In my last post, I talked about the idea of Everyday Payments, and shared six hot topics payment providers should keep in mind as they start their journey. Today I’d like to focus more closely on one of those concepts, namely, polymorphic payments.
Payment providers, whether they are banks, payment processors or card issuers, capture large amounts of aggregated and opt-in transaction data about their customers. For payments, that data offers a significant competitive advantage. If they learn to use the data well, providers can tap in to that transaction data and gain insights. Then they can use what they learn about customers to connect and engage with them. By increasing their connection points with customers, payment providers can become central to their customers’ daily lives.
In fact, payment providers can know their customers well enough to anticipate their wants and needs. Using digital technology, providers can directly engage with their customers to offer discounts, loyalty points and other rewards. While they are connecting, providers can also make actual purchases entirely seamless.
One trend that is central to Everyday Payments is the idea of polymorphic payments. As customers accumulate many different kinds of value, such as air miles, accumulated credit and loyalty points, payments might involve something more than just a physical or electronic exchange of cash. For example, a customer may want to buy a new laptop using existing credits for another product they returned to the merchant several weeks earlier.
Or, the transaction may be more complex. Perhaps the customer’s existing credits cannot fully cover the laptop’s cost. Rather than using money, maybe the customer would like to use airline miles to cover the difference. You can see that this might become a messy transaction, with the merchant’s cashier ringing up one transaction to cover the credits and another transaction to add in the air miles.
Here’s where Everyday Payments comes in. An Everyday Payment Provider could consolidate both forms of value into one, seamless transaction. But the polymorphic payment concept does not end there. An Everyday Payment Provider could transform the entire transaction. Using geo-location to know that a customer had entered an electronics store, the Everyday Payment Provider could automatically send a text to the customer, reminding them of their loyalty point balance, say, or other forms of value. The Everyday Payment Provider could text that customer a link to the merchant’s website, and then let the customer scan a bar code on a chosen laptop and complete the entire purchase via smartphone.
In this way, polymorphic payments supports many forms of payment. Also, it changes—or morphs—seamlessly to complete the transaction, no matter what form of payment is used. Polymorphic payments can lead to a single, consistent user experience, no matter what technology, platform, source, destination, or form of payment is involved.
Where does this all lead? An Everyday Payments customer would be able to use a single app or digital wallet, without ever having to change it for different situations—without having to think too much about it at all!
For more on Everyday Payments, see our positioning paper.