We love near-field communications (NFC), the technology that enables you to pay for purchases with your smart phone. We love the security factors built into it. Banks and merchants are loving it more, too, because now they launch more loyalty programs to reward themselves – and even you. It’s the logical extension of programs that started with books of trading stamps from grocery stores and gas stations and now extend electronically from purchases at coffee bars to international vacation packages.
There’s a lot at stake for banks and retailers because the citizens of nations with developed economies still spend a lot of money. And while some older consumers dislike waiting for charges to be approved using the more secure chips in their credit cards, millennials and their older siblings are embracing mobile payments. With smart phones almost always accessible, it’s easy to tap a payment station with your phone or hold it close to the station, enter your passcode and keep going with life.
That phone, of course, contains a wealth of information that merchants and banks can tap into with their big-data systems. They can use the data to optimize rewards programs for their customers based on what you and where you buy it. Financial industry research shows that the more affluent you are, the more likely you are to use digital payments whenever you can. And a good number of you are likely to use digital coupons on your smart phone.
You might say a perfect storm is forming. As the use of smart phones grows for all sorts of purchases, merchants and bankers will offer more incentives, and that will draw more people to the technology. That will ratchet up new programs to attract more users in a continuing spiral. The financial industry sees big changes in the next three to five years.
What can our transactional environment look like over the next few years? It’s not that hard to imagine. Your browsing history may show, for example, that you are looking for a new computer in the $1,000 range. With location services turned on for your phone – because you used it to find the fastest route to the shopping mall – the retailer and the bank that supports your credit card can easily deduce that you are entering a store to make a purchase.
Together, the retailer and bank can send a message to your phone to let you know that if you buy a specific computer-and-accessory package today, you are eligible for a discount from the price you saw during your online shopping – or you may be eligible for extra miles from the airline that sponsors your credit card – or you may get extra cash back for this purchase.
Or, your credit card company may have an arrangement with another retailer nearby, and they can offer you rewards to go to their retailer. They can let you know about their specials before you go into any store.
The driver in all of this is likely to be the bank that supports your credit card – or more realistically that has the credit account you access from your phone. They are the ones who “lend” the money when you charge a purchase or collect a handling fee on a debit purchase. The sheer volume of money changing hands creates incentives for them to incentivize you.
In turn, you will need to pay closer attention to the security of your smart phone. You will need to make sure you always have the latest operating system on your phone and that you have all appropriate anti-virus and anti-malware software running – on your computer or tablet as well as on your phone. And you will need to pay special attention to all offers you receive over your smart phone. If a retailer or bank can send a special offer to your smart phone, so can a scammer.
We can help you reap all the benefits of your rewards programs by making sure all of your technology has the latest security software properly set up to match the way you live. Call us – 973-433-6676 – or email us to help you make sure you are good to go.