Cards (as in prepaid, stored-value cards that consumers can use for gambling, payroll and a variety of other uses, many of them novel) are only half the battle. The real trick is to tie engaging consumer experiences to those cards, which is critical, as prepaid and reloadable cards continue to evolve — moving from plastic cards to mobile accounts that can adapt to an expanding portfolio of use cases, including payroll, online gambling or even consumer and business lending.
So stands one of the main views offered in a new PYMNTS podcast interview between Karen Webster and Tom Cregan, CEO and managing director at Emerchants Limited (EML Payments), an Australian-based payment services firm that has set upon a path of global expansion, with its focus on the U.S.
‘That Would Be Our Business Model Going Forward’
Step back a bit first. To get a sense of how the world of payments and cards has changed, Cregan told Webster a story about a conference he attended in Las Vegas in 2009.
It included “literally hundreds of payment companies,” a reflection of how the stature of payments has increased (and continues to do so) with the rise of eCommerce and other digital technologies. That experience made him appreciate even more just how difficult it can be to move customers from one payment method to another without real innovation. Not only that, but Cregan came to more deeply appreciate how innovation and scale are vital to both survival and growth in the modern global economy when it comes to creating value for consumers, merchants and the payments ecosystem.
“That would be our business model going forward,” he said, a comment that underscored the importance of all those factors.
That Las Vegas trade show memory came up during the PYMNTS discussion when Cregan shared what has influenced, and still motivates, EML as it expands from its base in Australia into Europe — and, now, to the U.S. Engagement, innovation and scale are all vital.
A decade after that conference, new types of card products are emerging and helping to build ecosystems, doing so via those long-standing principles of innovation and scale. New use cases for those payment devices and methods, and consumer engagement tactics, are also emerging, with mobile is leading the way.
Payroll Card Evolution
Take payroll cards. The typical use case for plastic payroll cards was as follows: Employee gets paid via a payroll card, goes to the ATM and withdraws all the balance in cash. The card was a way to get paid, but not a way to pay others. Lacking a user interface that made it easy for consumers to keep track of what they had left to spend, those employees reverted to what they could see and manage: cold, hard cash.
Mobile has changed the payroll game — and, with it, consumer expectations for how it should work.
In the case of EML’s payroll card experiences in Australia, that means not just making a payroll card as a way to get paid, but for consumers to use one as they would any other debit card product. Marrying payments with commerce, Cregan and his team created a merchant coalition that uses geolocation and mobile technology to, say, inform cardholders that they are within a short distance of a participating retail location, offering a discount for a limited time (perhaps $2 off a specialty beverage for the next two hours.)
“It’s very targeted,” Cregan said. “And the aim of that is to ensure that customers see that they were paid — not only by their employer, but by the participating business. … It makes [consumers] stickier.”
Changing The Nature Of Payroll
The global rise of the gig economy is also fueling innovations in payroll cards, and leading to new experiences — or, as Cregan put it, “the changing expectation of how to get paid.”
As he pointed out, taxi drivers used to get paid at the end of the month. Now, they are “paid at the end of a shift.” Not only that, but companies are competing more fiercely for the best, most loyal and reliable candidates from a tight labor pool. “They are using payments as a way of attracting that labor pool,” he told Webster, an example of how an experience can go beyond the card, and become something new and more enticing as work and digital technology both evolve.
Workers can also benefit in other ways. He said that using payroll cards (in conjunction with the merchant coalition) can save employees $5 to $10 per month.
Placing A Bet On Online Gambling
The rise of online and mobile (legal) gambling is providing benefits to reloadable and store-value cards, and driving innovation. The U.S. is one of the main examples of that, and a target of EML’s prepaid business expansion plans. After all, the country has a large pool of consumers ready to place bets, even if just a few times a year. Most importantly, the new legal atmosphere in the U.S. is letting individual states make up their own minds on gambling, as well as set their own rules in governing it.
In general, innovation and competence around card programs that focus on gambling — more specifically, gambling payouts — are driven largely by the high stakes involved in the activity.
“There is no room for failure,” Cregan said. “You have enormous brands and massive amounts of consumers involved. There is little tolerance for any solution not working 100 percent of the time.”
In addition, fuel for card innovation comes from the ongoing move to mobile for state-approved gambling programs in the U.S. Sure, some state laws require in-person payments or impose other hassles, introducing friction into the process. However, with so much potential tax revenue on the line, Cregan said, there are heavy incentives that favor mobile.
“As the industry grows, tax revenues will be significant, and [state authorities] will eventually move to a mobile-driven world” to better meet consumer demands and expectations, he said. “Lack of confidence will lead to lower tax revenues.”
That means potentially good news for these online gambling operators, as well as the accounts and consumer experiences they support.
The gambling situation in Australia also underscores the importance of offering consumers as much frictionless convenience with cards and payouts as possible. That’s because, in Cregan’s telling, the overall betting market there is growing slowly — about 2 percent to 3 percent per year. Yet, those operators that up their games, so to speak, on the consumer experience (including via cards) could carve out advantages for themselves.
Cards And Financing
One can bet on card innovation taking place in the realm of consumer and business financing, as more lenders deploy cards for capital distribution and use. That’s a newer use for cards that might have been hard to imagine for most people a decade ago.
For instance, Cregan told of a program in Sweden in which the financing provider — via software and transaction routing — can actually track or reject payments on associated cards that are outside the bounds of a loan. That might include purchases made at casinos or of hotel rooms, as just two examples — payments that are unlikely to be uses for the money loaned to the business or individual consumer.
Indeed, the use of cards to facilitate both consumer and (small) business lending will prove to be, over the next year or two, “probably one of our largest growth drivers around the world,” Cregan said. As payday lending comes under more scrutiny, and as more consumers, and even businesses, struggle to find enough use cases for daily living and operations, “all those variables are opportunities.”
Still, it’s not just about the cards. It’s about the holistic experience — the innovation, the reasons offered to customers to break out of their inertia and adopt something new. The word “card,” perhaps, doesn’t even do the full job of describing what’s going on.
“It’s an account, really, at the end of the day,” he said.
That’s something that has surely changed from those trade show days of a decade ago.