Retailers had to quickly adapt to the accelerated shift to online amid the pandemic in order to meet their customers where they wanted to shop and felt safe doing so.
And there was another digital reality for retailers: the need to digitize the store cards that many of their most loyal customers used to buy from them. With brick-and-mortar stores having been shuttered through large swaths of the pandemic, access to the card (and the ability to wield it at the register) had largely been limited.
This exposed the limitations of living in a world where plastic cards are minted and sent by courier mail, spurring many firms to promote a digital-first “journey” for the customer to get their cards — the plastic ones, as well as digital options.
Many private-label card (PLC) issuers were lacking in their modernization efforts to pivot and meet the demands of the digital shift. The main difference between PLC issuers and debit/credit card issuers has been that the banks behind credit and/or debit cards already had the experience of transitioning from magnetic stripe to EMV chip cards — and, more recently, to digital.
With the retail environment continuing to adapt to the great digital shift, it appears that private-label cards are about to have their own digital makeover.
Pivoting to Digital Issuance
As in many other aspects of retail’s digital shift, the private-label card issuers have quickly caught up, digitizing their offerings to be stored in digital wallets (whether their own wallet or one of the “Pays” such as Google Pay or Apple Pay), and to be used at contactless card terminals, Ledru said.
The one-tap functionality in stores also encourages repeat use, as Ledru told PYMNTS.
“It’s much easier because the card is always in the phone,” he explained. “And with one tap, the experience is much better, which is a good reason [for retailers] to go digital.”
There is still a range of technical aspects those PLC issuers must contend with, he noted, including the fact that near-field communication (NFC) standards can vary from region to region. PLC issuers can embrace different strategies to digitize their cards and drive use, such as co-badging with an international payment network to benefit from that firm’s higher reach and its digital enablement services.
As more commerce goes online, authenticating the person using the card is critical. Ledru pointed to the use of augmented identification technology as a way to gain this level of certainty.
Augmented identity can use permissioned data and biometrics such as fingerprints to make sure the would-be consumer is indeed “authentic,” said Ledru.
In card-not-present (CNP) transactions, he added, “either the consumer is authenticated first and can then complete a transaction, or they can move through the transaction and get a request to authenticate and confirm.”
In that last scenario, Ledru said there are two steps tied to one action, which is making the payment. Those steps are different and may take time to complete. Time is a luxury that might be nonexistent as instant and real-time payments become more widespread.
In brick-and-mortar transactions, it’s been relatively easier to link payments to the user, as consumers had to input PINs at the point of sale to authenticate themselves. But with online payments, anonymity reigns. Higher levels of security — and the increasing use of digital cards to transact — benefit not only the consumer, but the issuer as well. The digital conduits allow them to issue cards that last months (not years), build loyalty programs and other perks into them, and avoid the cost of having to produce and mail plastic cards.