[Dave Birch] The phrase "top of wallet" is well-understood in the wacky world of card marketing. It means making your card the one that consumers reach for first when they open their wallets. There's real science to this in the cards world: there are very clever people who know exactly how much to spend and where (TV ads? Cashback? Rewards?) to force cards to top of wallet. And they've been very good at it, which is one of the reasons why retailers complain about card costs going up faster than their sales: one of the most effective ways to get top of wallet is rewards, and as consumers switch to use rewards cards (which are more expensive for the merchant – after all, some has to pay for the rewards) so costs rise.
I don't really understand marketing and brand, but I do occasionally find myself in meetings where these things are being discussed, so I hear "top of wallet" from time to time. These have left me wondering: what does "top of wallet" mean in a mobile environment?
The problem is that it may not be the consumer who is making the choice! So what if I can grab your attention with a clever and expensive advertisement for a credit card, if when you actually tap in-store, the retailer POS and the mobile wallet engage in their own negotiation to select the best payment instrument for a transaction? You can easily imagine how this might work: the wallet offers the default credit card, the POS asks for a debit card, the wallet declines, the POS offers double loyalty points for the debit card, the wallet accepts and the transaction proceeds without the consumer being involved in the decision at all.
You can already see the incipient problem. Consider, for example, the Wallaby card.
The Wallaby Card is connected to each of its users’ accounts and is able to select the best one to take advantage of discounts and rewards.
This is an example of what has come to be called "decoupled" payment where the card you use at POS does not necessarily belong to, in any sense, the payment instrument behind it. One particular subset of this genre, the decoupled debit card, looks particularly promising. I think there is evidence that both consumers and merchants like such cards.
They are decoupled in the sense that the merchant issuer is not the same entity that holds the cardholder’s funds. About 200,000 consumers carry the cards, which are mostly sponsored by petroleum marketers, though grocery stores will be going live on the platform soon
Totally decoupled debit cards wouldn't be issued by either the bank or the merchant. We're in the land of BYOT (bring-your-own-token) here. I caught this phrase from super smart Eve Maler ("@xmlgrrl"). She said
The category that quickly became my favorite was "bring-your-own-token." BYOT is Forrester's term for the various methods (sometimes called "tokenless") that leverage the devices, applications, and communications channels users already have.
BYOT doesn't quite work for me. I was thinking about "MYTH" (MY THingy), because I can imagine a marketing campaign about "believe your own myth" or something like that. Anyway, why can't I just wave my thingy at the bank to link to my debit card or pre-paid or PingIt or O2 Wallet or whatever to it and then go and wave it a retailer to link it to my loyalty account. Then when I pop into buy something, I can just wave my thingy and be gone.
What that thingy might be is a matter of debate, but one form factor is certain to be the mobile phone and one application is certain to be the mobile wallet. So move the decoupling into a mobile environment where the "negotiation" around which payment instrument to use can be so much more sophisticated. Now as a consumer I might not only have no interest in getting into the loop — let my phone sort it out, I'm busy — but I may not even know that such a negotiation is under way. I've written about payments auctions before…
The idea is that, rather as advertising networks such as DoubleClick auction page impressions to advertisers in real-time (when you click on a page, the advertising network sends the details to advertisers who get 20 milliseconds to respond with a bid, and then the advertisement from the highest bidder is displayed) so when you click on “pay”, the payment platform might bundle together some facts about the transaction and auction them to processors.
…but this takes things to another level because of the interactive nature of the negotiations that might take place. We're into one of my favourite realms, the world of unexpected consequences. Where the organisations behind my payment choices have to market to my wallet, not to me, and where the complex negotiation and selection of payment deals might happen at POS. I might want to set my wallet a general policy toward payments, but I shouldn't think I'd want to get involved in every one of them.
This is the sort of thing I imagine will be discussed at Inside Intelligence's conference on Mobile Wallet—Revolutionising the Customer Experience in London on September 27th 2012. The wonderful people at Inside Intelligence have given us a delegate place worth an astonishing EIGHT HUNDRED AND FORTY FIVE of your British Pounds to give away as a prize on the blog. So if you are going to be in London on 27th September and want to come along and meet a variety of experts (and me), then enter the competition! We're trying something different this time. All you have to do is make a non-spam comment on this post on the Tomorrow Transactions blog (don't e-mail me – that doesn't count). A week from today, we will close off comments and then make a random draw amongst commentators and the winner will receive the delegate place!
This competition is void where prohibited, not open to employees and associates of Consult Hyperion or members of my extended family and no animals were harmed during its creation.
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