when they are using my cards.’”
And that popularity among parents shows up in the data — among the population of MCS users between 35 and 65 years old, 72.7 percent report being “very” interested in setting spending limits at certain merchants. Additionally, Lesher noted, apart from putting controls and breaks on kids’ spending, parents also express a large amount of interest in using MCS to “train their kids up” on financial responsibility. It is why Ondot is not surprised that when promotions targeting parents go out through its banking partners, the firm tends to see interest surge. Such drives in the market, he said, can really powerfully move the ball forward for MCS, largely because there is almost no sale that needs to happen. Once most parents are aware of the product, how it works and that they can create very specific parameters for shared card use — they don’t need to be persuaded so much as pointed in the right direction.
Ondot also sees alerts as being a high-engagement and a rather sticky set of MCS — an unsurprising result, he said, given the rather visceral response consumers have to protecting their funds. Banks and issuers secure users’ funds against fraud, Lesher noted, but particularly for debit and prepaid card customers — being able to reclaim one’s lost funds still induces a good deal more trouble than never losing them in the first place.
“For those customers who lost funds … they may ultimately get their money back. But because so many people live close to paycheck to paycheck, if you have something happen that disrupts your cash flow even short term, that can really throw a wrench into your life for a month or two or three.”
Credit card customers, he said, aren’t exactly thrilled to have been the victims of fraud either, though the effect hits less directly. They also put a rather high value on real-time notifications, and the ability to customize their allowable card uses.
The alerts do make a difference to how much damage a fraudster can do. On average, customers usually have four or five fraudulent transactions before they notice and report a problem on their card — but those who use MCS to enable real-time spending alerts, he noted, see that drop to an average of one.
Expanding the MCS Benefits
Giving consumers the ability to be better stewards of their own protection from fraud — by both letting them restrict their cards’ use cases and keeping them up to date in real time as to how they being used — mean that ultimately financial institutions are facing fewer costs from fraudulent uses and chargebacks. Their data on this is incomplete, Lesher noted, because some of their banking partners are more open about their internal fraud figures than others, but what they tend to observe among those who do report is a 20 percent to 40 percent reduction in fraud claims as their partners’ customers start switching on mobile card services.
Moreover, he said, good, easy-to-access mobile financial services kick off a virtuous cycle in terms of consumer adoption. The more secure and in control of their plastic card’s digital lives users feel, the more likely they are to use and engage with those cards over a wider variety of use cases. Ultimately, he said, when used to their fullest potential they can both boost consumer transactions while increasing the likelihood that more of those transactions are good ones.
But, he noted, for financial institutions to extract that kind of value, they have to be committed to pushing these offerings, and making them easily accessible for consumers. Even among those offering the services, especially larger players that are offering them in concert with a rich digital toolset of other mobile services, it is easy for consumers who don’t already know what they are looking for to simply miss all the opportunities they have to create controls for their cards.
There are, however, all kinds of solutions to that problem. In some cases, he noted, it means building a separate, branded, mobile app where the MCS features live and are easily used with a few taps. It requires the extra download, Lesher said, which consumers have become more accustomed to doing. Consumers download both the Facebook and Messenger apps frequently — and move between them because they are linked to make that easy to do. If financial institutions can build that same smoothness of flow into an extra set of capabilities customers have proven to be open to, there is reason to think customers will use it. Or, he said, it might require something as simple as surfacing the two most popular MCS features to consumers on the front page of a mobile app — and from that starting point makes it easy to access the entire card control dashboard from within the app.
“There is no one size-fits-all answer, the goal is to elevate something in the consumer experience and place it in a way so that it can drive awareness and easy access so that it doesn’t feel like an archeological expedition to use these things,” Lesher said.
Because at the end of the day, consumers like feeling in control of their cards, and naturally gravitate toward tools that let them do that. The challenge so far, he said, has been in making sure the tools end up in front of the consumers.