Viewpoint: Virtual Reality
The rise of m-wallets, smartphones and online shopping could be a boon to virtual incentives.
With the growth of consumer mobile wallet solutions like Apple Pay, Samsung Pay and Android Pay over the past year, one of the questions many corporate marketing departments are asking is: “Can virtual cards and mobile wallet solutions be used for business-to-consumer (B2C) incentive payments (much like checks and physical prepaid cards are widely used today) and if so, what are the benefits and challenges? When it comes to B2C virtual payments, what is reality versus fantasy?”
The short answer is of course that virtual network branded prepaid cards have been used for rebates and corporate incentives for nearly 20 years, but the near ubiquity of smartphones and the continued growth of online consumer spend in recent years mean that virtual card solutions are more viable than ever and can offer unique benefits as part of corporate marketing promotions in the here and now.
The very first product at Citi Prepaid (then known as Ecount) was called Webcertificate, and was introduced in the fall of 1997. As part of their consumer incentive promotions, companies could send a Visa or MasterCard virtual prepaid card, or Webcertificate, and have it delivered with an electronic greeting card to anyone with an email address. The genius behind Webcertificate was that it enabled the sender to deliver an electronic payment instantly to someone else without having to know the bank account details of the recipient. All you needed was an email address. We patented the underlying technology, and it remains a key pillar of our platform.
Even back in 1997 this virtual card solution helped solve a few key problems for institutional clients, including making an electronic payment without the beneficiary’s bank information; having an incentive that’s appealing to consumers while trying to direct some of that spend back to our client’s products and services; and reducing the payment delivery time and costs by eliminating the need to mail a check or card.
Until recently, virtual prepaid card solutions have been used mostly for online marketing promotions—for example, as an incentive for completing online surveys or signing up for paperless billing. When the desired action is an online activity, it made sense for the reward to be paid online as well. On the flip side, for traditional rebate programs driven by retail sales, it made sense to replace the traditional rebate check with physical rebate cards that would drive consumers back into retail stores to spend their rebates. Combined with the fact that in the early 2000s—just as corporations began adopting prepaid as an alternative to rebate checks—online consumer spend was still low (but growing quickly), it made sense that physical prepaid cards took off and have dominated the consumer incentives landscape ever since.
In 2016, virtual card solutions for consumer incentive promotions still deliver the same fundamental benefits to institutional buyers, but now can do so in a much more compelling way because of several key factors:
- The prevalence of smartphones means most beneficiaries receive their initial email or text notification right away and can access their virtual accounts wherever they are without having to be in front of a desktop computer
- Online shopping is much more ubiquitous now, and consumers are more comfortable using their rewards to shop online versus in-store
- For those that do want to shop in-store, the availability of host card emulation solutions or integration with mobile wallets promises to enable beneficiaries to transact online at a growing number of merchants without the need for a physical card
- Geolocation services and big data, combined with an intuitively designed user interface such as a native app or responsive design mobile Website, enable clients to be very targeted in presenting cardholders with relevant and compelling offers that drive spend back to their own products or channel partners
As institutional clients look to benefit from these developments, they should be aware of the fact that mobile wallet solutions are still device-specific and have a more limited acceptance footprint compared with a physical network branded prepaid card. While these numbers are improving every day, issuers and institutional buyers should consider offering integrated payment alternatives (such as an optional physical card) to ensure that 100 percent of a client’s customer base can access their rewards wherever they are. Delivering a great user experience is essential.
Virtual cards may have been a reality for the last 20 years, but recent developments suggest that virtual cards are becoming not only a viable alternative to physical cards but a service that can deliver additional client value in terms of speed, data, cost and consumer appeal for B2C corporate incentives in 2016 and beyond.
Brad Garfield is the global product head for Citi’s corporate and public sector Prepaid Cards business. Brad was an early member of the product management team at Ecount, a pioneering prepaid card and electronic payments company that was acquired by Citi in 2007. Brad has held senior product roles in the U.S., EMEA and LATAM, and has led the innovation around many of the new payment flows that have fueled Citi Prepaid’s tremendous growth since the acquisition. He may be reached at firstname.lastname@example.org. This article also appears in the Spring 2016 issue of Pay Magazine out this month.
In Viewpoints, payments professionals share their perspectives on the industry. Paybefore presents many points of view to offer readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore.