Card-linked offers earned a bad rep for lack of relevance and basic customer knowledge, but that’s set to change in 2022 and going forward as data networks help merchants and financial institutions (FIs) use receipt- and SKU-level data to reenergize these digital promotions.
Anyone who’s received a valuable-sounding offer linked to a payment card that was utterly irrelevant to them knows the frustration — partly because the reaction tends to include a realization on some level that had the offer been tailored to them, they’d have bought it.
It’s a safe and secure way to reach customers, as Jehan Luth, CEO at data platform Banyan, told PYMNTS’ Karen Webster. But there’s data work to do before its potential is realized.
“The offers you and I see in our banking apps, these rails were laid over a decade ago and have not really been innovated to catch up with the expectations we as consumers have today,” Luth said. “We want relevant offers reaching us. We want things that make sense to what I am, where I am in my life, what I want to save on, but that also make sense for the bank or the FinTech, whoever’s [making the] the offer, and the advertiser.”
Much discovery happened over the two-plus-year COVID-19 emergency, as merchants and FIs studied redemption patterns and saw where some of the fails were happening.
As an example, Luth said, “If you shop 80% of your groceries at one store, it’s really hard to run a generic offer because it’s not relevant, it’s not personal, especially when the grocer sells 80,000 different products. Multiple things are colliding to get card-linked offers into the new era.”
That new era is being powered by receipt-level and SKU-level data that helps merchants and FIs design offers that zero in on the current interests and purchasing behavior of consumers.
“What’s required is two things,” he said. “The first is definitely the data, which is a level deeper than what all banks and FinTechs have today, and all of them have transaction-level data. They know you and I spent $50 at store X. But none of them at scale have the items you and I purchased at that store, also known as SKU-level data or item-level data.”
That’s becoming the sweet spot for SKU-level data networks like Banyan and others that are surfacing insights from deeper-level data to make offers resonate with recipients.
See also: Former Mastercard Worldwide SVP Andrea Gilman Joins Banyan as CMO
Routine Spend is the Sweet Spot
Granular item-level data can set the whole thing loose, “but what’s really interesting is we cannot get SKU-level data at scale without the merchant’s participation,” he said.
Luth told Webster that for the next wave of card-linked offers, more merchant participation is needed. Without their SKU-level data, we’re back to offers for carwashes. In other words, offers where people don’t shop on a regular basis.
Webster noted that this is further complicated because issuers and merchants have different expectations from card-linked offers, and these are often out of alignment. She said issuers want top-of-wallet status regardless of where the consumer shops or what they buy there.
Merchants are essentially the opposite, more concerned with the where and what of transactions, and not overly concerned with the issuer logo on the payment card used.
“The key idea is top of wallet, and for many issuers, the vision of card-linked offers has very little to do with the revenue potential that offers generate,” Luth said. “The much bigger thing for the issuers is driving habituation on their products.”
Moreover, it’s routine spending that card issuers want a piece of, as compared to more infrequent big-ticket purchases.
“When you go to the grocery store five times a month, they want their card to be used,” he said, adding that “for the longest time, the merchants that participated weren’t everyday spend merchants. They were merchants that had a lot more margin to give, which is how they could afford to participate in card-linked offers.”
If everyday spend is the lock on this new era of hyper-relevant card-linked promotions, item-level and SKU-level data is the key.
“It’s a little antithetical to some incentives because everyday spend is not the highest source of revenue for card-linked offer companies,” Luth said. “But what’s very relevant to people is saving money at their grocer [for example].”
Related: PYMNTS Digital Economy Payments Study Series
Harmonizing Card-Linked Offers
What does the new era of card-linked offers made from granular SKU-level data look like? We’re finding out right now as Banyan and others remake the space with platform tech.
Remember, these new offers must be relevant to the consumer most of all, while supplying a two-sided ecosystem — merchants and issuers — with what they each need from the deal.
Luth said, “Think about your local grocery store. It’s summertime. A lot of them want to drive traffic towards the grill section. What if a grocer could run a campaign that says, ‘buy grilling equipment at grocer X and get 20% cash back.’”
“It’s not a specific item or charcoal made by this manufacturer. It could be a category. It could be however the grocer wants. It aligns well with the grocer’s [and] issuer’s incentive. Those two things together benefit the consumer.”
Onboarding merchants is the big challenge because they have the golden SKU and item-level data from which truly relevant promotions that convert can be crafted, benefitting all parties.
Banyan overcomes this hurdle by making its platform easy to integrate and use.
“There’s so many parties involved to process a single transaction that it’s actually quite complicated to even get into that ecosystem,” Luth said.
“The way we describe plugging into our network or connecting [to it] is we’ve essentially built a parallel rail to the payment rails, which, on the merchant side, does not touch their point of sale, which is really important.”
He added, “On the issuer side, we’re not touching PCI data, we’re not linking on full card numbers or anything that would enable you to run a transaction, which reduces the compliance risk significantly. We went about it quite differently and made it really easy for merchants, issuers and FinTechs to integrate with us.”
Essentially, it’s an agnostic stance on merchants and issuers, as aligning with either throws off the balance of promotions that should make instant sense to consumers, who ideally click.
Luth attended med school and is an epidemiologist by training, giving him a keen understanding of cause-and-effect relationships. That, in turn, informs his approach to onboarding.
“The first set of merchants we onboarded were in the grocery, convenience and drug space,” he said. “We had a lot of participation from everyday spend merchants.
“The first few financial institutions we worked with also gravitated towards the cleanest, highest ROI, the fastest one being, ‘Let’s drive traffic to everyday spend and get habituation up.’ This is not a hypothesis. It’s proven.”
The epidemiologist-turned-CEO sees “a lot of innovation happening and being publicly spoken about around the next evolution of card-linked offers. It’s inevitable considering three big things have happened. The first one is banks have so much pressure because of the innovation happening in FinTech to catch up and drive habituation. That’s a really big one.”
Then comes inflation pushing consumer interest in saving on everyday items from groceries to gas, along with major big retailers taking “a very strategic position on growing their retail media organizations,” he said.
“These three things put together make the perfect recipe for seeing a lot of innovation in the second half of this year.”
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