Points, payments and friction, and the power of free

There’s no question we all love the idea of loyalty points. It’s just the collection and redemption of them is generally a woeful experience. And no one has really cracked either piece yet. But as a carrot to incentivise someone to use your product time and time again, it’s a great tactic.

Airline points are the obvious example, and why points linked credit cards have tended to work so well. But in every other facet of life, from boutique brands to even big grocery players, it has been difficult to find an easy, friction free solution for consumers when it comes to loyalty. This is mainly because the tech stack is so fragmented. Often unique POS integrations are required, special loyalty cards have to be used, or apps downloaded. It’s a mess, and consumers just opt out.

But sandwiched in between card issuers and consumers is a tech layer that if implemented correctly, could solve all of this.

Melbourne based startup Verrency plans on having a crack. The business has raised US$4 million so far and will be tapping investors for a further US$15 million as it builds out its global platform.

Verrency wants to build a technology layer between the issuer and the consumer that houses all the latest payment management features we’ve all come to expect out banks to offer, but which barely any of them do.

Things like the ability to block or lock any card based on suspicious behaviour youself. The ability to set payment limits per card, category type, or by individual merchant. The platform also wants  to enable ‘points and pay’ at a merchant checkout, something airlines do well online, but which as a concept, has failed to translate into many other online or offline sales experiences.

The other player in this ‘loyalty meets cards’ space, that is worth keeping an eye on is Canadian startup Drop. What is super neat about Drop is that all you need to do is upload any debit or credit card you already use, and it will start accruing points everywhere you spend on the loyalty network. It then surfaces up offers for you based on your points balance.

And what about making payments that aren’t typically meant for credit cards and hacking the system so you can collect the points anyway? Two companies that crossed my path this week in Australia do exactly that, and prove that despite a little friction, people will go out of their way to get a reward points. That’s how powerful they are.

Rent Rewards lets you pay your rent using your credit card, without it being treated as a cash advance. And RewardPay allows small businesses to pay their superannuation commitments to employees using their American Express card. Plus they can benefit from the interest free period! Neither of these payment experiences is as easy as paying direct from your bank, but the lure of a free flight to Fiji proves we’ll all go a little out of our way to benefit our future self. There is a behavioural psychology gem in there I’m sure.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business.

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