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Money Magic: How Data-Driven Rewards Are Transforming Digital Payments

card payments, rewards, loyalty

A payment is never just a payment. Increasingly, it is a gateway into a lifelong customer relationship.

And with the recent trend across the payments landscape of financial services firms like JPMorgan Chase and PayPal creating their own ad networks that use data from user purchases, the integration of payment systems and the use of personalized data to enhance customer experience and drive loyalty is top of mind for companies looking to establish a competitive moat of repeat business.

That’s because, in the evolving digital and connected economy, the integration of payment systems and the activation of personalized data are no longer optional — they are essential for unlocking the full potential of payments and maximizing customer lifetime value.

Unintegrated payments, after all, are standalone transactions that lack connectivity with other business processes and data systems. These disjointed payments fail to provide businesses with the crucial insights needed to enhance customer experience and streamline operations. Without integration, payment data remains isolated, preventing businesses from understanding consumer behavior, preferences and spending patterns.

Driving offers to customers inside various ecosystems means using data, and accepting the digital payments that provide that data, in the right way. Effective personalization goes beyond addressing customers by their names; it involves understanding their preferences, anticipating their needs and providing relevant offers and rewards seamlessly tailored to distinct behaviors.

And leveraging payments data for ongoing personalization doesn’t just have its place in the consumer payments realm. The principles of integrated payments and personalized data, as well as the value of rewards and benefits, can increasingly be applied to B2B payments and operations.

See also: The Trickledown Consumerization of B2B Payments Helps Firms Win Business

Unlocking Better Business Relationships

By consolidating payment data with other customer information, businesses can gain valuable insights into purchasing behaviors, enabling personalized marketing and even tailored offers.

“Given the high correlation of customer satisfaction to the payment experience … Whenever there’s a transfer of payment or money, there’s an opportunity to enhance [the process] and drive a better customer experience for consumers as well as businesses,” Wally Mlynarski, head of merchant solutions and receivables at Bank of America, told PYMNTS.

The inclusion of rewards and benefits not only incentivizes timely payments and loyalty but also can add significant value to B2B transactions. By embracing these advancements, B2B businesses can improve efficiency, foster stronger partnerships and scale their operations more effectively.

“In a B2B business, the finance function itself is part of the customer experience,” Aanchal Kochhar, head of product at Capital One Trade Credit, told PYMNTS. “You can delight customers and capture more customers when underwriting is seamless, the credit process is seamless, and how money flows is seamless and with less error. There is a lot of growth potential.”

By integrating payment systems with additional services like financing options, supplier-side businesses can provide more value to their clients, making their offerings more attractive, while offering rewards such as early payment discounts can incentivize buyers to pay invoices sooner, improving supplier cash flow.

Automating payment processes and linking them with other systems also helps minimize manual entry, which in turn reduces errors and saves time for firms, boosting their operational efficiency and leverage.

Read more: 15 Experts Explain the Strategic Side of Payments Modernization

Data — especially user-permissioned, receipt-level data — will have the power to change the way business is done, Banyan President Alpesh Chokshi told PYMNTS in a discussion posted Monday (June 3).

While the traditional value proposition of payment systems focused primarily on transaction speed, security and cost, the modern value calculus includes rewards and benefits as crucial elements that influence payment acceptance decisions for both smaller firms and enterprise businesses.

For small businesses, integrated payment systems with built-in rewards and loyalty programs can be game changers. These features help attract and retain customers in competitive markets by allowing firms to offer personalized discounts, track customer preferences and engage customers through loyalty rewards, thereby driving repeat business and increasing lifetime value.

Larger enterprises benefit from integrated payment systems by leveraging extensive customer data to drive sophisticated loyalty programs and personalized marketing strategies. These businesses can analyze vast amounts of data to identify trends, segment their customer base and deliver highly personalized experiences at scale.

“We talk about our loyalty program not as a cost center, but as a profit center to the business,” Rite Aid Chief Marketing Officer Jeanniey Walden told PYMNTS.

Integrated payments and the strategic use of personalized data are also pivotal in scaling digital payments.

By offering rewards and benefits, businesses can encourage the adoption of digital payment methods, which are more efficient and secure than traditional payment options. This shift not only reduces operational costs but also provides a treasure trove of data that can be used to further refine personalization strategies and enhance customer loyalty.